Ninth Person Pleads Guilty in Scheme to Fraudulently Control Condominium Homeowners’ Associations in Las Vegas
|U.S. Department of Justice November 09, 2011|
WASHINGTON—A Las Vegas man pleaded guilty today for his role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area so that the HOAs would direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Special Agent in Charge Kevin Favreau of the FBI Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Special Agent in Charge Paul Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Daniel Solomon, 39, pleaded guilty before U.S. District Judge Lloyd D. George in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Solomon is the ninth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Solomon admitted that from approximately January 2006 through February 2009, he participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Solomon’s co-conspirators.
Solomon admitted that he acted as a straw purchaser at the Vistana condominium complex. Solomon’s co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments for the property and were the true owners of the property. According to plea documents, Solomon signed and submitted false and fraudulent loan applications and closing documents to a financial institution in order to finance and close on the property on behalf of his co-conspirators. Solomon represented that the unit would be “owner occupied” when in fact it was not. Solomon lived in another unit purchased by co-conspirators in furtherance of the conspiracy.
According to plea documents, Solomon’s co-conspirators managed and operated the payments associated with maintaining straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.
Solomon admitted that once he purchased the property at Vistana for his co-conspirators, he purported to become a member of the HOA community and ran for election to the Vistana HOA board of directors. Solomon admitted that he breached his statutory fiduciary duty to the homeowners by accepting from his co-conspirators compensation, gratuity and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions, resulting in a conflict of interest.
According to plea documents, once elected to the board of directors, co-conspirator board members would meet with other co-conspirators in order to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. Solomon either attended these meetings or took direction from co-conspirators who attended these meetings instructing him to vote in furtherance of the conspiracy. Solomon admitted that he used his position on the board to vote in a manner directed by and favorable to certain co-conspirators. Specifically, Solomon participated in the following votes, among others: on or about July 20, 2007, a vote to agree to settle a construction defect lawsuit for $19 million; on or about Sept. 7, 2007, a vote to award a construction defect remediation contract to the co-conspirator construction company; and on or about Nov. 16, 2007, a vote to pay $1.5 million to the co-conspirator construction company, which was followed by several other votes for payment to the same co-conspirator, related to construction defect remediation work.
Solomon’s sentencing is scheduled for Feb. 23, 2012. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison.
The case is being prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Nicole H. Sprinzen and Mary Ann McCarthy of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.