FBI searches attorney's office as political corruption probe continues - Las Vegas Sun: "The latest search warrant served in the Las Vegas Valley in the ongoing investigation of possible political corruption was at a local attorney's office.
FBI agents went to attorney Nancy Quon, whose Web site says she represents homeowners associations, and seized more records, said KLAS-TV Channel 8 today.
A law enforcement task force first served search warrants at homes, offices and clubs all across the Las Vegas Valley Wednesday as part of what might become a political corruption investigation."
--------------
This is an intriguing situation. The articles I have seen so far tell me that the press doesn't have the whole story yet. They say, "Lawmen believe [contractor Leon] Benzer and other persons conspired to take over the boards, hire Benzer to do repair work and funnel lucrative lawsuit cases to certain law firms." (I haven't seen police referred to as "lawmen" since the last John Wayne rerun I watched--lots of "lawmen" seem to be women these days.) The press seems to think that there is some sort of collusion among professionals, run by a contractor and enabled by rigged elections. Perhaps the argument is going to be that this contractor stage-manages elections and puts in BOD members who follow his orders and hire a certain law firm which in turn hires a particular set of experts who in turn present a case that generates a pot of money, the repairs are overseen by a certain property manager, and everybody profits.
But there are plenty of questions unanswered.
1. Such as, what exactly is the suspected crime that led to such a drastic step as searching an attorney's offices? Believe me, that is a big deal, because of attorney-client privilege. Obviously, I get why owners would be angry at having their associations taken over, but usually such things are civil matters. What made this one into a criminal investigation?
2. How can you have "outsiders" on an HOA or condo association BOD? Don't you have to be a member to serve as an officer?
3. If the vote total goes way up from one election to another, is that because of ballot box stuffing and/or ineligible voters, which obviously would be bad, or is it because somebody solicited votes from absentee owners? If the latter, why is that illegal? I get that the resident owners don't like it, but if absentee owners are members, don't they get to vote if they want to? If somebody helps them vote, so what? In political science we call that GOTV...Get Out the Vote. (It's the Chicago Way. We even have dead people voting here.) Don't these associations have some way of determining that each ballot they count is from an actual owner?
4. And why is it criminal if one law firm represents lots of HOAs, and in every case that has the same kinds of damages, they hire the same contractor, estimator, soils engineer, and so forth? And if one contractor or property manager habitually refers cases to the same attorneys, is that illegal? Referrals are how law firms get construction defect cases.
5. And what is the relationship, if any, of all this to actual political corruption? Not clear from the articles.
6. Fred Pilot asks if this would be happening but for the unfolding real estate and mortgage meltdown. Good question, and I don't know. It would depend on how serious this really is. Is there some larger dimension to this investigation that the press doesn't know about?
I assume law enforcement has at least tentative answers to these questions or they wouldn't be executing search warrants. But so far, this is a puzzling situation that leaves me curious.
2 comments:
There was a similar investigation more than a decade ago involving NY City co-ops and condos.
This NY Times item may possibly shed some light on why the Las Vegas investigation is being treated as a criminal matter:
July 10, 1994
YOUR HOME; Corrupt Co-op Agents
By ANDREE BROOKS
BOARDS of co-ops and condominiums in New York City are coming under pressure to explore ways to gain compensation -- or reimbursement -- for the thousands of extra dollars they may have paid out because of corrupt managing agents.
Pressure is mounting because certain filing deadlines may have to be met. Further, shareholders are likely to sue board members if prudent and timely action is not taken.
"Some of our boards have already received letters from certain shareholders suspicious that they knew these things were going on all along," said Dennis H. Greenstein, a partner in Haas, Greenstein, Cohen, Gerstein & Starr, which represents some 155 boards.
The flurry of activity results from the bribery charges outlined in recent months by the Manhattan District Attorney's office. According to the charges, more than 80 managers routinely extorted millions of dollars annually from painters, plumbers and other contractors for the right to work in the managers' buildings. Some deny the charges. Others have pleaded guilty.
http://query.nytimes.com/gst/fullpage.html?res=9405E4D9163FF933A25754C0A962958260&sec=&spon=&pagewanted=all
How is this any different than what is happening throughout Texas and other states with CAI management companies? Consider, for example, Associa which is owned by a Texas state senator (John Carona).
The management company (owned/controlled by the senator) "contracts" with the HOA Board.
Once in the door, the management company changes the HOA insurance policies. Now premium payments are made to Association Policyholders - owned by Sen. Carona.
The management agreement requires that the management company collect 10% of any policy payout.
The management company switches the HOA bank accounts to First Associations Bank - owned by Sen Carona.
The management company instructs the Board on "resale certificates". Suddenly homeowners have to purchase resale certificates from "Community Archives" prior to selling their homes. Community Archives is owned by Sen Carona.
The management company will recommend purchasing a web page at a hefty monthly fee. The website is a worthless template that the management company uses for all of its HOAs. The HOA pays Community Association Websites for this worthless service. Senator Carona owns Community Association Websites.
The management company will convince the board to adopt a "resolution" requiring the homeowner to pay for a "Certificate of Compliance" before they can put their SFH home for sale (under threat of fine and foreclosure of course). The payment is also made to a Carona-owned entity.
The management company will convince the Board to adopt a resolution for re-characterizing assessments paid by the homeowners in such a fashion that any money paid in is applied amounts the management company claims are owed the management company, attorney fees, etc. before being applied to assessments. In this fashion, additional money is extorted from homeowners under threat of foreclosure on their property.
The management agreements will be autorenewing. In addition, bylaws or resolutions may be adopted to ensure that the management company cannot be changed without a unanimous vote of the Board. By this mechanism, Sen Carona ensures that the homeowners are trapped with the management company, insurance, web hosting, resale certificate racket, certificate of compliance racket virtually into perpetuity. The management company counts the votes for Board members at elections, of course.
Generally, there is a SOP of moving in and converting all vendor contracts for either the benefit of self-dealing board members or management companies. This is not new and it has been happening for a long time to the great detriment of the homeowners.
Post a Comment