Leon Benzer Indicted by a Federal Grand Jury of Tax Evasion By Alleging He Was Evading Federal Income and Employment Taxes

May 15, 2013

The Federal Bureau of Investigation (FBI) on May 14, 2013 released the following:

“Former Construction Company Owner Indicted in Nevada for Income Tax Evasion

WASHINGTON—A federal grand jury in Nevada today returned an indictment against a former construction company owner for evading federal income and employment taxes, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber, FBI Acting Special Agent in Charge William C. Woerner of the Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.

Leon Benzer, 46, of Las Vegas, was charged in U.S. District Court in the District of Nevada with two counts of tax evasion.

In January 2013, Benzer was indicted in a related case on charges of wire fraud and conspiracy to commit wire and mail fraud. According to court documents, from approximately August 2003 through February 2009, Benzer orchestrated a scheme to direct construction defect litigation and repairs at condominium complexes to a conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC). As a result of this scheme, the indictment alleges that SLC was awarded a contract worth over $7 million for work at the Vistana Homeowner’s Association (Vistana HOA) in Las Vegas. The case is pending.

According to the indictment returned today, in August 2006, Benzer filed five years’ worth of personal tax forms and business tax returns without any payments accompanying those returns. As of April 2007, Benzer had allegedly failed to pay his personal tax liability of approximately $459,000 and SLC’s employment tax liability of approximately $687,000 and unemployment tax liability of approximately $18,000. In May 2007, the IRS issued a notice of intent to file a levy; Benzer subsequently appealed this process and indicated that he wanted to enter into an “offer-in-compromise” with the IRS to pay a portion of what was owed in full satisfaction of all his tax liabilities. According to the indictment, during this offer-in-compromise process, the IRS requested detailed financial information from Benzer.

Between March 2005 and January 2008, the indictment alleges that Benzer and SLC received over $7 million from the Vistana HOA contract, including a wire transfer of over $1 million on September 21, 2007, to a personal U.S. Bank account that Benzer opened in August 2007. The indictment alleges that when Benzer filed certain IRS forms related to the offer-in-compromise process on September 25, 2007, he failed to disclose this personal U.S. Bank account or the assets contained in it.

The maximum prison sentence for each count of tax evasion is five years in prison and a maximum fine of $100,000.

The charges and allegations against the indicted defendant are merely accusations, and the defendant is considered innocent unless and until proven guilty.

The case is being prosecuted by Senior Deputy Chief Kathleen McGovern, Deputy Chief Charles La Bella, and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section. The case is being investigated by IRS-CI, the FBI, and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions; and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit http://www.stopfraud.gov.”

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


HOA fraud cases may be merged

September 5, 2011

Las Vegas Review-Journal on September 4, 2011 released the following:

“By Jeff German
LAS VEGAS REVIEW-JOURNAL

Federal prosecutors are moving to consolidate all of the cases under one judge in the massive investigation into fraud and corruption at homeowners associations.

Senior U.S. District Judge Lloyd George is considering handling as many as two dozen plea deals prosecutors intend to file over the next six weeks in what may be the most far-reaching criminal fraud case ever in Nevada.

All of the targets striking deals are expected to testify in a push by prosecutors to obtain indictments against higher-level players. Prosecutors have identified as many as 100 co-conspirators at various levels of the scheme, including lawyers, judges and former police officers.

“This case sounds huge,” said Douglas McNabb, a seasoned Washington, D.C., defense lawyer who has battled the Justice Department in court over the years. “We’re talking about some 24 people who have already flipped and are cooperating against many more defendants. It’s clear the government has started at the bottom and is working its way up.”

Records show that the Justice Department’s Fraud Section in Washington has brought in four trial attorneys to prosecute the criminal cases. A motion by prosecutors to consolidate the cases has been filed under seal in federal court.

The lead prosecutor is Charles La Bella, a Fraud Section deputy chief who oversees investigations on the West Coast. La Bella, based in San Diego, attracted national attention following the 1996 presidential race when then-Attorney General Janet Reno appointed him to head a task force to investigate possible Democratic fundraising abuses during the campaign.

Christopher Blakesley, a University of Nevada, Las Vegas law professor who specializes in criminal law, said the homeowners association investigation is as “massive and far-reaching” as any case he has seen here.

“The complexity sort of lends itself to wanting it before one judge,” he said.

A former federal prosecutor agreed, saying, “The large number of voluntary guilty pleas suggests a criminal case that is unprecedented in size and scope in Nevada. From the prosecutors’ perspective, the judge will understand the history of the case instead of having to explain it to a half-dozen different judges.”

Last week, longtime Republican strategist Steve Wark became the first target to plead guilty in the scheme. George accepted his guilty plea to one count of conspiring to commit mail and wire fraud, and set a Dec. 16 sentencing.

At the hearing, La Bella said Wark’s case was one of four prosecutors had filed under seal. Four more cases were expected to be filed in the coming days, with as many as 15 more by mid-October, he said.

George promised a quick decision on whether he would hear all of the cases. He hinted that he would take on the assignment, saying his senior status gives him more time to deal with the cases than his full-time colleagues who have busy court calendars.

Wark, 54, who is cooperating with prosecutors, admitted to participating in a sweeping conspiracy to stack homeowners association boards with members who then pushed for construction defect lawsuits against builders.

Legal work and multimillion-dollar repair contracts were funneled to lawyers and companies associated with the scheme at the expense of the home­owners, who were deprived of honest voting on their boards.

The board members friendly to the co-conspirators were “straw purchasers” in the various developments and elected by the co-conspirators through classic dirty campaigning that included conducting phony polling, hiring private investigators to dig up dirt on candidates and rigging the balloting, according to federal court documents unsealed last week.

“This process created the appearance of legitimacy, since bona fide home­owners believed the elected board members … were, as fiduciaries, acting in their best interest rather than to advance the financial interests of the co-conspirators,” the documents alleged.

“In fact, defendant Wark and others were paid by or on behalf of their co-conspirators … for their assistance in purchasing the properties, obtaining HOA membership status, rigging elections and manipulating their votes to further the goals of the conspiracy and to enrich the co-conspirators at the expense of the HOA and bona fide homeowners.”

One association dragged into the investigation, Vistana, alleges in civil court papers that it overpaid the company that did construction repairs and has suffered more than $3 million in damages.

The company, Silver Lining Construction, was one of the businesses the FBI raided in 2008, when it went public with the investigation.

Search warrants also were executed at law firms, homeowners association offices and other businesses across the valley. Since then, nearly a dozen associations have become embroiled in the investigation.

Anti-homeowners association activists were elated last week after hearing the news of Wark’s guilty plea.

“I was hoping I would live long enough to see this day,” said Jonathan Friedrich, a 65-year-old former general contractor who has been fighting to expose corruption at homeowners associations across the Las Vegas Valley since 2007. “I’m delighted that the light is finally shining on the cockroaches that have been bleeding homeowners.”

Added Bob Robey, 72, who also has been fighting homeowners associations the past several years: “It’s about time. I hope they continue their investigations, and I hope they uncover more.”

Rana Goodman, 70, another activist, said she hopes the long-running FBI investigation will start to bring “some justice” to the homeowners.

“It’s taken way too long, but we’re thrilled,” Goodman said. “We’d like to see the stranglehold that some of these attorneys have on a large group of associations broken. There’s finally light at the end of the tunnel — maybe.”

But defense lawyer Thomas Pitaro, who represents construction defects attorney Nancy Quon, one of the key targets in the homeowners investigation, thinks the criminal case has veered off course.

“If this is such a big investigation, I hope they investigate the developers who ravaged this community with their shoddy construction of residential homes,” Pitaro said. “They should be looking at the primary cause of the problem, and that is the substandard housing developments.”

Blakesley said he is not surprised that it has taken three years for the federal investigation to result in criminal charges.

He said it likely took investigators a lot of time to gather and sort out the evidence.

“It has so many sidebars,” Blakesley said. “It looks like there are all sorts of avenues to travel to establish the case.”

He said George, namesake of the federal courthouse, is perfectly suited to handle the consolidated cases.

“He’s almost like the father of the federal system here,” Blakesley said. “He’s respected. He’s appreciated. He’s smart. On top of that, his experience gives him a lot of credibility in whatever he decides.”

What makes this investigation even more intriguing is that, despite the magnitude and deep impact it is having on the community, the Las Vegas U.S. attorney’s office will play no role in it.

When U.S. attorney Dan Bogden returned to take the reins of the office in October 2009, he removed himself from making any administrative decisions in the case because of a potential conflict of interest. He owns a condominium at one of the developments under investigation, Park Avenue.

In October, the U.S. attorney’s office asked to be removed entirely from the case to avoid the appearance of a conflict, a Justice Department spokeswoman said last week.

The Fraud Section took over the case in November. Late last year, the Justice Department’s Public Integrity Section in Washington also began investigating whether the U.S. attorney’s office was leaking information about the homeowners investigation. Allegations had surfaced that Quon was getting information from the office.

The Justice Department steadfastly refused to comment on that investigation until last week after Wark pleaded guilty. A spokeswoman said the department had “completed its review and determined no further action is necessary.”

Quon’s saga has turned into one of the more bizarre twists in the homeowners association investigation. Her law office was searched in the 2008 FBI raids.

She denies it, but Las Vegas police believe she has tried to kill herself to escape the pressure of the federal investigation.

Her boyfriend, former Las Vegas police officer William Ronald Webb, was charged in November in a scheme to arrange her death using what the couple thought were undetectable illegal drugs.

Then on Aug. 17, both Quon, 51, and Webb, 43, were indicted in what prosecutors say was a botched suicide attempt that involved setting fire to her Rhodes Ranch home.

Both Quon and Webb pleaded not guilty in District Court in the alleged scheme last week. The lead investigators in the federal case were on hand for their arraignments.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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