Palm Beach developer Robert Matthews pleads guilty in Palm House case
by Foster LLP, on News
Real estate developer Robert V. Matthews pleaded guilty today in Connecticut in a criminal case involving investor funds earmarked to renovate the long-stagnant Palm House hotel-condominium in Palm Beach, according to a joint statement released by U.S. officials.
In a Bridgeport federal courtroom, Matthews, 61, pleaded guilty “to conspiracy, money laundering and tax evasion offenses related to multiple schemes to defraud foreign investors and financial institutions,” today’s statement said.
Matthews faces up to 45 years in prison after entering a plea agreement with federal prosecutors, according to the announcement by the U.S. Attorney for the District of Connecticut John H. Durham, along with representatives of the FBI and the IRS.
Matthews had been facing a maximum of 325 years in prison after pleading not guilty last year to 21 felony counts following his arrest at his Palm Beach oceanfront mansion.
Matthews’ wife, Maria “Mia” Matthews, 52, also entered a plea agreement today. She pleaded guilty to a single count of felony tax evasion and is facing a maximum prison term of five years, according to the statement.
The Matthewses were released on bond pending sentencing, and sentencing dates have not been scheduled, the statement said.
The majority of the charges against Robert Matthews involved money transfers into accounts in Florida and Connecticut, where the couple had residences, according to the statement.
“The funds were used to pay Robert and Mia Matthews’ credit card debts and to purchase two properties located in Washington Depot, Conn. One of the Washington Depot properties was a property that Robert Matthews had lost in foreclosure,” the statement said.
In March 2018, on the same day that Robert Matthews was taken into custody, real estate attorney Leslie R. Evans was arrested at his Palm Beach home. He was immediately charged with counts similar to those brought against Robert Matthews, excluding the tax evasion charge. Evans has pleaded not guilty to eight counts of wire fraud, one count of bank fraud, one count of conspiracy to commit bank fraud and wire fraud, and one count of illegal monetary transactions. Convictions on all those counts would carry a maximum penalty of up to 230 years, according to the U.S. Attorney’s office.
Evans is free on bond as he awaits trial in Connecticut. The Matthewses also were free on bond and had been expected to face trial in the same proceeding.
The original indictment alleged that Robert Matthews, Evans “and others used EB-5 funding for purposes not related to the (Palm House renovation) project, including for Robert and Maria Matthews’ personal gain,” according to a statement released about the case in March 2018 by the U.S. attorney’s office in Connecticut.
Court records show that foreign investors put millions of dollars into the Palm House project through the federal EB-5 program, which offers foreign nationals and their families expedited permanent immigration visas, commonly known as green cards. Dozens of investors put up $500,000 each through the program, which funds U.S. construction projects that meet specific job-creation goals, according to court documents.
Connecticut attorneys for the Matthewses said they had no comment about the plea agreements.
West Palm Beach attorney David George, who represents many of the EB-5 investors, said today’s developments came as good news for his clients.
“While these guilty pleas will not get them their green cards, they go a long way towards restoring their faith in the American justice system,” George said.
The Palm House renovation project has been mired for years in legal troubles, including lawsuits, foreclosure proceedings, code violations and, most recently, bankruptcy. Renovations ceased at the site in October 2014, and its ownership company is now overseen by former Delray Beach mayor Cary Glickstein as court-appointed manager.
Robert Matthews bought the Palm House property at 160 Royal Palm Way in 2006 and lost it in foreclosure in 2009. In August 2013, he “reacquired control of the property” through an ownership company nominally headed by his brother, Gerry Matthews, the statement said.
Before the criminal case was filed against Robert Matthews and Evans, two other men entered plea agreements in related Connecticut cases. Gerry Matthews pleaded guilty to a single felony count of conspiring to commit wire fraud. Nick Laudano, a construction executive for the Palm House, pleaded guilty to two felony counts — conspiracy to commit bank fraud and taking part in an illegal monetary transaction. Both men are awaiting sentencing.
In March, a federal bankruptcy judge in West Palm Beach approved the sale of the Palm House property to a London-based real estate investment company. The sale hasn’t been finalized, according to Glickstein.
In August, the U.S. Securities and Exchange Commission initiated a separate eight-count civil complaint that accused Robert Matthews and three other defendants of carrying out securities fraud by misusing millions of dollars solicited from the EB-5 investors for the Palm House. Robert Matthews has pleaded not guilty in that case.
Early this month, a U.S. bankruptcy judge authorized an ownership transfer of Robert Matthews’ Palm Beach house to the “assignee” of a lender that held a primary mortgage on the property. The transfer was approved after a bankruptcy auction derailed when no “qualified” bidder agreed to meet the minimum bid of $31 million.
Robert Matthews’ guilty pleas mean he is facing as much as 30 years imprisonment on one count of conspiracy to commit bank fraud and wire fraud; a maximum of 10 years imprisonment on one count of illegal monetary transactions; and a maximum of five years imprisonment on one count of tax evasion, the statement said.
Mia Matthews was charged in September with tax evasion, her first and only charge in the case. Her husband was charged at the same time with an identical count.
Source: Palm Beach Daily News