In the grand scheme of the millions of dollars the Vistana homeowners association lost because of corrupt board members, $356,000 is not a lot of money to get back.
But the HOA is happy to take it.
“We’re ecstatic,” HOA President Lynn Williams said. “We hope this is the first of many recoveries.”
The FBI, still knee-deep in its massive investigation into a valleywide scheme to take over Vistana and 10 other HOAs, returned the $356,000 last month.
It was the first time in the long-running investigation, which began in November 2007, that any of the associations got money back.
Federal prosecutors plan to seek roughly $25 million in restitution from some 40 defendants charged in the case. Vistana lawyers estimate the condominium development in southwest Las Vegas lost more than $18 million.
The saga of how the $356,00 was stolen and then returned spans nearly five years.
On Dec. 30, 2008, two months after FBI agents and Las Vegas police conducted a valleywide raid in the HOA takeover conspiracy, Vistana board members Patrick Bergsrud and Rudy Alvarez walked into a Wachovia bank branch and withdrew $450,000 from the HOA’s construction defect settlement account, according to court documents and Vistana lawyers.
At the time, the two men did not have authorization from the Vistana board to withdraw the money. Bergsrud and Alvarez wrote a $450,000 cashier’s check to attorney Sigal Chattah in care of her client, Silver Lining Construction.
The company, which is alleged to have received millions of dollars for doing phony construction defect work at Vistana, was run by Leon Benzer, accused of being the scheme’s mastermind.
Investigators looked at Chattah’s conduct in the theft of the $450,000, but have not charged her. Chattah declined comment.
Bergsrud pleaded guilty and is cooperating with Justice Department prosecutors.
In his plea agreement, he admitted abusing his power as a Vistana board member when he withdrew the money.
Alvarez was indicted in January with Benzer and 10 others on charges of defrauding the 11 homeowners associations between 2003 and 2009. Their trial is set for March 3.
The indictment alleges Benzer, the late construction defect lawyer Nancy Quon and others funneled more than $8 million through secret bank accounts to land lucrative legal, construction and community management contracts from the homeowners associations.
The conspirators, through election rigging and other dirty tricks, packed association boards with members who handed out contracts worth millions of dollars at the expense of the homeowners, according to the indictment.
Quon was never charged in the investigation. She committed suicide in March 2012.
Eventually, $350,000 of the missing $450,000 in Vistana money wound up in the hands of Benzer’s criminal attorney at the time, David Chesnoff.
At the request of federal authorities, Chesnoff turned over the money.
“When the government informed me that it belonged to someone other than Mr. Benzer, I returned it,” Chesnoff said. “I did what the law required of me.”
In June 2011, Mike Elliott, the lead FBI agent in the takeover investigation, informed Vistana officials that their request for the funds was approved by authorities and forwarded to the FBI’s forfeiture unit in Washington.
Attorney Richard Haskin, who represents Vistana, praised Elliott for pushing for the money’s return when the process got bogged down in bureaucratic red tape.
Lynn Williams, president of the Vistana board, also singled out the FBI.
“It’s taken a little while, but I give credit to the FBI for doing due diligence, tracking the money down and going out and taking it,” he said.
When the FBI returned the $350,000 with $6,000 in interest last month, the money was promptly put back into the HOA’s construction defect settlement fund, Williams said.
But there’s a lot more money to recover.
Haskin is suing Benzer, Quon’s estate and a host of other defendants in the takeover scheme to get back most of the $19.1 million Quon won for Vistana in a 2007 construction defect settlement.
Federal prosecutors also have made it clear their goal is to get restitution for Vistana and other victims of the scheme.
Most of Vistana’s $19.1 million went to court costs and legal fees to Quon’s firm and other law firms.
Vistana paid more than $8 million to Silver Lining Construction for repair work that was never done, Haskin said.
“It’s my belief that the players in this conspiracy one way or another dispensed with the profits of the conspiracy,” Haskin said. “What they did with the money is anybody’s guess, right now.”
Haskin said he suspects Quon stashed away $5 million in offshore accounts, and Benzer squandered away millions more.
Vistana has competition from the Internal Revenue Service in its effort to get money from Benzer.
In May, Benzer was indicted by a federal grand jury on charges of evading roughly $1.2 million in taxes owed the IRS.
Most of that money was earned during the vast takeover scheme, the indictment alleges.
Contact Jeff German at firstname.lastname@example.org or 702-380-8135. Follow @JGermanRJ on Twitter.