Real Estate Developer from Palm Beach, Florida Admits Role in Investment Fraud, Bank Fraud, Money La

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https://www.justice.gov/usao-sdfl/pr/real-estate-developer-palm-beach-florida-admits-role-investment-fraud-bank-fraud-money

Department of Justice
U.S. Attorney’s Office
Southern District of Florida

FOR IMMEDIATE RELEASE
Thursday, April 25, 2019

Real Estate Developer from Palm Beach, Florida Admits Role in Investment Fraud, Bank Fraud, Money Laundering and Tax Evasion Schemes

John H. Durham, United States Attorney for the District of Connecticut, Brian C. Turner, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation in New England, announced that ROBERT V. MATTHEWS, 61, of Palm Beach Florida, pleaded guilty today in Bridgeport federal court to conspiracy, money laundering and tax evasion offenses related to multiple schemes to defraud foreign investors and financial institutions. In addition, Matthews’ wife, MARIA MATTHEWS, 52, pleaded guilty today in Bridgeport 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”), a property that he sought to develop in Palm Beach. Robert and Maria Matthews maintained residences in both Florida and Connecticut.

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.

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 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 into accounts controlled by Robert Matthews and his associates.

While Gerry Matthews was the nominal 99 percent owner of Palm House, LLC, Robert Matthews controlled the company. Robert Matthews and other 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 scheme, Robert Matthews 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, 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, 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.

Since approximately 2008, 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 their attorney’s trust account to pay for personal expenses. For example, in approximately November 2014, Robert Matthews caused Maria Matthews to execute documents to obtain a loan from an individual with the initials K.M. The loan was secured by one of their Washington Depot properties, which, at the time, was in the name of a shell company. The proceeds of this loan were eventually disbursed into an account controlled by the Robert and Maria Matthews in the name of Mirabia LLC. Robert and Maria Matthews subsequently used the loan proceeds for personal expenses without paying any of their outstanding tax liability.

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.
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1. More from courant.com

http://www.courant.com/news/connecticut/hc-news-robert-matthews-guioty-real-estate-fraud-20190425-20190425-ywmnaapslbf6dodgmiwikzdxc4-story.html

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The indictment charged that Matthews and the others used a federal visa program known as the EB-5 program to lure foreign investment to The Palm House. Under the program, foreign nationals can obtain U.S. residency visas by making substantial investments in qualified U.S. development projects that create jobs. About 60 investors from China and Iran made threshold investments of $500,000.
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