HOA fraud trial defense rests on argument that the accused knew nothing

After nearly three weeks of testimony and arguments, a federal jury Monday received the case against four defendants charged in the massive scheme to take over and defraud homeowners associations.

The jury planned to begin deliberations Tuesday morning.

In closing arguments, lead Justice Department prosecutor Charles La Bella said each of the four defendants were willing participants paid to play key roles in the multimillion-dollar scheme under the direction of former construction company boss Leon Benzer.

Each “engaged in lies, deceit and misdirection” to help Benzer land lucrative construction contracts, La Bella told the jury.

Several times La Bella referred to Benzer as the “puppet master” and “Mr. Control Freak,” who had all angles covered during the scheme said to have targeted as many as 11 HOAs between 2003 and 2009.

The four defendants, including former Benzer attorney Keith Gregory, have been standing trial on conspiracy and fraud charges before U.S. District Judge James Mahan. Also on trial are Benzer’s half-sister Edith Gillespie, who allegedly recruited straw buyers; Salvatore Ruvolo, a reputed Benzer-controlled HOA board member at Park Avenue and Chateau Nouveau; and David Ball, whom Benzer is alleged to have placed on the Chateau Nouveau board.

Defense lawyers said in closing arguments that the government presented little evidence linking their clients to the scheme, and attacked the credibility of witnesses who testified under plea deals seeking reduced sentences.

One key government witness, former Benzer right-hand man Ralph Priola, acknowledged on the witness stand that he was promised probation and home confinement for his testimony, the lawyers said.

A little more than a third of the 37 defendants who pleaded guilty testified in a scaled-back version of the case prosecutors brought. Benzer pleaded guilty prior to the trial and did not testify.

La Bella told the jury that Benzer and the late construction defect lawyer Nancy Quon, who invested $3 million in the scheme, had a “formula.” They targeted large condominium developments that needed construction repairs, then used straw buyers to buy condos at the developments, stuffed ballots to elect “politicians” to HOA boards and steered the boards to hire attorneys on Benzer’s payroll to provide legal advice.

Once the boards were controlled, it was “game over,” La Bella said. Quon’s firm would be hired to file construction defect lawsuits against the developers. And after a settlement, the HOA boards would hire Benzer’s Silver Lining Construction Company to do the work.

“It was like a computer virus,” La Bella argued. “Once they get in, it spreads and you can’t stop it.”

At Vistana, the crooked board awarded Benzer more than $8 million for work that largely went undone, La Bella said.

“All he did was back up a truck, shovel the money in and take off,” the prosecutor said.

Gregory was double-dipping, paid by both Vistana and Benzer to do Benzer’s bidding at Vistana — all against the interests of the homeowners, La Bella contended.

In his closing argument, defense lawyer Loren Washburn said Gregory was not a part of “Team Benzer,” as the government alleges. Gregory, he said, was not let in on the scheme and was merely giving out proper legal advice to Vistana.

Gregory “wouldn’t risk everything” for a client who only brought in less than one percent of his professional income, Washburn added.

Gillespie’s lawyer, Chris Rasmussen, chastised the government for bringing the case against her.

“Nobody came here and said, ‘Edi Gillespie committed a crime,’” Rasmussen argued.

Bret Whipple, who is defending Ruvolo, added, “There is no credible evidence in this case.”

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