United States v. Edgar Lugo

Closed Criminal Division Cases

United States v. Edgar Lugo
Court Docket Number: 11-cr-00299-LDG-RJJ (D. of Nevada)

Court Assigned: This case is assigned to Judge Lloyd D. George, U.S. District Court for the District of Nevada, Courtroom 6B, Lloyd D. George United States Courthouse, 333 Las Vegas Blvd. South, Las Vegas, Nevada 89101.

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Criminal Charges: On October 20, 2011, Edward Lugo was charged by a criminal information with one count of conspiracy to commit mail and wire fraud. He pleaded guilty to those charges on the same day. Lugo is the sixth person to plead guilty in connection with the scheme to defraud homeowner associations (HOAs) in the Las Vegas area.

Lugo admitted that from approximately August 2003 until February 2009, he 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 Lugo’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. Lugo agreed to act as a straw purchaser of a property at Mission Ridge and a property at Park Avenue, both HOA communities located in Las Vegas. In fact, Lugo’s co-conspirators were the true owners; they provided the down payments and monthly payments, including the HOA dues and mortgage expenses for the properties. Lugo admitted that he signed and submitted false and fraudulent loan applications and closing documents to financial institutions to finance and close on these properties on behalf of his co-conspirators.

Lugo admitted that he managed and operated the payments associated with maintaining many, if not all, of the straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program.” At the direction of a co-conspirator, Lugo maintained several limited liability companies (LLC) for the purpose of opening bank accounts and concealing the funds for the Bill Pay Program. According to court documents, a co-conspirator transferred funds to the LLC accounts and Lugo used the funds to wire payments associated with the properties in Nevada.

Court documents indicate that Lugo and other co-conspirator straw purchasers agreed to run for election to the respective HOA boards. Lugo and the co-conspirators were paid in cash, check or promised things of value for their participation, resulting in a personal financial benefit to the co-conspirators. Lugo was elected to the HOA board at Park Avenue. He admitted that once he was on the board, he breached his statutory fiduciary duties to the homeowners by accepting from his co-conspirators compensation, gratuity and other remuneration that improperly influenced, or reasonably appeared to influence, his decisions, resulting in a conflict of interest. Lugo admitted that he voted in a manner directed by and favorable to his co-conspirators.

Lugo admitted that he and his 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.

Lugo also admitted that he assisted in sending forged out-of-town homeowner ballots from California to Nevada to make it appear that the ballots were completed and mailed by bona fide homeowners residing outside Nevada.

According to plea documents, co-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, and by check and promised things of value, by or on behalf of Lugo’s co-conspirators for their assistance in rigging the elections.

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.

Lugo admitted that, at the direction of his co-conspirators, he worked at a property management company. Lugo and other co-conspirator property managers received and accepted 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.

For more information about the charges, please see below:
Press Release – October 20, 2011
Information
Plea Agreement
Judgment

The information on this website will be updated as new developments arise in the case. If you have any questions, please call the Victim Assistance Line toll-free at (888) 549-3945 or email us at victimassistance.fraud@usdoj.gov.

Presumption of Innocence: It is important to keep in mind that defendants are presumed innocent until proven guilty and that presumption requires both the court and our office to take certain steps to ensure that justice is served.

Crime Victims’ Rights Act and Right to Retain Counsel: The Crime Victims’ Rights Act (18 U.S.C. § 3771) applies only to victims of the counts charged in federal court, and thus individuals may not be able to exercise all of these rights if the crime of which the individual is a victim was not charged. Section 377I(c)(2) of this Act requires that we advise you that you have the right to retain counsel. Although the statute specifically sets forth your right to seek advice of an attorney with regard to your rights under the statute, there is no requirement that you retain counsel. The Government may not recommend any specific counsel, nor can the Government (or the Court) pay for counsel to represent you. Government attorneys represent the United States.

If you elect to obtain counsel to represent your interests, please have your attorney notify this office in writing at: U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, 4th Floor, Washington, DC 20530, Attention: Victim Witness Unit; fax: (202) 514-3708; or email: victimassistance.fraud@usdoj.gov. If you elect not to retain counsel to represent your interests, you do not need to do anything.

Plea Agreements: Please be aware that many criminal cases are resolved by plea agreement between the Department of Justice and the defendant. You should also know that it is not unusual for a defendant to seek to negotiate a plea agreement shortly before trial is scheduled to begin. Plea agreements can be made at any time and as late as the morning of trial, leaving little or no opportunity to provide notice to you of the date and time of the plea hearing. If the court schedules a plea hearing in this case, we will use our best efforts to notify you of available information as soon as practicable. If you want to inform the prosecutor of your views regarding potential plea agreements, or any other aspect of the case, please contact the prosecutor assigned to this case or call the Victim Assistance Line toll-free at (888) 549-3945 or email us at victimassistance.fraud@usdoj.gov.