Lawyer kick-started massive HOA probe with private investigation

A prominent construction defect attorney was the driving force behind the long-running federal investigation into the scheme to take over valley homeowners associations, according to a copy of an FBI affidavit obtained by the Las Vegas Review-Journal.

Scott Canepa brought information to FBI agents and Las Vegas police assigned to a joint public corruption task force in November 2007 about an investigation his firm conducted into the scheme, hatched by then-construction company boss Leon Benzer, the affidavit says.

Canepa learned one of his competitors, the late construction defect lawyer Nancy Quon, was assisting Benzer in the scheme. Quon, described in the affidavit as Benzer’s former “paramour,” committed suicide last year under the weight of the federal investigation. She was never charged.

Canepa told investigators one of the condominium associations chose Quon over his firm to file a construction defect suit.

The redacted FBI affidavit surfaced late Thursday in court papers filed by a defense lawyer in the case. Canepa’s name was blacked out on all but one reference.

Canepa did not return phone calls Friday, and Benzer’s lawyer, Daniel Albregts, could not be reached for comment.

In a biography on his firm’s website, Canepa calls himself “a true pioneer in the fight for homeowner rights in Nevada” and says he is recognized in the legal community as a “leading authority on Nevada community association and construction defect laws.”

Following their meeting with Canepa, members of the public corruption task force launched their own investigation, dubbed “Operation GrandMaster,” into the scheme which occurred between 2003 and 2009. Investigators conducted interviews and wired confidential informants, who took them into the heart of Benzer’s operation, the affidavit states.

POSSIBLE MOB TIES

Early in the investigation, task force members heard information linking the scheme to organized crime. According to the FBI affidavit, one witness told investigators there were “rumors” that Benzer’s now-defunct company, Silver Lining Construction, was controlled by the New York Mob and had helped Quon set up her law firm.

A potential target said during a secretly recorded conversation that Benzer, 46, thought of himself as a “Soprano,” a reference to the HBO series about organized crime.

The target told the informant that people thought Benzer was “in the mob” because of his association with attorneys John V. Spilotro and Mark Kulla. Spilotro is the nephew of Anthony Spilotro, the slain overseer of street rackets in Las Vegas for the Chicago mob in the 1970s and 1980s.

Investigators also disclosed they were aware that a key player in one of the HOA takeovers, Paul Citelli, was known to have ties to the Buffalo mob.

One of Benzer’s top associates told an informant that Benzer maintained that he was not connected to the mob and preferred to think of himself as “just a bully,” the affidavit states. Both Benzer and his “right-hand man,” Ralph Priola, according to the affidavit, would be seen around town with armed bodyguards, which concerned investigators for the safety of their informants.

Priola and Citelli are among 29 defendants who eventually pleaded guilty. The two men now are cooperating with prosecutors.

MASSIVE INVESTIGATION

The investigation became public at the end of September 2008 with a joint FBI-Las Vegas police raid across the valley.

Prosecutors later detailed a vast conspiracy to swindle 11 homeowners associations, including two of the most well-known victims, Vistana and Park Avenue, out of millions of dollars.

The key was getting straw buyers elected to the HOA boards through ballot-stuffing and dirty tricks to help Benzer and Quon land lucrative contracts. Community managers who ran the HOAs were bribed with cash to steer business to the conspirators.

FBI Agent Mike Elliott submitted a sworn affidavit to a federal judge in September 2008 to obtain permission to conduct some of the searches. His affidavit and others were among the mountain of evidence turned over to defense lawyers this year after Benzer and 10 other defendants were indicted in the conspiracy. The defendants are to stand trial March 3.

POSSIBLE LEAKS

One of the defense lawyers, Chris Rasmussen, attached 51 pages of Elliott’s 88-page affidavit as an exhibit to a motion seeking to dismiss conspiracy and fraud charges against Benzer’s half-sister Edith Gillespie. The affidavit contained flow charts showing the key players in takeover schemes at several of the homeowners associations.

Rasmussen contends unnecessary delays, including a lengthy one to investigate alleged leaks to Quon, have harmed his client’s ability to defend herself.

Elliott’s affidavit hinted that inside information getting back to Quon could allow her to destroy evidence before agents could get to it.

The focus shifted to prosecutors in the U.S. attorney’s office in late 2010 when the Justice Department opened a criminal investigation into the leaks.

The U.S. attorney’s office removed itself from the HOA investigation and the Justice Department’s Fraud Section in Washington took over the reins.

Months later in August 2011, as the first defendant pleaded guilty in the case, the Justice Department found “no further action was necessary” in the leak investigation. No charges were filed, and U.S. Attorney Daniel Bogden publicly defended his office’s handling of the HOA investigation.

In his motion, Rasmussen said he wants an evidentiary hearing to discover more facts about the leak investigation and what impact it might have on his client’s defense.

He also said it is clear prosecutors originally targeted local attorneys, judges and county commissioners.

Several attorneys and former police officers have been charged so far, but no judges or commissioners.

Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow @JGermanRJ on Twitter.