John H. Durham, United States Attorney for the District of Connecticut, Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, and Joel P. Garland, Special Agent in Charge of IRS Criminal Investigation in New England, today announced that a federal grand jury in New Haven returned a 20-count indictment yesterday charging ROBERT V. MATTHEWS, 60, and LESLIE R. EVANS, 70, both of Palm Beach, Florida, with various fraud and money laundering offenses stemming from a scheme that defrauded foreign investors
Matthews and Evans were arrested this morning in Florida and appeared in U.S. District Court for the Southern District of Florida, in West Palm Beach. Matthews was detained pending a detention hearing that is scheduled for March 19 at 10 a.m. Evans was released on a $250,000 bond.
According to the indictment, Robert Matthews, a real estate developer who maintained residences in both Florida and Connecticut, was the developer in charge of The Palm House Hotel (“PHH"), a property that he sought to develop in Palm Beach. Evans is a real estate attorney.
The EB-5 visa program is a federal program by which foreign nationals and their families are eligible to apply for lawful permanent resident status (commonly known as a “green card") if they meet certain requirements by investing in a development project in the U.S. Various entities in the U.S. act as intermediaries between potential foreign investors and investment projects. One such entity, South Atlantic Regional Center, LLC (“SARC") in Palm Beach, Florida, advertised EB-5 projects to foreign investors, collected funds from foreign investors that were earmarked for certain development projects, and made the funding available to the respective development project.
The PHH was a development project advertised by SARC to EB-5 investors between approximately 2012 and 2014. Robert Matthews purchased the PHH property in August 2006, and then lost the property in foreclosure in 2009. In August 2013, Robert Matthews reacquired control of the property through an entity called Palm House, LLC. However, Robert Matthews’ brother, Gerry Matthews, was listed in incorporation documents as owning 99 percent of Palm House, LLC, and another individual, who had secured additional financing for Robert Matthews, was listed as owning the remaining 1 percent.
The indictment alleges that Robert Matthews, Evans and others defrauded EB-5 investors, SARC and the one-percent owner of PHH by representing that funds from EB-5 investors would be used to develop the PHH; that certain well-known individuals would be on the PHH advisory board and certain well-known entertainers, businesspeople and politicians “will be a part of the club"; and that Gerry Matthews was a member of the Palm House, LLC management team and was the 99 percent owner of the project. EB-5 investors invested in the PHH project by providing money to bank accounts controlled by SARC. SARC, in turn, provided EB-5 money earmarked for PHH use either into an account controlled by Robert Matthews, Evans and their agents, or into Evans’ Interest on Trust Account (“IOTA") that was used to maintain his clients’ funds.
The indictment alleges that, while Gerry Matthews was the nominal 99 percent owner of Palm House, LLC, Robert Matthews controlled the company. The indictment further alleges that Robert Matthews, Evans and others used EB-5 funding for purposes not related to the PHH project, including for Robert Matthews’ personal gain. In addition, there was no evidence any of the proffered well-known individuals would be on the PHH advisory board or would be members of the club.
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 located in Washington Depot, Connecticut. One of the Washington Depot properties was a property that Robert Matthews had previously lost in foreclosure. Robert Matthews, Evans, Nicholas Laudano and others conspired to purchase the property out of foreclosure by concealing both the relationship between the co-conspirators, and the source of the funds used to purchase the property.
Laudano is a construction contractor who continuously worked on the development of the PHH project between approximately 2006 and 2016. He also has operated several restaurants in Florida and Connecticut.
The indictment charges Robert Matthews with eight counts of wire fraud, and offense that carries a maximum term of imprisonment of 20 years, one count of bank fraud, an offense that carries a maximum term of imprisonment of 30 years, one count of conspiracy to commit bank fraud and wire fraud, an offense that carries a maximum term of imprisonment of 30 years, and 10 counts of illegal monetary transactions, an offense that carries a maximum term of imprisonment of 10 years.
The indictment charges Evans with eight counts of wire fraud, one count of bank fraud, one count of conspiracy to commit bank and wire fraud, and one count of illegal monetary transactions.
U.S. Attorney Durham stressed that an indictment is not evidence of guilt. Charges are only allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.
On March 7, 2018, Gerry Matthews, 57, of Middlebury, Connecticut, waived his right to be indicted and pleaded guilty to one count of conspiracy to commit wire fraud. On March 12, 2018, Laudano, 48, of Boynton Beach, Florida, waived his right to be indicted and pleaded guilty to one count of conspiracy to commit bank fraud and one count of illegal monetary transactions. They await sentencing.
This matter is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney John T. Pierpont, Jr.
Source: U.S. Department of Justice, Federal Bureau of Investigation (FBI)
