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Once-secret papers reveal how HOA scheme widened

Inspired by his lucrative takeover of the Vistana homeowners association, then-construction company boss Leon Benzer moved swiftly a decade ago to broaden the scheme across the Las Vegas Valley, according to once-secret government trial papers.

Benzer enlisted the help of high-profile attorney Nancy Quon, who invested $3 million in the push to corrupt other HOAs — all with the goal of obtaining additional construction defect litigation for her firm and contracts for Benzer's company to do construction repairs.

Quon agreed to share 10 percent of her attorney's fees with Benzer as she sought to file lawsuits and obtain settlements for the HOAs, according to the trial papers.

The 17-page brief written by Justice Department lawyers describes the key players in the massive scheme and provides a road map to how the conspiracy widened and caught the attention of the FBI and Las Vegas police.

A total of 42 defendants either pleaded guilty or were convicted at trial in what is thought to be the largest public corruption case ever in Southern Nevada.

Earlier this month, Benzer, who pleaded guilty in the scheme, was sentenced to 15½ years in federal prison. Quon was never charged but while under investigation killed herself in March 2012.

Worried that a Review-Journal story might cause prejudicial publicity before the February trial of four defendants, Justice Department lawyers did not publicly file the brief as they normally would. Instead, they gave copies directly to defense lawyers, who were bound by a judicial order not to disclose any evidence as they prepared for trial.

Last week, prosecutors gave the brief to the Review-Journal in the "spirit" of a federal judge's order sought by the newspaper unsealing some three dozen documents filed in the long-running case. U.S. Magistrate Judge George Foley Jr. has yet to rule on another Review-Journal request to make public 6 million pages of evidence, including 10,000 pages of investigative reports, that prosecutors turned over to defense lawyers.

The brief turned over last week shows Benzer and Quon devoted most of their attention to eight HOAs that had potential for construction defect litigation.

In addition to Vistana, Benzer's organization sought to take over boards at Jasmine, Park Avenue, Chateau Nouveau, Chateau Versailles, Mission Ridge, Horizons at Seven Hills and Pebble Creek.

"To execute his plan, Benzer recruited real estate agents, notaries, lawyers, property managers and individuals into his fraudulent scheme," the brief alleges. "Through this assembled network of co-conspirators, Benzer methodically set out to control HOA boards to perfect the scheme, initially keeping his principal investor (Quon) apprised of his progress.

"Benzer directed the purchase of condominiums at targeted HOAs through a network of straw buyers and systematically took control of several HOA boards through a pattern of fraud and deceit, including the rigging of HOA board elections."

For the straw buyers — many of whom were employees, family members and friends of Benzer — it was a deal they couldn't refuse, according to the trial papers. Benzer provided the funds for down payments, mortgages, taxes and HOA dues. He also agreed to pay the straw buyers up to $5,000 a year, plus 50 percent of any profits after a condominium was sold.

Straw buyers who got elected to boards were given additional cash payments to attend board meetings and vote Benzer's way, the prosecution papers allege.

Benzer wound up getting more than $7 million to do construction defect repairs at Vistana, but very little repair work was done, and most of the money went to line his pockets.

After gaining control of Vistana in 2005, Benzer got $600,000 from Quon to set up "puppet" boards at Chateau Nouveau and Chateau Versailles, the trial papers said.

He also put board members in place at Park Avenue, Jasmine and Sunset Cliffs.

The case came to the FBI's attention after Jasmine's HOA attorney, Scott Canepa, became suspicious of three Benzer-backed candidates who appeared out of nowhere, the papers allege.

Two of the candidates withdrew from the race after Canepa raised questions, and eventually one revealed the takeover scheme to the lawyer.

Canepa later provided evidence of what he learned to the FBI, which secretly opened a criminal investigation in November 2007.

By mid-2008, the FBI uncovered a scheme by Benzer to bribe a property manager at Mission Ridge to help rig a board election, the trial papers allege.

Benzer's right-hand man, Ralph Priola, was secretly recorded giving the property manager, who was cooperating, a $20,000 bribe on the eve of the election in September 2008.

The next day, FBI agents led a raid across the valley that broke up Benzer's organization.

At the time, according to prosecutors, Benzer was on the verge of obtaining contracts for construction defect repairs at other HOAs.

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

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