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Monday, July 15, 2024
HomeNewsLocal newsFour Arrest Warrants Issued for Real Estate Auction Fraud

Four Arrest Warrants Issued for Real Estate Auction Fraud

At least four men are facing 10-year prison terms for conspiracy, fraud, grand larceny and other charges allegedly committed during delinquent tax property auctions in 2012 and 2013, Acting Attorney General Claude Walker announced Friday during a press conference.

Three people were arrested Thursday and advised of their rights Friday — businessman Edward P. McKenzie, former Tax Assessor officer Calford O. Charleswell and Sylvester Warner, of the V.I. Waste Management Authority. Businessman Paul Sabers, who is out of the territory until later Friday, was also set to be arrested.

According to Walker, the four men were involved in a scheme to defraud the V.I. government by manipulating the bidding process during real estate auctions conducted by the Lt. Gov. Gregory Francis’s Tax Division.

“These arrests are the result of an extensive investigation conducted by the Office of the Virgin Islands Inspector General into the alleged fraudulent sale of real property at tax auctions conducted by the Lt. Governor’s Office, Tax Assessor’s Division,” Walker said.

Friday’s charges include conspiracy, forgery, obtaining money by false pretense, conversion of government property, fraudulent claims upon the government, grand larceny and embezzlement.

Charleswell, formerly chief of enforcement for the tax assessor’s office, was charged with conspiracy, forgery, obtaining money by false pretense, fraudulent claims upon the government, conversion of government property, grand larceny, embezzlement by public and private officers, embezzlement or falsification of public accounts to obtain property at a government auction. His bail was set at $200,000.

McKenzie was charged with conspiracy, obtaining money by false pretense and conversion of government property for allegedly conspiring to illegally obtain property at a government auction. His bail was set at $140,000.

Walker said Charleswell, of St. Thomas, allegedly tampered with bid sheets during the auction of 97 Estate Frydenhoj. All four conspired to intentionally inflate the price to ensure Sabers received property after the highest bidder was unable to make the down payment.

Louis “LoLo” Willis, former director of the Internal Revenue Bureau, also was involved in the transaction, Walker said, but he currently had no plans to charge him. Willis was sentenced to five years in federal prison in May for bribery and extortion committed while he was executive director of the V.I. Legislature.

Specific charges against Sabers and Warner were not outlined at the attorney general’s press conference.

“I can share with you that unfortunately these four arrests are only the beginning,” Walker said. He declined to say how many other cases might arise but that there are “a decent number of properties,” mainly on St. Thomas. 

In 2011, the Lt. Governor’s Office announced there were 1,400 properties in the territory that were tax delinquent for 10 or more years. In 2012 and 2013, auctions were held on St. Thomas and St. Croix to sell 153 of the properties.

The Inspector General’s Office released an audit on the real estate auctions in 2014 citing “highly irregular and questionable practices” especially at auctions in the St. Thomas-St. John District. The report stated there was a scheme to manipulate the bidding process, shut out legitimate bidders, transfer properties at undervalued prices and involved collusion by at least two bidders.

According to the audit, buyers were required to pay 10 percent of the sales price at the close of the auction and the balance within 30 days. After the first auction, the rules changed and auditors found that 15 sales in the St. Thomas district were not awarded to the highest bidder, but the second or even third prospective buyer. Once such case was found on St. Croix.

“There is also a strong indication that one or more officials from the Lieutenant Governor’s Office either participated in the bid manipulation scheme or were aware of it happening and failed to prevent it from continuing,” the audit states.

In April 2013, Lt. Gov. Francis changed the policy ordering that properties would no longer be awarded to the next highest bidder if the highest bidder failed to post the required 10 percent. 

When asked for a response to the audit, Francis spokesperson Shawna Richards at the time said he would not be issuing a statement. Gov. John deJongh Jr., in his formal response to the audit, said he agreed with most of the findings.

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