Real Estate Developer, Wife, Charged with Tax Evasion
John H. Durham, United States Attorney for the District of Connecticut, today announced that on August 29, 2018, a federal grand jury in New Haven returned a 21-count superseding indictment charging ROBERT V. MATTHEWS, 60, LESLIE R. EVANS, 71, and MARIA MATTHEWS, also known as “Mia Matthews,” 48, all of Palm Beach, Florida, with various offenses stemming from a scheme that defrauded foreign investors.
On March 14, 2018, a grand jury returned a 20-count indictment charging Robert Matthews and Evans with fraud and money laundering offenses. The superseding indictment adds one count of tax evasion against Robert Matthews and Maria Matthews.
According to the indictment, Robert Matthews was a real estate developer in charge of The Palm House Hotel (“PHH”), a property that he sought to develop in Palm Beach. Robert and Maria Matthews, who are married, maintained residences in both Florida and Connecticut. 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.
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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 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 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 and Maria Matthews’ credit card debts, to purchase two properties located in Washington Depot, Connecticut, and to assist in Robert Matthews’ purchase of a 151-foot yacht. 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 further alleges that, between approximately 2009 and March 2017, Robert and Maria Matthews willfully attempted to evade paying federal income tax they owed for the 2005 and 2007 calendar years in multiple ways, including by using limited liability companies, a company bank account, and the Evans IOTA account to pay for personal expenses. In addition, after Robert and Maria Matthews received notice from the IRS that a failure to pay their delinquent income tax liabilities by September 2, 2016, would result in the seizure of all of their assets, Robert Matthews sold, on September 2, 2016, a Mercedes for $82,000 and, after paying off a lien, caused the proceeds of the sale to be wired into the Evans IOTA account.
The indictment charges Robert Matthews with eight counts of wire fraud, an 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.
Robert Matthews and Maria Matthews are charged with one count of tax evasion, an offense that carries a maximum term of imprisonment of five years.
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.
Robert Matthews and Evans were arrested on March 15, 2018, and are released on bonds. Maria Matthews and Robert Matthews are scheduled to be arraigned by U.S. Magistrate Judge Robert M. Spector in New Haven on September 4 at 10:30 a.m.
On March 7, 2018, Gerry Matthews, 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, 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. Attorneys John T. Pierpont, Jr. and David E. Novick.