Updated: 11:28 a.m. Friday, March 16, 2018 | Posted: 4:17 p.m. Thursday, March 15, 2018
UPDATE: A federal grand jury in New Haven, Conn., returned a multi-count indictment accusing Palm Beach developer Robert V. Matthews and Palm Beach real estate attorney Leslie R. Evans of scamming foreign inves-tors. Both were arrested at their Palm Beach homes Thursday and appeared in court in West Palm Beach. Matthews, 60, was held pending a detention hearing set for Monday. Evans, 70, was released on a $250,000 bond, according to a news release issued this afternoon by the U.S. Department of Justice.
Robert V. Matthews
The indictment accuses Matthews of eight counts of wire fraud, one count of bank fraud, one count of conspiracy to commit bank fraud and wire fraud, and 10 counts of illegal monetary transactions. It charges Evans with eight counts of wire fraud, one count of bank fraud, one count of conspiracy to commit bank fraud and wire fraud, and one count of illegal monetary transactions.
Maximum sentences for the charges are:
*Wire fraud — 20 years per count
*Bank fraud — 30 years per count
*Conspiracy to commit bank fraud and wire fraud — 30 years per count
*Illegal monetary transactions — 10 years per count
Connecticut attorney Ross H. Garber released a statement to the Daily Newson behalf of Evans. “Mr. Evans is disappointed that he was also named as a defendant in this case by the government against a former client. But the allegations closely track those that have been made before in civil cases, and which Mr. Evans has been fighting vigorously. Once all this litigation ends, the truth will come out. Until then it is important for everyone to realize that allegations aren’t proof. None of this in any way interrupts Mr. Evans’s work for his valued clients,” said Garber, of the law firm Shipman & Goodwin. Evans also was named in a federal lawsuit filed in January against Palm Beach Gardens resident Ilia Mogilevsky. In that suit, Evans and three others are accused of taking part in notarizing documents in a broad real estate fraud. An attorney for Robert Matthews couldn’t be reached.
Thursday’s indictment alleges “that Robert Matthews, Evans and others used EB-5 funding for purposes not related to the (Palm House) project, including for Robert Matthews personal gain,” according to the statement released Thursday.
The statement also said: “As part of this alleged scheme, Robert Matthews, Evans and others moved investor funds through various bank accounts located in Connecticut and Florida. The funds were used to pay Robert Matthews’ credit card debts, to assist in Matthews’ purchase of a 151-foot yacht, and to purchase two properties” in Washington Depot, Conn.
ORIGINAL STORY: Palm Beach developer Robert “Bob” V. Matthews and attorney Leslie Robert Evans were arrested early this morning on charges related to improprieties at the still-unfinished Palm House hotel-cond-ominiumon Royal Palm Way.
A spokesman at the U.S. Attorney’s office for the District of Connecticut confirmed the men had been arrested but said his office couldn’t yet release the single indictment that led to the arrests. “We are just waiting for the indictment to be unsealed,” said Tom Carson, who handles media calls for the Connecticut office.
This month, two other men who played roles in the convoluted history of the long-shuttered Palm House have agreed to federal plea deals related to a misuse of funds at the Palm House. The hotel has sat dormant for more than three years in the ocean block of the street known to locals as “Bankers Row” because of its many financial institutions.
Connecticut commercial real estate broker Gerry Matthews, whose brother is Bob Matthews, pleaded guilty to a single felony count of conspiring to commit wire fraud, court documents show. The allegations were brought by the U.S. Attorney’s office for Connecticut, where Gerry Matthews has resided. Gerry Matthews is facing up to 20 years in prison, among other penalties, according to the documents filed March 7.
Palm House construction contractor Nicholas Laudano has pleaded guilty to two felony counts — conspiracy to commit bank fraud and taking part in an illegal monetary transaction. Those allegations were brought by the same U.S. Attorney’s office, and the documents relating to Laudano’s charges were filed Monday.
The conspiracy charge against Laudano carries a maximum penalty of 30 years imprisonment, while the second charge could result in as much as 10 years in prison, among other penalties. Laudano did business in Connecticut and Florida, according to the federal charges.
Matthews was arrested at his home at 101 Casa Bendita and Evans at his home at 135 Seminole Ave., according to records at the Palm Beach Police Department, which assisted in the arrests.
Bob Matthews wasn’t identified by name in the documents related to the plea deals for Gerry Matthews and Laudano. But Gerry Matthews’ document refers to “Developer-1., whose identity is known to the United States Attorney.”
It goes on to state: “Developer-1 had a lengthy history with the PHH,” referring to the Palm House Hotel. “He originally purchased the property in August 2006. Developer-1 lost the PHH in foreclosure in 2009.” Court- house records show that Matthews bought the Palm House in 2006 and lost it in foreclosure in 2009. The separate cases were the first federal charges of criminal activity connected to the Palm House. The renovation project at 160 Royal Palm Way has been mired for years in other legal troubles, including lawsuits, foreclosure proceedings and code violations. Construction ceased at the site in October 2014, and the project is today overseen by a court-appointed receiver, who has told town officials work is underway to resolve myriad issues surrounding the property.
All of the counts leading to Gerry Matthews’ and Laudano’s pleas involve money related to the federal EB-5 program. The program offers foreign nationals and their families expedited permanent immigration visas — commonly known as “green cards” — into the United States in exchange for investing in U.S. construction projects under specific rules.
The Palm House development team solicited EB-5 money and said it would fund construction of the PalmHouse, according to the federal documents detailing the charges against Gerry Matthews and Laudano. Those federal counts detail how the EB-5 program was applied to the Palm House project. To qualify for the program, a foreign investor would make at least a $500,000 investment in a project that would ultimately employ 10 or more people.
A group of more than 50 EB-5 investors, mostly from China and Iran, filed in 2016 a lawsuit in federal court in West Palm Beach against Palm House developers, alleging they were defrauded out of more than $50 million.
As detailed in the court document filed this month by U.S. Attorney John H. Durham and Assistant U.S. Attorney John T. Pierpont Jr. against Gerry Matthews, “Developer-1, his co-conspirators, agents and others used EB-5 funding for purposes not related to the (Palm House) project, including for the personal gain of Developer-1 and others.”
A rendering depicts one of three bedrooms in the presidential suite at the under-construction Palm House. The condo carries an $18 million price tag, according to the Miami broker marketing the condominium-hotel at 160 Royal Palm Way. Rendering courtesy of Venegas International Group