David Saks: LAS VEGAS MAN PLEADS GUILTY IN CONNECTION WITH FRAUD SCHEME TO GAIN CONTROL OF CONDOMINIUM HOMEOWNERS' ASSOCIATION

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LAS VEGAS MAN PLEADS GUILTY IN CONNECTION WITH FRAUD SCHEME TO GAIN CONTROL OF CONDOMINIUM HOMEOWNERS' ASSOCIATION

Las Vegas Man Pleads Guilty in Connection with Fraud Scheme to Gain Control of Condominium Homeowners’ Associations

U.S. Department of Justice September 06, 2011
  • Office of Public Affairs (202) 514-2007/TDD (202) 514-1888
 
WASHINGTON—A Las Vegas man pleaded guilty today for his role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) in the Las Vegas area so that the HOAs could 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’s Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.

Darryl Scott Nichols, 47, 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.

According to the plea agreement, Nichols admitted that, beginning in approximately November 2005, he joined a fraud scheme aimed at controlling various HOA boards of directors so that the HOA boards could award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Nichols’ co-conspirators. According to court documents, the fraud scheme operated from approximately August 2003 through February 2009.

According to court documents, in order to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities.

Nichols admitted that he became a straw purchaser and used his name and credit to purchase condominiums at the Chateau Versailles, Sunset Cliffs and Palmilla condominium complexes.

Nichols admitted that his co-conspirators provided the down payments and monthly payments, including HOA dues and mortgage payments, for the condominiums and were the true owners of the properties.

According to plea documents, Nichols’ 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.

Nichols admitted that he agreed to run for election to the HOA boards at the condominiums and became a board member at Chateau Versailles and Sunset Cliffs.

Once elected to the boards, Nichols breached his statutory fiduciary duty to the homeowners by accepting from his co-conspirators compensation, gratuities and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions—resulting in a conflict of interest. Nichols admitted that after being elected to the boards and accepting payments from his co-conspirators, he subsequently voted in a manner directed by and favorable to his co-conspirators.

According to court documents, to ensure Nichols and other straw purchasers would win HOA board elections, Nichols and his co-conspirators employed deceitful tactics such as creating fake labels and ballots, calling out-of-state homeowners in order to gather information about their voting intentions, and supplying mailing lists to co-conspirators to create forged ballots for non-voting homeowners. Nichols admitted that in approximately June 2008, at the request of his co-conspirators, he agreed to mail forged ballots from California to Las Vegas to make the forged votes for out-of-town homeowners appear legitimate.

Nichols admitted that he was given cash payments for his assistance in purchasing the properties, obtaining HOA membership status, rigging elections, and using his position to manipulate the HOA’s business to enrich the co-conspirators at the expense of the HOA and the legitimate homeowners.

The maximum prison sentence for conspiracy to commit mail fraud and wire fraud is 30 years. Sentencing is scheduled for Dec. 4, 2011.

The case is being prosecuted by Deputy Chief Charles La Bella, Assistant Chief Michael Bresnick 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 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.

Courtesy FBI



David Saks



Time&Temp Memphis

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Comment balloon 3 commentsDavid Saks • September 07 2011 05:42PM

Comments

The world we live in is a crazy place!  Thanks for posting/sharing for everyone to see....we all need to be aware of stuff like this.

Posted by Melissa Hailey, Collin County Realtor-Lucas, Murphy, Plano, Parker (North Texas Top Team, REALTORS (Plano, Murphy, Wylie)) almost 9 years ago

I have heard of some crazy frauds.  That one seems like a lot of work.  Glad they got nailed.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) almost 9 years ago

Thank you, Melissa and Gene, for your comments.

Posted by David Saks ((retired)) almost 9 years ago

This blog does not allow anonymous comments