ANOTHER GUILTY PLEA IN HOMEOWNER’S ASSOCIATION CONDO CONTROL SCHEME

The following excerpt is from the Department of Justice website:

Tuesday, October 11, 2011
“Fifth Guilty Plea in Connection with Scheme to Fraudulently Control Condominium Homeowners' Associations
WASHINGTON – A Las Vegas woman pleaded guilty today for her role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) 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 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).
Angela Esparza, 24, pleaded guilty before U.S. District Judge Philip M. Pro in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Esparza is the fifth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.
Esparza admitted that from approximately July 2006 until February 2009, she 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 Esparza’s co-conspirators.
According to plea documents, to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities. In October 2006, Esparza agreed to act as a straw purchaser at Terrasini, an HOA community. In fact, Esparza’s co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for this property and were the true owners. Esparza admitted that she signed and submitted a false and fraudulent loan application and closing document to a financial institution to finance and close on this property on behalf of her co-conspirators. Esparza admitted that at the direction of co-conspirators, she used her position at a mortgage company to help process other co-conspirators’ loan applications.
Court documents indicate that the straw purchasers and those who acquired an interest in a unit agreed to run for election to the respective HOA boards. These co-conspirators were paid in cash, check or promised things of value for their participation, all of which resulted in a personal financial benefit to the co-conspirators. Esparza admitted that in November 2007, she ran for election to the Terrasini HOA board, although she was not elected.
Esparza admitted that she and her co-conspirators employed deceitful tactics in their attempts to win the board elections, including creating false phone surveys to gather information about homeowners’ voting intentions, using mailing lists to vote on behalf of out-of-town homeowners unlikely to participate in the elections, and submitting fake and forged ballots. Co-conspirators also hired private investigators to find “dirt” on the bona fide candidates in order to create smear campaigns. Esparza admitted that she created fake ballots and campaign flyers for co-conspirator candidates. Esparza also admitted that she assisted in mailing and tracking forged ballots for out-of-town homeowners.
According to plea documents, c o-conspirators also attempted to create the appearance that the elections were legitimate by hiring independent attorneys, or “special election masters,” to run the HOA board elections. However, these individuals were paid in cash, check and promised things of value, by or on behalf of Esparza’s co-conspirators for their assistance in rigging the elections. Esparza admitted that on several occasions, she was provided access to the special election master’s office to preview the election ballots, and that she also took several ballots that had been mailed by bona fide homeowners so that they were not counted during the election.
Court documents indicate that, once elected, the co-conspirator board members would meet with other co-conspirators to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA. The co-conspirators created and submitted fake bids for “competitors” to make the process appear to be legitimate while ensuring co-conspirators were awarded contracts.
Esparza admitted that, at the direction of her co-conspirators, she worked at two property management companies. Esparza and other co-conspirator property managers breached their fiduciary duties by receiving and accepting cash, checks or things of value for using their positions to gain inside information and recommend that the HOA board hire a co-conspirator for remediation and construction defect repairs and another co-conspirator for the construction defect litigation.
Esparza’s sentencing is scheduled for Jan. 23, 2011. 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.”