St. John Tradewinds News

Defendant gets 90 days in 2012 property auction scheme

 A third defendant charged with racketeering in a property auction case heard his fate April 6 in Superior Court

ST. THOMAS — An attorney charged with taking part in a fraudulent property auction scheme has pleaded guilty to a minor charge. The defendant, Ed McKenzie, is the third person to admit their role in manipulating bids for properties put up for auction by the government in 2012.

According to a source at the Justice Department, McKenzie pleaded guilty to compounding a crime. Superior Court Judge Michael Dunston accepted the plea on March 17.

On April 6 the defendant was sentenced to 90 days in jail, plus supervised release and 100 hours of community service.

Investigators from the office of the Virgin Islands Inspector General said McKenzie worked with co-defendant Paul Sabers and two government employees to carry off the scheme. Co-defendants Calford Charleswell and Sylvester Warner entered guilty pleas earlier this year.

Both are former employees of the Office of the Lieutenant Governor.

It’s the duty of the lieutenant governor’s office to administer the collection of property taxes and to conduct property auctions.

A dozen such auctions were conducted between June 2012 and June 2013, six on St. Croix and six in the St. Thomas-St. John district.

According to court documents filed by Inspector General Special Agent Nicholas Peru, procedural changes were made by persons within the lieutenant governor’s office which made it easier to steer the bid on properties.  

The sale that drew the attention of the law was located in Estate Frydenhoj, St. Thomas. It took place on Aug. 30, 2012. The investigation uncovered a scheme where a team of bidders worked together to make sure the second bidder would win by default.

Co-conspirators working inside the lieutenant governor’s office then accepted a cash payment on the under bid and processed the sale without recording the amount of the sale or the name of the person who handed over the cash.

The mystery buyer was later identified as former Legislative Director Louis Milton Willis. Willis is currently serving time in prison on a separate matter related to a bribery kickback scheme.

After the sale the Frydenhoj property was transferred to a man who owned a marina on an adjacent property. That man was identified as Sabers.

Sabers is the former owner of Wharfside Village Shopping Center in Cruz Bay.

McKenzie was identified as an attorney representing Saber’s St. Thomas business, Go Fast Charters d/b/a Pirate’s Cove Marina.

The investigation led to charges against Charleswell, Warner, McKenzie and developer Paul Sabers. Sabers is the last defendant in the case with criminal charges pending against him.

All four were charged with violations of the Criminally Influenced and Corrupt Organizations Act, and related crimes.

A spokesperson for Justice said the successful prosecution of a third co-defendant moves the racketeering case towards completion.

“Based upon the investigation, the Department of Justice filed criminal charges against McKenzie, alleging that he and others conspired and associated with an enterprise, through a pattern of activity with the intent to defraud the Government by manipulating the property auction process,” said Justice Department spokesperson Corliss Smithens.

The head of the Justice Department, Attorney General Claude Walker, said prosecutors are prepared to dig through a mountain of evidence to prepare the case against Sabers.

“DOJ has resolved criminal charges against a third defendant in the tax assessor’s property auction scam. McKenzie has pled guilty for his role, and like two other defendants who have also pleaded guilty, he has agreed to cooperate,” Walker said.