Fla. RE developer admits guilt in EB-5 investment fraud
PALM BEACH, Fla. – April 26, 2019 – A real estate developer from Palm Beach, Florida, has admitted his role in investment fraud, bank fraud, money laundering and tax evasion schemes related to the U.S.’s EB-5 visa program.
The EB-5 visa program allows foreign nationals and their families to apply for lawful permanent resident status (a green card) if they meet certain requirements, including a $500,000 investment in a development project. Various U.S. entities ordinarily act as intermediaries between potential foreign investors and investment projects.
The charges against Robert V. Matthews and his wife, Maria Matthews, were announced after an investigation by the U.S. Attorney for the District of Connecticut, the Federal Bureau of Investigation and the Internal Revenue Service. Robert Matthews pleaded guilty this week in federal court to conspiracy, money laundering and tax evasion offenses related to multiple schemes to defraud foreign investors and financial institutions. Maria Matthews pleaded guilty to tax evasion.
According to court documents and statements made in court, Robert Matthews was a real estate developer in charge of The Palm House Hotel (PHH) in Palm Beach, and an intermediary between projects and potential investors was South Atlantic Regional Center, LLC (SARC) in Palm Beach. SARC advertised EB-5 projects to foreign investors and collected funds earmarked for certain development projects. It then made the funds available to respective development projects.
SARC advertised the PHH development project to potential EB-5 investors around 2012 to 2014.
Robert Matthews purchased PHH in August 2006 but lost the property through foreclosure in 2009. In August 2013, he reacquired control through an entity called Palm House LLC. However, his 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.
In pleading guilty, Matthews admitted that he and others defrauded EB-5 investors by representing that funds from EB-5 investors would be used to develop PHH; that certain well-known individuals would be on the PHH advisory board – 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 into accounts controlled by Robert Matthews and his associates.
While Gerry Matthews was the nominal 99 percent owner of Palm House, LLC, however, Robert Matthews controlled the company, and he used money from EB-5 funding for purposes not related to the PHH project, including for Robert and Maria 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 the scheme, investor funds were moved through various bank accounts located in Connecticut and Florida and used to pay Robert and Maria Matthews’ credit card debts and purchase two properties in Connecticut, one of which Robert Matthews previously lost in foreclosure.
Robert Matthews, along with Nicholas Laudano and others, conspired to purchase the property out of foreclosure by concealing both the relationship between co-conspirators and the source of the funds. Laudano is a construction contractor who worked on the development of the PHH project. He also operated several restaurants in Florida and Connecticut.
Since approximately 2008, Robert and Maria Matthews willfully attempted to evade paying federal income tax owed for the 2005 and 2007 calendar years in multiple ways, including the use of limited liability companies, a company bank account, and their attorney’s trust account to pay for personal expenses.
The investigation also revealed that, between approximately 2007 and 2009, Robert Matthews conspired with others in a scheme to defraud T.D. Banknorth, N.A. (now TD Bank, N.A.), out of the proceeds of a construction loan by making material misrepresentations to the bank in connection with the development of the Point Breeze Hotel in Nantucket, Massachusetts. In addition, in June 2010, Robert Matthews conspired with others in a scheme to defraud TD Bank out of its ability to foreclose on another parcel of property in Nantucket owned by Matthews.
Finally, in pleading guilty, Robert Matthews admitted that, between approximately December 2010 and January 2013, he conspired with others to defraud JP Morgan Chase Bank N.A. by misappropriating insurance proceeds earmarked for repair of one of his Washington Depot properties.
Robert Matthews pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud, an offense that carries a maximum term of imprisonment of 30 years; one count of illegal monetary transactions, an offense that carries a maximum term of imprisonment of 10 years, and one count of tax evasion, an offense that carries a maximum term of imprisonment of five years.
Maria Matthews, who is also known as “Mia Matthews,” pleaded guilty to one count of tax evasion.
Robert and Maria Matthews are released on bonds pending sentencing. Sentencing dates are not scheduled.
On March 7, 2018, Gerry Matthews, of Middlebury, Connecticut, pleaded guilty to one count of conspiracy to commit wire fraud. On March 12, 2018, Laudano, of Boynton Beach, Florida, pleaded guilty to one count of conspiracy to commit bank fraud and one count of illegal monetary transactions. They await sentencing.
© 2019 Florida Realtors®
Comments are closed