Little RICO: Federal case starts
It's been used to prosecute the Gambino organized crime family, Adelphia Cable's Rigas family, even the Hell's Angels. Today in U.S. District Court, the Racketeer Influenced and Corrupt Organizations Act was the basis for a civil suit against a Greene County homeowners association, and testimony included the glimpse of a gun at a subdivision property owners meeting.
Dogwood Valley residents Douglas Dye, pictured left, Mitch Miller and Grant Colby made a federal case of disputes with the Dogwood Valley Citizens Association, claiming that its board of directors inflicted "extortionate" collection methods without legal authority, subjected residents to threats of losing their property, and damaged their reputations and credit-worthiness, according to Joseph D'Erasmo, the plaintiffs' attorney, in his opening statement. The motive? Profit and an alleged attempt to force residents to bend to the association's will, says D'Erasmo.
Defense attorney John Loehr countered that the defendants–- who include Stanardsville Mayor/association president Gary Lowe, construction company owner/treasurer Matt Brown, Dean Musser, Judy McDavid, and Keith Wynn–- all own one lot in Dogwood Valley except for McDavid, who owns two, so profit could hardly be the motive. He pointed out that of 320 lots in the neighborhood, only 15 had been foreclosed since 1998– less than 10 percent of the neighborhood.
Two of those properties, owing $35 each in special assessments, were sold at auction in 1998 and one was picked up by Lowe for $1,000. Their owner, William Winkelman, took the case to the Supreme Court of Virginia, which ruled in 2004 that the Dogwood Valley Citizens Association was not a homeowners association that could levy special assessments under Virginia law and revoked the sale.
Lowe is the only defendant who owned a foreclosed property, said Loehr. "This is a totally frivolous lawsuit," he said, questioning whether it was a RICO enterprise for what amounted to the association getting "a couple of loads of gravel."
Plaintiff Douglas Dye went to court against the association in 1984, protesting fees that resulted in liens for $875 placed on his property, and the Greene County General District Court ruled that the association failed to show it "had the right to collect such fees," he testified.
Dye paid no further road fees, and in 1998 he discovered a public notice in the Greene County Record that his lots were to be sold at public auction in three days. He paid the fees "under duress," he said, but discovered when refinancing his home in 2005 that the original liens had never been removed.
He also noted that in reviewing the association's records, he discovered it had paid $159,000 in legal fees to the law firm of its attorney, George Dygert.
Plaintiff Mitch Miller testified to a problem paying in cash $70 in assessments he owed on lots he owned with his mother. "I had concerns that checks were not being properly credited and liens were being filed," he said. "It was important for me to pay in cash with witnesses for verification."
At a Dogwood Valley Citizens Association meeting, Jack O'Leary was there to videotape the meeting "at the direction of George Dygert," said Miller. He said Lowe refused to take his money, and Miller put the payment on a railing at Lowe's elbow. After the meeting, O'Leary told Miller to take his money back, and when Miller declined, "He opened his jacket and said if I didn't take it, I would be made to pay," said Miller, who then described seeing a small revolver inside O'Leary's jacket.
Miller said that despite paying a 2002 assessment, in 2003 he received a letter saying he owed $206, and his brother wrote a check to the association, which was returned in June 2003. A lien was placed on his property for road assessments and special assessments, and Miller took the warrant in debt to the Supreme Court of Virginia, which ruled in 2006 that the Dogwood Valley Citizens Association still could not make special assessments on property owners.
To fight what started as a $206 road assessment, Miller claimed it cost him $25,000 in legal fees to go the the state's highest court.
Plaintiff number three, Grant Colby, also read in the paper that the property he bought in 1993 was going to public auction in 1998. "I paid the special assessment three times," said Grant. His money order for $245.72 kept being sent back by an attorney in Dygert's firm because it didn't include interest, attorney's fees, and the cost of the newspaper ad, he said.
On auction day, "I attended the sale and advised people if they bought my land, they'd be behind first lienholder Crestar Mortgage and have to wait 20 years," said Colby.
He testified that a letter from Dygert's firm went to Crestar notifying it of a public sale of Colby's lot, and on November 5, 1998, he received a letter from Crestar informing him that it had paid $545 in Greene County taxes. "I had no unpaid taxes because they're paid through an escrow account," said Colby. "Money was coming from my first mortgage to pay a private, imagined debt."
Ultimately, that payment cost Crestar $3,000 plus attorney's fees, said Colby, but that wasn't the last of the special assessments he got from the homeowners association. In March 2005, another Dygert letter informed him he was late on $70 special assessment and interest. Aware of the 2004 Winkelman case, Colby refused to pay and that earned him a lien on his house, which was removed in 2006 after the second Virginia Supreme Court case.
The RICO case is scheduled for four days, and the plaintiffs have 25 witnesses on their list. Judge Norman Moon at times seemed impatient with the length of the trial, and at times chastised both attorneys to move it along. "Do you want to be here for six months to try this case?" he asked Loehr after an objection.