PropertyProf Blog

Editor: Stephen Clowney
Univ. of Arkansas, Fayetteville

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Wednesday, January 18, 2012

The Sneakiest Scam of the Real Estate Age?

I spent the long weekend in Las Vegas and came across this truly outstanding tale of deceit.  It's a story of woe that involves all of my favorite things: homeowners associations, private investigators, and Four Loko:

As Las Vegas’s housing supply exploded, so did the competition among lawyers and contractors to represent new homeowner associations in so-called construction-defect lawsuits. It was in this environment, according to plea agreements recently unsealed in an ongoing FBI investigation, that a shadowy outfit cooked up a brazen scheme.

When a new development was nearing completion, the group would buy a couple of units in the community and then transfer partial ownership of the condos to individuals secretly on its payroll, according to court documents. While pretending to be residents of the communities, these “straw buyers” would run for leadership positions on boards of the new homeowner associations. By paying off community managers, hiring private investigators to find dirt on legitimate candidates, and rigging elections, the documents allege, the straw buyers were able to infiltrate boards at several new developments in Las Vegas from 2003 to 2008. Once in control of the boards, the straw buyers would then use their governing positions to steer millions of dollars in construction and legal fees back to their co-conspirators.

Steve Clowney

http://lawprofessors.typepad.com/property/2012/01/the-sneakiest-scam-of-the-real-estate-age.html

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