State and Local Reporter - 10/02/2008 (Plain Text Version)

Bob Frost, Chair
Blue Springs, Missouri

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In this issue:
Vegas Case Exposes Alleged Corruption Among Local Homeowner Associations
SLGA Conference 'Early Bird' Registration Deadline Is Oct. 3
NAHB State & Local Issues Fund Continues to Help Builders
9th Circuit Court of Appeals Upholds Arizona’s Immigration Statute
Fire Official Surge Sweeps Sprinkler Mandate to Victory
County Leaders Express Support for Housing Industry
Philadelphia Foreclosure Program an Example for Cities
NACo Releases Results of Foreclosure Survey
Studies Find New Homes Are Tiny Piece of Carbon Footprint Solution
New Study Shows Growth in State Lobbying
2008 Election Summary

Vegas Case Exposes Alleged Corruption Among Local Homeowner Associations

A team of FBI agents and detectives with the Las Vegas Metropolitan Police Department have joined forces to investigate alleged corruption among local homeowner associations, involving a web of board members, management companies, lawyers, contractors and others, who have allegedly siphoned away millions of dollars from home owners and developers in construction defect litigation cases.

Specifically, the FBI is investigating whether individuals were placed on homeowner association boards and, in turn, directed business stemming from construction defect lawsuits to select companies.

Forty-three people are listed on the warrant requesting "any and all documentation correspondence and notes" about them.

“Recent reports that the Las Vegas Metropolitan Police Department and the FBI are investigating alleged fraud and corruption in construction defect litigation cases confirm what many of us in the homebuilding and construction industry have been saying for years — that this is an area ripe for potential abuse, with homeowners often being hurt” said Irene Porter, executive director of Southern Nevada Home Builders Association.

Investigators raided nine sites recently, including the community management company for the Vistana condominium complex and six other condo complexes; the office of Leon Benzer, owner of Silver Lining Construction; and at least two law offices of attorneys who do construction defect litigation cases.

A review of court documents indicates that some of the developments have the same board members, with links between the neighborhoods and Benzer companies and associates. Authorities are investigating whether people were placed on the boards to direct business from construction defect lawsuits to certain companies.

“We applaud the efforts of law enforcement officials investigating these complex, often highly technical cases. The home building industry stands ready to provide whatever assistance may be required. We are confident that the professionals of Metro and the FBI will bring this investigation to a just conclusion,” Porter said.

Leon Benzer, a focus of the investigation, has been the owner of Silver Lining Construction since 1992. The company specializes in remediation work and claims involvement in 300 local building projects, including Vistana Condo development.

Owners who initiated a massive construction defect lawsuit paid Benzer’s company more than a million dollars to fix some of the defects.

Public records show that Benzer's manager, Mark Kulla, is also the attorney who set up Benzer's many businesses. Vistana home owners alleged in the past that the board purposely steered their lawsuit to Kulla and the remediation work to Benzer, and that both profited from the arrangement.

The FBI wants to know if the Vistana set up was mirrored in other homeowner associations and resulted in large lawsuit settlements.

The president of the Vistana homeowners association was Steve Wark, a well-known Republican political strategist and frequent TV talk show guest. The vice president of the Vistana association is reportedly a full-time employee of Benzer's.

For more information, e-mail Elizabeth Ambrose, or call her at 800-368-5242 x8253.