mathewshomeThe estate of former New Haven Developer Bob Mathews, now under federal indictment. The home was priced for auction at $26.5 million, but has been listed on Realtor.com for $44 million.

 

By Mitchell Young

NEW HAVEN: A flash from the past as 90’s era real estate developer Bob Mathews has been indicted, with the Federal government alleging he ‘scammed foreign investors.”

Mathews had developed what is now the city’s premier bio-science building 300 George Street, after buying it for $500,000 from SNET. It was mostly vacant when Winstanley Enterprise purchased it for $$27 million in 2000, Winstanley spent more than $25 million to develop the building for bioscience use.

mathewsMathews was a close friend and involved in several transactions with former Governor John Rowland, including purchasing his Washington apartment at what was seen as an inflated price. Mathews was fined $2000 for ethics violations relative to a transaction with Rowland but was not charged with any crimes.

Last spring 58 investors from China and Iran sued Mathews, alleging fraud in the same transaction that has generated the federal indictments. Both the law suit and the indictment stem from what is known as the EB-5 visa program, where 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. The projects must generate jobs in the US and the investment must be at least $500,000, pus a $40,000 administration fee.

The funds were to be invested in a Palm Beach real estate project known as the 'Palm House Hotel.” The suit and the indictment claim that “virtually none of the Plaintiffs' funds were used to develop the property.” Additionally, "no jobs were created, and no EB-5 visas were issued to any of the Plaintiffs."

John H. Durham, United States Attorney for the District of Connecticut, Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, and Joel P. Garland, Special Agent in Charge of IRS Criminal Investigation in New England, announced that a federal grand jury in New Haven returned a 20-count indictment charging Robert V. Matthews, 60, and Leslie R. Evans, 70, both of Palm Beach, Florida, with various fraud and money laundering offenses stemming from a “scheme that defrauded foreign investors.”

Matthews and Evans were arrested in Florida and appeared in U.S. District Court for the Southern District of Florida, in West Palm Beach. Mathews was first arraigned in prison garb, but appeared at his bond hearing several days later in a tailored suit. The Judge U.S. Magistrate Judge William Matthewman, commented on Mathews’ better attire at the bail hearing, the judge then accepted a $500,000 bond for Mathews which included that the developer be required to wear a GPS location device. Evans’ bond had been set earlier at $250,000.

Prior to Mathews’ raising bail he was restricted by the court to stay in the Mediterranean-style house he built on Palm Beach’s beachfront. Among his most immediate neighbors, Tommy Hilfiger and Dr. Oz, Radio shock jock Howard Stern and Jon Bon Jovi reportedly live close by as well.

Mathews’ residence has itself been the center of a foreclosure dispute and a $26.5 million price tag was placed on the home for auction last fall before that action was halted when Matthews declared personal Chapter 11 bankruptcy.

According to the announcement by the US attorney, “Robert Matthews, a real estate developer who maintained residences in both Florida and Connecticut, was the developer in charge of The Palm House Hotel [“PHH”], a property that he sought to develop in Palm Beach. Evans is a real estate attorney.”

The indictment says, "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. The Feds say Matthews purchased the PHH property in August 2006, and then lost the property in foreclosure in 2009. In August 2013, he 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.”

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.”

It further added, “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 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, the indictment continues that “Robert Matthews, Evans and others moved investor funds through various bank accounts located in Connecticut and Florida. The funds were used to pay Robert Matthews’ credit card debts, to assist in Matthews’ purchase of a 151-foot yacht, 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, 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 New Haven and Meriden, Connectoicut.

The indictment charges Robert Matthews with eight counts of wire fraud, and 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.

On March 7, 2018, Gerry Matthews, 57, 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, 48, 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.