Federal and local law enforcement officers raided nine sites around the valley on Wednesday in a sweeping probe into possible collusion between homeowners associations and businesses benefitting from construction defect lawsuits.
The raids are part of a "pending public corruption case," according to Federal Bureau of Investigation spokesman Dave Staretz, who refused to release details. He said no arrests were made.
According to a law enforcement source, the FBI is investigating whether individuals were placed on homeowners association boards who, in turn, would direct business stemming from construction defect lawsuits to select companies.
At issue, according to the source, is whether HOA members were steering contracts to certain construction companies.
Other sources said there has long been speculation that some HOA representatives were hiring certain law firms to handle construction defect lawsuits in exchange for kickbacks.
State Sen. Mike Schneider, D-Las Vegas, a lawmaker who has been involved in homeowners association issues before the Legislature, said the speculation involved management companies steering construction defect business to law firms in exchange for kickbacks.
One of the companies raided Wednesday by FBI agents and Las Vegas police was a business in an industrial area near the Palms owned by Leon Benzer, who is involved in a variety of businesses.
The company, Benzer’s, at 4246 Bertsos Drive, near Flamingo Road and Arville Street, was described by a woman who worked in a nearby business as a banquet hall that opened six months ago.
She said she’s "never seen a banquet there," however.
Records show Benzer is attempting to acquire a liquor license from the county and a license for a banquet facility.
He also operates a nonprofit autism foundation out of that location, state records show, though officials in the autism community had never heard of it.
Benzer owns another company, Silver Lining Construction, which also lists the Bertsos address and which has ties to the Rhodes Ranch development of Vistana — a development that recently won a $19 million settlement to repair construction defects.
Political consultant Steve Wark served as president on the Vistana Homeowners Association as the company fought Rhodes over faulty plumbing and other problems.
"Our problem, as a homeowners association, was that Rhodes would not repair the units … and would not address the problem," Wark said. "And so the association was out a tremendous amount of money addressing those problems."
Wark said he has known Benzer for about 10 years and disclosed their relationship before he ran for president of the association.
Before Wark came on the board, Benzer had come to the homeowners association offering that his company would front the cost of those repairs, Wark said.
In turn, the association would grant Benzer’s company the right of first refusal for the low bid when the association won a settlement, Wark said. In other words, Benzer would get the first shot at repairing the property.
The association and Benzer entered into the agreement and both parties honored it, Wark said.
"I was very conscientious when I was president to make sure that absolutely everything was above board," Wark said. "I know Leon as a good, hard businessman, (and) very, very generous. I thought that it was a heck of a risk-taking by taking an agreement with an HOA to take care of repairs knowing that the HOA couldn’t pay them for those repairs (right away)."
Benzer could not be reached for comment late Wednesday.
Wark, who left the board eight months ago, said he doesn’t know whether his association has become entangled in the investigation.
He said he hasn’t been in contact with anybody in law enforcement.
"My problem is that I have absolutely no idea what’s going on, and nobody’s talking to me," he said.
He said he met Benzer while campaigning for former governor Kenny Guinn and described him as "a good, solid individual."
"The reputation that he has with me is that when he sees an injustice, he gets very angry about it," Wark said.
According to a source in Benzer’s neighborhood in Anthem Country Club, a gated community with homes worth upward of $1 million, Benzer’s home was raided early Wednesday morning.
One of the other companies raided Wednesday was a large homeowners association management company, Platinum Community Services.
The company manages roughly 150 community associations around the valley, including high-end communities in Summerlin and high-rises on the Strip.
As plainclothes agents and detectives walked in and out of the business, in an office at 3360 W. Sahara Ave., near Valley View Boulevard, attorney Blaine Beckstead said the company had "nothing to hide."
"I don’t believe they’re looking into anything we’ve done," he said.
Beckstead said the search warrant requested records for two of the homeowners associations the company manages. Beckstead said the search warrant did not name the company or a company employee.
He would not reveal the names of the two associations or which neighborhoods they represent.
Review-Journal writers David Kihara, Molly Ball, Antonio Planas, Adrienne Packer, Hubble Smith, Annette Wells, John L. Smith, Jane Ann Morrison and Sean Whaley contributed to this report. Contact reporter Lawrence Mower at email@example.com or 702-383-0440.ON THE WEBView the slideshow RELATED STORY Construction company owner also heads autism foundation