Third Man Pleads Guilty to Fraud Scheme Involving Alexandria-Based AvalonBay Communities, Inc.

ALEXANDRIA, VA—Arthur T. Willden, age 45, of Longmont, Colo., pleaded guilty today to one count of conspiracy in connection with a scheme to defraud Alexandria-based AvalonBay Communities, Inc., an equity Real Estate Investment Trust primarily engaged in developing, acquiring and managing apartment communities within the United States. Willden also pleaded guilty to one count of obstruction of justice in connection with a federal court action in Alexandria in which AvalonBay Communities sued Willden for his role in the scheme.

Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, and Joseph Persichini, Jr., Assistant Director in Charge of the FBI Washington Field Office, made the announcement after the plea was accepted by United States District Judge Claude M. Hilton.

Sentencing has been set for May 29, 2009. Willden faces a maximum potential penalty for both offenses of 25 years’ incarceration and a fine of $500,000.

Arthur Willden, according to court papers, was an official assigned to the Fort Collins, Colo., office of Tetra Tech, a company that provided environmental inspection and cleanup services throughout the United States. Arthur Willden’s brother, James, was the Vice President for Engineering at AvalonBay’s corporate headquarters. From May 2004 until November 2006, the Willden brothers conspired with Michael Schroll, the owner of a California water conservation company, to bill AvalonBay for non-existent work ostensibly performed by Schroll’s company. After Schroll received payment, he kicked back most of the proceeds to James Willden in Virginia. To facilitate kickbacks to James Willden, Arthur Willden arranged for Schroll to bill Tetra Tech $2.4 million as a subcontractor on Avalon Bay/Tetra Tech mold removal projects, when Schroll’s company performed no services.

In return for his brother’s assistance in the scheme, court documents allege that James Willden delivered valuable antiques and collectible items worth at least $350,000 to Arthur Willden. During the discovery phase of the civil case, in which AvalonBay had sued both Tetra Tech and Arthur Willden for the money that had been wrongly paid to Schroll, Arthur Willden engaged in obstruction of justice by creating phony documents explaining why he received the valuable antiques from his brother and testifying to that effect in a deposition. Both Schroll and James Willden pleaded guilty in October and December 2008 respectively.

The investigation involving AvalonBay Communities, Tetra Tech, and Michael Schroll’s company, San Jose Water Conservation, was conducted by Special Agents of the FBI. The prosecution of the case is being handled by Assistant United States Attorney Stephen Learned.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pacer.login.uscourts.gov.