The king of all
Vegas real estate scams
Bloomberg Businessweek
By Felix Gillette
08 December 2011
Before the market crashed and home prices tumbled, before federal
investigators showed up and hauled away the community records, before
her property managers pled guilty for conspiring to rig neighborhood
elections, and before her real estate lawyer allegedly tried to commit
suicide by overdosing on drugs and setting fire to her home, Wanda
Murray thought that buying a condominium in Las Vegas was a pretty good
idea.
four old
ladies
At first glance, Murray doesn’t look much like the type of person who
would arrive in Las Vegas only to get tangled up in and eventually help
unravel a complex criminal conspiracy. At 65, she stares out at the
world through thick glasses. She is legally blind. Her eyes never quite
seem to focus on any one thing. On a recent Friday morning, she sits at
her dining room table wearing a zip-up leopard-print sweatshirt and
recounts how she helped to foil a group of lawyers and contractors
running amok in Sin City. “They didn’t think there would be four old
ladies who wouldn’t put up with their stuff,” says Murray. “They really
pissed me off.”
Before moving to Las Vegas, Murray and her husband ran a children’s
dance studio in the suburbs of Minneapolis. Every so often, they would
travel to Las Vegas on vacation. They loved the warm, dry weather. A
poolside condo, far away from the Minnesota winters and a short drive
from the Bellagio fountains, seemed like the perfect place to retire.
In 2002 they bought a two-bedroom condo for $105,250 in a new gated
community, the Vistana, on the southwest outskirts of the city. The
development’s architecture consisted of vaguely Spanish-style stuccoed
buildings with ruddy tiled roofs. All told, there were 732 units in the
subdivision, hundreds of imported palm trees, three swimming pools, and
one cloudless Nevada sky.
Condominium complexes such as the Vistana were springing up across the
city. Fueled by low interest rates and feverish demand, there were
32,964 closings on new condominiums and apartment conversions in Las
Vegas from 2002 to 2007, according to Restrepo Consulting Group. At the
same time, the building boom was creating a growing market for the
contractors who fixed the construction problems, such as leaky roofs or
faulty electrical outlets, that emerged at the hastily built
developments.
In Las Vegas these large-scale repair jobs often involved lawsuits.
There were a handful of lawyers in town who specialized in such suits,
which pitted the collective owners of a gated community—in the form of
nonprofit neighborhood corporations known as homeowner
associations—against their developers.
construction-defect lawsuits
As Las Vegas’s housing supply exploded, so did the competition among
lawyers and contractors to represent new homeowner associations in
so-called construction-defect lawsuits. It was in this environment,
according to plea agreements recently unsealed in an ongoing FBI
investigation, that a shadowy outfit cooked up a brazen scheme.
When a new development was nearing completion, the group would buy a
couple of units in the community and then transfer partial ownership of
the condos to individuals secretly on its payroll, according to court
documents. While pretending to be residents of the communities, these
“straw buyers” would run for leadership positions on boards of the new
homeowner associations. By paying off community managers, hiring
private investigators to find dirt on legitimate candidates, and
rigging elections, the documents allege, the straw buyers were able to
infiltrate boards at several new developments in Las Vegas from 2003 to
2008. Once in control of the boards, the straw buyers would then use
their governing positions to steer millions of dollars in construction
and legal fees back to their co-conspirators. Targets included the
Chateau Nouveau, Chateau Versailles, Park Avenue, Palmilla Townhomes,
Jasmine, Pebble Creek, Mission Ridge, Mission Pointe, Horizons at Seven
Hills, Sunset Cliffs, and the Vistana.
An FBI spokesperson says that for the time being the agency is not
commenting on the case. But already the investigation has provided a
window into yet another layer of corruption that took place amid the
national housing boom and its subsequent hangover—a period that saw a
surge in real estate malfeasance of every imaginable variety, including
false loan applications, predatory lending schemes, illegal property
flipping, equity skimming, and “air loans” (loans for property that
doesn’t exist). According to FBI data, the number of suspicious
activity reports related to real estate fraud filed by financial
institutions jumped to 67,190 in 2009 from 6,936 in 2003.
To this history, Las Vegas has managed to add another florid chapter.
So far, prosecutors have reached plea agreements with 10
co-conspirators. Many more are expected to appear in front of judges in
the coming months. Says Murray: “We’re all going to be sitting in the
front row, watching.”
Not long after moving into the Vistana in 2002, Murray got a letter in
the mail from Nancy Quon, a partner at the local law firm Quon Bruce
Christensen. Parts of the development hadn’t even been painted yet, and
already Quon was soliciting homeowners for a possible construction
defect suit.
Among her drab fellow attorneys, clerks, and paralegals, Quon stood
out. She had long dark hair, hazel eyes, and pale skin. She drove a red
Lexus convertible. During her 10-year marriage to an insurance
attorney, she had two daughters and worked as a legal secretary. After
a divorce in 1988 she went back to school and earned a law degree. One
of her best friends was a Las Vegas judge. At night they did Pilates
together.
For years, Quon co-hosted a TV show on Channel 2, Homeowner Talk, in
which she gave viewers advice about the city’s razzle-dazzle real
estate market. A wine connoisseur, Quon sometimes gave bottles she had
collected to charity.
low on perks and high
on potential hassles
After moving into the Vistana, Murray volunteered to fill a temporary
vacancy on the community’s fledgling homeowner association board. The
five-member board would be responsible for governing the day-to-day
operations of the development. At the time, she says, there wasn’t much
competition over the unpaid positions, which were low on perks and high
on potential hassles.
In those early days, according to three longtime residents,
construction problems at the Vistana were numerous but relatively
minor. Some of the units had leaky roofs and windows. There were civil
engineering issues involving the sidewalks. The internal fire and
security systems didn’t work. Insulation, soundproofing, and plumbing
needed fixing in some units.
In July 2003 the board members voted to retain the law firm Angius
& Terry—rather than Nancy Quon’s firm—to represent them in a
construction defect suit against their developer, Rhodes Homes.
According to Murray, Quon told the Vistana residents, “I’ll be back.”
Through her public-relations representative, Quon declined an interview
request.
In the summer of 2004, Angius & Terry initiated the suit against
Rhodes Homes. At the time, says Murray, the potential for a speedy
settlement seemed promising. Rhodes Homes has since declared
bankruptcy, and a representative for developer James Rhodes declined an
interview request.
Murray first sensed trouble the following October, when the Vistana
held its annual board election. The results were surprising. Two
newcomers, an ex-cop and a union foreman, won spots on the board. It
was odd, if only because nobody recalled seeing much of either man
around the neighborhood. Shortly after, the two appointed another
stranger to a vacant position.
In Nevada, state law requires that to serve on a homeowner association
board, an individual must own property in the development. On a hunch,
Murray and a group of her neighbors pulled some property records. As it
turned out, the newest appointee had recently purchased a mere 0.5
percent of a single condo at the Vistana. Digging around a little bit,
the Vistana residents claim they found records that the new board
members were employees of Silver Lining Construction.
amateur detective
agency
Murray wasn’t sure why somebody who didn’t actually live in a condo
community would want to serve on its unpaid board. It seemed
suspicious. In the weeks to come, Murray, along with three other
like-minded ladies at the Vistana, formed a kind of amateur detective
agency. They searched state property records. They dug deep into Google
search results. They even did the occasional stakeout. The more
they investigated, the more arrows they found pointing to Silver Lining
Construction.
The change at the Vistana came fast that winter. In January 2005 the
three new board members on the five-person board canceled a mediation
session with Rhodes Homes, fired their attorneys from Angius &
Terry, and replaced them with a firm called Spilotro & Kulla. John
Spilotro was well known in Vegas not only because of his success as a
criminal lawyer but also because of his famous uncle, Anthony “The Ant”
Spilotro. During the ’70s, Anthony Spilotro moved from Chicago to Vegas
allegedly to help run various mob-related businesses, including the
Stardust Resort & Casino. In the years to come he ran roughshod
over the city, forming a notorious burglary outfit called The Hole in
the Wall Gang and touching off a spasm of street violence that drew
national attention, and ultimately, a federal crackdown on organized
crime in Vegas.
In 1986 police found Anthony Spilotro’s body several feet under an
Indiana cornfield. They suspected he’d been buried alive. In the 1995
Martin Scorsese-directed movie Casino, Joe Pesci plays a character
based on Spilotro. A quarter-century later, the surname Spilotro still
gives some people in Vegas the heebie-jeebies. “When I heard that
name,” recalls Murray, “I went, ‘Oh, you’ve got to be kidding me.’ ”
(Spilotro did not respond to a request for comment. He has not been
accused of any wrongdoing.)
That January the new members of the Vistana board hired a property
management group, Platinum Community Services, run by Lisa Kim. Her
husband, Vistana residents would later discover, was Ben Kim, a member
of the Las Vegas Metropolitan Police Dept.’s fraud unit. On the side,
Ben Kim owned and operated the Courthouse Cafe, a cafeteria inside the
city’s regional justice center. He had two partners in the business,
lawyer David Amesbury and Leon Benzer, head of Silver Lining
Construction.
a
second recall election
Murray and her posse of neighborhood sleuths had seen enough. They went
to the Las Vegas police, who referred them to the Nevada Real Estate
Division, a governmental agency charged, in part, with investigating
real estate fraud. The Vistana residents filed a formal complaint and
in February 2005, hoping to reclaim control of their board, conducted a
recall election. When the votes were counted, their efforts had failed.
Suspecting the ballots had been tampered with, Murray organized a
second recall election in which the votes were tallied at the
neighborhood pool rather than at the association office. This time all
the board members connected to Silver Lining Construction lost.
Afterward, however, they refused to step down.
In response, the original members of the Vistana board helped to file a
civil suit aimed at removing the suspected interlopers. According to
Murray, when they showed up in court for the first hearing, they were
shocked to see a robust team of eight or so lawyers to defend the
“straw buyers.” She couldn’t believe so many billable hours were being
racked up to protect a handful of unpaid volunteer positions.
In the end, the jumbo team of lawyers triumphed, the homeowners lost
the suit, and the Silver Lining-connected board members carried on.
In the meantime, Spilotro & Kulla hired Nancy Quon, the
convertible-driving TV lawyer, to restart the Vistana’s construction
defect suit.
In March 2005, on the advice of Quon, the Vistana homeowner association
took out a $1 million loan to pay for some emergency repairs while they
waited for the lawsuit to move forward. The board hired Benzer of
Silver Lining Construction to make the repairs.
political operative named Steven
Wark
All across Nevada, people knew that if you needed to win a tricky
election you might want to call a political operative named Steven
Wark. In 1988 as a state campaign manager, Wark helped Pat Robertson
win Nevada’s Republican Presidential caucus. In 2004, according to his
interviews with several news organizations at the time, Wark raised
money to help get Ralph Nader on the ballot in Nevada as a way to
siphon off votes from Democratic hopeful John Kerry; George W. Bush
went on to narrowly win the state. Over the years, Wark had also served
as chairman of the Nevada Republican Party, hosted a fundraising event
for Rudolph Giuliani, and managed several successful campaigns for Mike
Montandon, the former mayor of North Las Vegas.
In spring 2005, having proven his value in Presidential and mayoral
campaigns, Wark focused on a smaller political battleground. He joined
the homeowner association board at the Vistana. Like the members of the
board who appointed Wark to the vacant position, he did not live in the
community but had recently purchased a 1 percent share of one Vistana
condo.
It didn’t take long to discover that Wark, too, had a connection to
Benzer. According to records from the Nevada Secretary of State, Wark
and Benzer co-owned a business called Allied Environmental Solutions.
Through his lawyer, Wark declined to comment.
By the time Wark arrived on the scene in 2005, the community meetings
were growing increasingly heated. As a result, Wark and his four fellow
allies on the board began arriving at meetings inside the cabana near
the front gates of the Vistana, which everybody called the clubhouse,
accompanied by entourages of burly men.
According to Murray, residents who asked the board too many pointed
questions risked getting hit with fines on trumped-up charges of
violating association rules. Residents recall that when confronted with
the intimidation tactics, Wark would habitually drop the names of his
powerful allies in Nevada politics. “They acted like they were
bulletproof,” says Vistana resident Bruce Wallace.
$11 million in legal
fees
In the fall of 2007 the Vistana board announced it had reached a $19.1
million settlement with Rhodes Homes. Of that—according to a recent
accounting by current Vistana board members—about $11 million in legal
fees and reimbursement expenses went to two firms: Spilotro & Kulla
and Quon Bruce Christensen. That left $8.1 million for repairs.
One night that September, Amesbury, a lawyer for Silver Lining
Construction, stood up at a meeting in the clubhouse. Amesbury, who
owned a small firm in Las Vegas, specialized in criminal law. He was
also a co-owner, along with Benzer and Kim, of the Courthouse Cafe.
That night, Amesbury told the Vistana residents that in 2005 the board
had signed a “right-of-first-refusal” contract with Silver Lining
Construction. The contract essentially guaranteed Benzer’s company 100
percent of the construction remediation money from the settlement.
Moving forward, he said, there would be no competitive bids with other
contractors. Amesbury did not respond to a request for an interview
sent to his attorney.
Over a roughly six-month period, from the fall of 2007 through the
spring of 2008, various teams of subcontractors working for Silver
Lining Construction came and went from the Vistana—painting buildings,
replacing windows, and patching roofs. By May 2008, all but $450,000 of
the $8.1 million was gone.
Shortly after, as the money ran out, the board members connected to
Silver Lining Construction stopped showing up at meetings. “They just
disappeared,” says current board member Wallace.
On Sept. 24, 2008, the day Murray had been anticipating finally
arrived. That morning, and in the days that followed, agents from the
FBI served search warrants and confiscated records at several
businesses, including the offices of Silver Lining Construction,
Platinum Community Services, and Quon Bruce Christensen.
Murray learned about the raids from a report on TV by Channel 8
investigative reporter George Knapp. “It blew me away,” she says. “I
was so relieved that it was finally happening.”
more surprises ahead
While the FBI didn’t go into much detail about the investigation, it
was clear from media reports that the scope extended far beyond the
Vistana. “We had no idea how far-reaching it was,” says Murray. There
were more surprises ahead.
On the morning of Oct. 28, 2010, Daniel Webb, a corrections officer
with the Las Vegas Metropolitan Police Dept., was awakened before dawn
by a phone call. It was his younger brother, William Ronald Webb (who
goes by “Ron”), calling from San Diego. He wanted to know if Daniel
could get up, drive across the city, and check in on Ron’s girlfriend,
a well-to-do attorney named Nancy Quon. Ron was worried something had
happened to her. She hadn’t been answering her phone all night.
Webb later testified to a grand jury that at first he was reluctant to
indulge his brother, who sounded drunk. There was a history of mental
illness in their family, and Ron had been acting paranoid recently,
particularly about the FBI’s investigation into his girlfriend’s law
firm.
Eventually, Webb gave in and drove over to Quon’s two-story house in a
tony gated community on the west side of town. He retrieved the spare
key from under a rock and let himself into the house. Among other
amenities it had a wine cellar, a fire pit, a swimming pool, and a
Jacuzzi. As soon as he stepped inside, he saw smoke. The house was on
fire. He ran outside and called 911.
With an ambulance on the way, Webb rushed back into the house to look
for Quon. A few minutes later, in the TV room off the kitchen, he
reached into a pile of blankets heaped on a puffy couch and felt a leg.
It was Quon. Her eyes were open, and her face was gray. He picked her
up, carried her out to the front yard, and began CPR. On the second
cycle, she started to cough.
The paramedics arrived shortly. They checked Quon and found she was
breathing shallowly, had pinpoint-size pupils, a strong pulse, and was
unresponsive. All were signs, one paramedic would later testify, of a
narcotic overdose. They treated her with a “narcotic antagonist” drug
called Narcan.
A few hours later, Daniel Webb went to the intensive care unit where
Quon was being treated. He later testified that Quon was thankful and
tried to explain to him what had happened. She allegedly told him that
she took some sleeping pills, climbed in the Jacuzzi, and drank a can
of Four Loko—a highly caffeinated, fruity malt beverage typically more
popular with rebellious teenagers than wine connoisseurs such as Quon.
Afterward, she told Webb, she felt dizzy. She went upstairs, lit some
candles, and drew a bath. It was all hazy, but at some point she must
have gone downstairs to lie down in the TV room, she allegedly told
Webb. Perhaps her bathrobe had accidentally knocked over a candle.
In August 2011, 10 months after the fire, a Clark County grand jury
indicted Quon on multiple felony charges, including first-degree arson
and insurance fraud.
According to prosecutors, Quon, 51, had taken some sleeping pills,
drank a Four Loko, and set her house on fire in an attempt to kill
herself. She wanted to take her life, they argued, to avoid the
embarrassment of being arrested in the FBI investigation. They further
argued that she was trying to do so in a way that would pay out a hefty
insurance policy to her two adult daughters, whom she supported
financially.
The prosecutor’s case included extensive testimony from Robert Justice,
a 45-year-old mechanic and occasional drinking buddy of Quon’s
boyfriend, Ron Webb. Justice told the grand jury that weeks before the
fire, Webb had tried to hire him to buy the couple a lethal amount of
the so-called date-rape drug GHB. According to Justice, Webb wanted the
GHB because he thought it wouldn’t turn up in an autopsy. Justice told
Webb there were better ways to kill yourself without arousing
suspicion. He suggested eating some sleeping pills and then downing a
couple cans of Four Loko. Ron Webb is currently in jail, facing
multiple charges including conspiracy to commit murder. He has pled not
guilty to all charges.
The police arrested Quon in Henderson, Nev., on the afternoon of Aug.
17. At the time of her arrest, she was carrying her passport and $7,000
in cash.
In subsequent court filings, her lawyers have denied that Quon set the
fire and have rejected the prosecutor’s assertion that she wanted to
kill herself for insurance money and to escape arrest. Her attorney,
Thomas Pitaro, has told reporters the prosecutor’s case is based on an
“Alice in Wonderland” theory.
Quon is free on $50,000 bail.
These days, life is much quieter at the Vistana clubhouse. Amid the
seasonal decorations, there are signs the residents are happily moving
on from their ordeal, even as they savor the prospect of watching their
former attorneys, property managers, and board members shuffle off to
jail.
On one side of the clubhouse, a poster marked “Before and After” leans
against the wall. The “before” section features photos of the Vistana
during the years when the straw buyers were managing the community. The
images show untrimmed palm trees, broken barbecue grills, cracked pool
decks, patches of dead grass, dented carports, and a busted front gate.
The “after” photos show the gradual, physical recovery of the Vistana
in the time since homeowners who actually live in the community
regained control of the board.
On bulletin boards a few feet away, dozens of newspaper clippings from
the Las Vegas Sun and Las Vegas Review-Journal chronicle the expanding
number of individuals who have pled guilty in the FBI investigation.
The display is labeled “Wall of Shame.”
The condominium schadenfreude hit a new high on Aug. 30 when Wark, the
former chairman of the Nevada Republican Party, appeared before a
federal judge and pled guilty to one count of conspiracy to commit mail
and wire fraud. The maximum sentence is 30 years in prison. He is
awaiting sentencing.
helping rig elections
In court documents filed as part of the plea agreement, Wark admits to
helping rig elections at the Vistana. Like most condominium complexes
built in Las Vegas during the boom, the Vistana had a high percentage
of owners who were investors living out of state. According to the
court documents, Wark and his crew won the elections, in part, by
targeting out-of-state owners unlikely to participate in board
elections. They would fill out a ballot on the owner’s behalf without
the individual’s knowledge, transport the documents to the owner’s home
state, then mail the ballot back to Nevada. The ballots would arrive
bearing the correct postmarks, lending the votes credibility.
The fake absentee ballots were used to tilt the campaigns in favor of
the straw buyers. When homeowners became suspicious, the court
documents reveal, the conspirators would bring in supposedly
independent “special election masters” to preside over the vote
counting. According to several plea agreements, the election overseers
were paid off, too.
Over the past three months, nine more guilty pleas have followed. So
far, the ranks of the admitted conspirators have included Deborah
Genato of Platinum Community Services, which worked as property manager
for the Vistana; Daniel Solomon, a straw purchaser who served on the
Vistana board; and Amesbury, Kim and Benzer’s former partner in the
Courthouse Cafe. Neither Ben nor Lisa Kim have been charged with a
crime.
On the morning of Nov. 16, a few weeks after reaching a plea agreement
with prosecutors, Amesbury was found on the streets of a Las Vegas
suburb severely beaten with multiple injuries, including two broken
kneecaps. According to a story by Jeff German in the Las Vegas
Review-Journal, police have so far found no evidence linking the
beating to the FBI investigation.
On a recent Thursday evening at the clubhouse, the Vistana board
members met with their lawyer, Richard Haskin, to discuss the the
community’s civil suit alleging that the straw buyers, in cahoots with
Benzer, vastly overpaid for Silver Lining’s services. Haskin is working
on an amended civil RICO (Racketeer Influenced and Corrupt
Organizations Act) complaint that will add Quon as a defendant and seek
upwards of $8 million in damages. “I was privy to the repairs,” says
Vistana resident Tony Kneip, himself a retired general contractor.
“They were outrageously high.”
Lawyers for Silver Lining Construction continue to allege the homeowner
association owes Benzer’s company $750,000. “It’s a classic
breach-of-contract, failure-to-pay case,” says Benzer’s attorney, Sigal
Chattah.
Whether the Vistana can retrieve any money remains to be seen. The
criminal fire investigation revealed that although her law firm has
shut down, Quon still possesses significant assets. (No one else at
Quon Bruce Christensen has been indicted.) During a court hearing in
August, prosecutors told the judge that in 2009, Quon made transfers of
$2.7 million and $2.9 million into an offshore bank account. Last year
she bought her daughter an apartment in New York City, paying $750,000
in cash.
“The bottom line for the homeowners is we’d like to see a lot of pain
and suffering on their end,” says board member Larry Fitch.
In the meantime, thousands of people who bought condos during the boom
are still coping with their own financial hardship. Two-bedroom,
two-bath condos at the Vistana were going for $200,000 in 2007. In
November a 929-square-foot two-bedroom, two-bath unit sold for $59,000.
Murray and her husband moved out of the Vistana in 2008 and now live in
a nearby development. “I couldn’t take the pressure anymore,” says
Murray. “Everything we did, they came after us. I’d had enough.”
dream home slip into
foreclosure
Eventually, she and her husband let their dream home slip into
foreclosure. “The reputation was out there, and nobody wanted to live
there,” says Murray. “So we let it go. … I took a big hit.”
These days, Murray stays as far away from homeowner associations as
possible. She is, however, looking forward to seeing where the FBI’s
investigation ultimately leads. Many mysteries remain.
To this day, Murray has never laid eyes on Leon Benzer. No matter how
many times they typed his name into Google or drew up elaborate maps
linking him to members of their homeowner association, the residents of
Vistana never seemed to get a glance of Benzer in person. He always
kept his distance. (Through his lawyer, Benzer declined an interview
request.)
Benzer’s primary business, Silver Lining Construction, has likewise
kept a low profile. In 1998 a rare article about the company in the
Review-Journal reported that Silver Lining Construction had been hired
to renovate the Pioneer Club, a historic building in downtown Las Vegas
that had served as everything from a restaurant to a casino to a
brothel. Benzer’s job was to turn the space into a gift shop. “A lot of
contractors are afraid of this kind of work because of the hidden
nightmares you can run into,” he told the paper. “We like the
challenges. We spent six months in preplanning, and our philosophy has
always been Murphy’s Law—anything that possibly could go wrong will.”
Over the years a lot seemed to go right for Benzer. He formed a charity
called the Benzer Autism Foundation; a music production company,
Benzermusic.com; an investment group, Silver Lining Investment; and a
boutique liquor brand, Benzila Tequila, that was reportedly made from
agave plants that grew on Benzer’s ranch in Mexico.
Although he has not been charged with any crime, Benzer’s businesses
are now all shuttered. “Basically, between the economy and the federal
investigation, there’s not much left,” says Chattah, his attorney.
Benzer, who is in his mid-40s, continues to live in Las Vegas, she
says, and has a source of income. When asked about the rumor that
Benzer now works as a local cab driver, Chattah responds, “He might be.”
In 2008, before the FBI raided his offices, Benzer created a channel on
YouTube where he posted clips of celebrities giving red carpet
shout-outs to Benzila Tequila and his foundation. You can still watch
the likes of Tom Jones, Anthony Michael Hall, and Patrick Swayze
tossing out paeans of support for Benzer and his charity work. “It’s
God’s plan,” says ESPN’s Stephen A. Smith in one video. “If you want to
make it to heaven one day, this is a good way to start.”
Gillette is a staff writer for Bloomberg Businessweek in New York.
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