(Michael Chamberlain/Nevada Business Coalition) – Two more defendants have entered plea agreements in a widespread scam involving construction lawsuits at condominium projects. Darryl Scott Nichols and Marcella Triana both pleaded guilty and have agreed to cooperate with prosecutors. Earlier, political operative Steve Wark was the first to make a deal with prosecutors.
In the scam, construction defect attorneys and construction company co-conspirators would pay people, such as Nichols and Triana, to act as straw purchasers for condominiums. The straw purchasers would often not even live in the condos but would merely be listed as co-owners.
These straw purchasers would get elected to the HOA boards. In many cases the straw purchasers and co-conspirators would rig the elections by engaging in phony phone surveys, hiring private investigators to dig up dirt on legitimate candidates, filing fraudulent ballots and hiring so-called independent observers, who were actually involved in the conspiracy themselves, to oversee the elections and ballot-counting.
Once elected and in control of the HOA board they would use their power to create and direct business to co-conspirators. They would select the management company. They would cause construction defect litigation to be filed using the attorneys and law firms that were involved in the conspiracy. They would rig the bid process and hire the construction company co-conspirators to perform emergency work and later the “repairs” called for by the lawsuits.
Press reports reveal there could be as many as two dozen plea deals related to this scam, which may involve a dozen condominium communities. Construction defect attorney Nancy Quon has been implicated in this scam, which has been reported to include other attorneys, judges, police officers and businesspeople.
It has even been the source of discord between the Clark County District Attorney’s office and the local U.S. Attorneys office. The Department of Justice took over the investigation from the U.S. Attorneys office. The DA’s office has implied that people within the U.S. Attorneys office may have leaked information to Quon or tipped her off.
Since the late 1990’s construction defect litigation has been easy money for law firms. Nevada law rewards them for filing litigation rather than seeking correction of alleged flaws in construction and it creates disincentives for contractors to address legitimate issues.
There is no definition of what actually constitutes a defect and contractors are not released from liability for making requested repairs. In some cases, making repairs actually extends the time period in which they can be sued. It is the only law in the state, possibly the entire country, in which plaintiffs’ law firms are guaranteed their fees and costs, even those occurring during and prior to discovery, upon filing a suit.
This is not just an issue that only affects the construction industry. These lawsuits were one element that contributed to increase costs that helped inflate the housing bubble. They clog up the court system and impose unnecessary costs on taxpayers.
Construction Lawsuit Fairness reform is necessary to stop the abuse of the system and ensure a fairer process for homeowners, contractors and all Nevadans.
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)