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September 17, 2014

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Las Vegas businessman pleads guilty in HOA fraud scheme

A Las Vegas man who pleaded guilty today for his role in a fraud scheme involving control of condominium homeowners’ associations could face up to 30 years in prison, authorities said.

Steven Wark, 54, a businessman and Republican consultant, pleaded guilty before U.S. District Judge Lloyd D. George in Nevada to one count of conspiracy to commit mail and wire fraud. The scheme involved gaining control of the HOAs in Las Vegas to funnel business to a law firm and construction company, officials said.

Wark admitted he joined a fraud scheme in May 2005 that had operated from as early as August 2003 through February 2009, according to his plea agreement.

To award construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Wark’s co-conspirators, they used straw purchasers to buy mortgage loans for units within HOA communities, according to the U.S. Justice Department.

Wark agreed to become a principal and managing partner of a business entity with the sole purpose of purchasing a condo unit at the Vistana Condominiums complex in Las Vegas under the business’ name — thereby gaining an ownership interest in the Vistana HOA community.

Federal officials said he admitted to not having any real interest in the business entity, considering that his co-conspirators provided the down payment and monthly payments, including HOA dues and mortgage payments, for the condo. He agreed to run for election to the Vistana HOA board, and once elected, he accepted from co-conspirators compensation, gratuities and other payments that improperly influenced, or appeared to influence, his decisions, officials said.

Wark’s co-conspirators allegedly managed and operated the payments associated with maintaining the straw properties by running a so-called “Bill Pay Program,” officials said. The program funded the properties through several limited liability companies, with many payments wired from California.

Wark admitted he voted in ways that were favorable to his co-conspirators after being elected to the Vistana HOA board, officials said. He also admitted to acting as the co-conspirators’ campaign consultant to ensure they were re-elected to the HOA boards.

The co-conspirators also rigged certain HOA board elections by preparing forged ballots for out-of-town homeowners, according to plea documents.

Wark admitted his co-conspirators gave him cash payments for his help to purchase the property, obtaining HOA membership status and using his position to manipulate the board’s business to benefit the co-conspirators at the expense of the HOA and real homeowners.

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 are prosecuting the case. The FBI, Metro Police and the Criminal Intelligence Section have been investigating it.

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  1. The best thing for all would be to pass state legislation making HOAs illegal and force the cities to accept their responsibilities. That would eliminate a huge source of opportunity for crooks and opportunists.

    HOAs are in effect a means for cities to get developers to do their job who then sell the HOAs to homeowners in exchange for little oversight and poor city planning.

    This arrangement puts the fate of the city in the hands of the developers who build what they want where they want with little to no zoning that protects neighborhoods. The cities have washed their hands of the whole thing, laying the responsibility and cost for road, utility and other infrastructure maintenance on the developer during buildout and turning their heads after it is transferred to homeowners via the HOA.

    Thats how we end up with cement plants, strip malls, warehouse operations and other commercial and light industrial operations next to residential neighborhoods. And pig farms down the street.

    Our city and county councilmen and planners have sold the citizens down the river in exchange for the power and money that comes from playing lackey to big developers.

    Proper zoning, city and county ordinances and enforcement make HOAs unnecessary. Instead, the cities and counties still get property taxes without doing their jobs and the homeowner gets stuck paying taxes plus HOA fees to overzealous HOAs who micromanage with an eye toward the power and revenues from their business partners, the management firms and collection agencies which now are more often than not all interconnected as separate profit centers in the same larger organization.

    A big scam perpetrated on the public and approved by state legislators drooling for political contributions and power.

  2. Well said, Dale. I couldn't agree more.