Real Estate Developer Sentenced for Investment Fraud, Bank Fraud … – Department of Justice

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Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that ROBERT V. MATTHEWS, 65, of Palm Beach Gardens, Florida, was sentenced today by U.S. District Judge Victor A. Bolden in Bridgeport to 65 months of imprisonment, followed by three years of supervised release, for conspiracy, money laundering, and tax evasion offenses related to multiple schemes that defrauded investors and financial institutions out of tens of millions of dollars.
According to court documents and statements made in court, Matthews was a real estate developer in charge of The Palm House Hotel (“PHH”), a property that he sought to develop in Palm Beach, Florida.  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.
Robert Matthews 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.  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.  Robert Matthews and others used EB-5 funding for purposes not related to the PHH project, including for Robert Matthews’ personal gain. 
Through this scheme, approximately 61 EB-5 investors lost a total of more than $30 million.
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 Matthews’, and his wife’s, 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 was 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.
In addition, Robert and Maria Matthews evaded 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.  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 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.
This tax evasion scheme resulted in a loss to the Internal Revenue Service of approximately $2.75 million in taxes, interest, and penalties.
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.  At the time Matthews defaulted on the loan, TD Bank was owed approximately $34 million.  After TD Bank foreclosed on the loan, it was owed approximately $12 million.  In June 2010, 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 and recover the $12 million dollar debt.
Finally, between approximately December 2010 and January 2013, Robert Matthews 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.
On April 25, 2019, Robert Matthews pleaded guilty to conspiracy to commit bank fraud and wire fraud, making illegal monetary transactions, and tax evasion.
Matthews, who is released on bond, is required to report to prison on October 23.
Restitution will be determined after additional court proceedings.
On April 25, 2019, Maria Matthews, also known as Mia Matthews, pleaded guilty to tax evasion.  She awaits sentencing.
On March 7, 2018, Gerry Matthews, pleaded guilty to conspiracy to commit wire fraud.  He also awaits sentencing.
On March 12, 2018, Laudano pleaded guilty to conspiracy to commit bank fraud, and to making illegal monetary transactions.  On June 4, 2023, he was sentenced to three years of supervised release.
This matter has been 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.
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