HUD charges area landlord in alleged kickback scheme

Art Nadler

Thursday, April 16, 1998 | 9:54 a.m.

A landlord of Section 8 housing in Southern Nevada has been charged with allegedly taking millions of dollars in kickbacks from property managers and contractors, Secretary of Housing and Urban Development Andrew Cuomo said Wednesday.

Bruce Rozet, one of HUD's largest property holders, is being investigated for allegedly requiring managers at 90 properties in 25 states to pay him kickbacks. He also is charged with inflating property insurance premiums and demanding kickback payments from contractors who did repairs on apartments.

Rozet, who owns Associated Financial Corp. in Los Angeles, was involved with three properties in Southern Nevada. They are: Sierra Nevada Arms, 1971 Carrara Drive; Spencer Street Manor Apartments, 1711 Rawhide St.; and the Thunderbird Apartments, 2816 Kim Lane in North Las Vegas.

"There was a project (the Sierra Nevada Arms) we were driving by that looked horrendous," Cuomo said of his visit to Las Vegas in August 1994. "I got out and walked to the middle of a project that was suppose to be a playground. There was this stench that was overpowering. I was trying to identify the source, and then I saw a broken sewer pipeline in one part of the playground."

The 352 units at Sierra Nevada Arms are currently being moved and new townhouses and condominiums are under construction. The Shepherd Hills Development Corp. was given $448,000 to remove the dilapidated buildings.

"This is a real win-win for us," Sharon Segerblom, director of Neighborhood Services for the city of Las Vegas, said. "You take a gang-invested slum and revitalize it. Cuomo's appearance (in Nevada) and Mayor (Jan Laverty) Jones willingness to work with local groups is a perfect partnership between the federal government, local government and the city."

Charges were filed against Rozet on 17 of his properties in Nevada and California in May. The landlord has been accused of allegedly getting $5 million in kickbacks.

"There's not a shred of evidence to support any of the charges they have made," Rozet said. "We are doing ... an exemplary job in overseeing the housing projects that we are involved with.

"We have not been involved in any kickback schemes whatsoever, and they have no evidence to support such charges."

Cuomo said this is the largest case ever brought by HUD in terms of the number of properties, states and units. There are more than 12,000 apartments involved, he said, covering a period from 1990-97.

HUD is seeking repayment of a minimum of $7.5 million from Rozet. Damages and penalties could soar to $20 million.

Insignia Financial Group of Greenville, S.C., that worked for Rozet has returned $7.4 million to the federal government.

"Now we will hopefully get rid of a landlord that we don't want to deal with," Clark County Commission Chairwoman Yvonne Atkinson Gates said. "We are submitting to the federal government to be upgraded to an enterprise zone (where Sierra Nevada Arms is located)."

Southern Nevada currently receives $3 million in federal funding to develop businesses as an enterprise community, Gates said. This area encompasses parts of Las Vegas, North Las Vegas and a small section of unincorporated Clark County.

If approved as an enterprise zone, Nevada would receive from $125 to $300 million, Gates said.

Because this is a civil case, HUD officials said Rozet wouldn't necessarily lose his properties but he would be fined.

They stressed that HUD was upgrading its computer system to keep better track of landlords who are abusing the system.

In all future property management situations, officials said HUD would try to take over apartments that are being mismanaged.

"We disbarred over 100 landlords last year," Deputy General Counsel Howard Glaser said.

HUD officials said investigations are ongoing, and indicated that more landlords may be involved.

"We are going to make sure that the taxpayer gets a fair deal, and tenants live in adequate housing that we pay for," Cuomo said of HUD's new objective. "There will be zero tolerance for waste, fraud and abuse."

SUN Reporter Denise Cardinal and the Associated Press contributed to this article.