Sylvester Warner, 43, of Estate St. Peter pleaded guilty to one count of conspiracy in exchange for his testimony in an alleged plot to rig government auctions of property, Attorney General Claude Earl Walker announced in a Friday news release.
The charges stem from an Aug. 30, 2012, property bid conducted by the office of the lieutenant governor.
Warner had faced two charges – one count each of conspiracy and Criminally Influenced and Corrupt Organizations Act (CICO.) He appeared in court Feb. 3 before V.I. Superior Court Judge Michael Dunston. Under the terms of the plea bargain, Warner entered a guilty plea to the single charge of conspiracy and in exchange for his testimony and full co-operation against the remaining co-defendants, the second count against him will be dismissed and he will be sentenced to a period of one-year supervised probation.
Warner also has to pay fees and court costs.
Warner was arrested Nov. 19, 2015, following an investigation by Nicholas Peru, special investigator in the office of the Inspector General. He was released from custody after posting bail.
Four men – Warner, Calford Charleswell, Paul Sabers and Edward McKenzie – were taken into custody and charged in connection with the public auction scheme. On Wednesday, Charleswell, who faced 14 charges stemming from the incident, admitted his wrongdoing and pleaded guilty to the single count of conspiracy.
Walker said his office is prepared to go to trial with the other two accused men.
“Now, we have the guilty pleas of two of the defendants, who have also agreed to testify against the other two, and so, it appears that will have a trial involving Sabers and McKenzie,” Walker said. “We can’t wait for trial because the people of the Virgin Islands have been getting ripped off for years in these government property auctions, and at trial, we will finally get to the bottom of what has been going on.”
The attorney general said the government auctions were not designed “to enrich the elites.”
“As Gov. (Kenneth E.) Mapp indicated, one of the main reasons for having these property auctions is to give ordinary working people such as teachers, police officers and small business owners a chance to own a home in the Virgin Islands,” Walker said. “That purpose, however, has been hijacked by the sheer greed of certain people in this community because these real property auctions have been tainted by fraud and bid-rigging, which resulted in properties being sold way below market value.”
According to the affidavit filed by Peru, a property auction was conducted on Aug. 30, 2012. One of the properties being auctioned was 97 Estate Frydenhoj. The first bidder offered $75,000, a second person bid $42,000 and the third bid was $10,100; however, the bidder tracking sheet prepared by Charleswell showed that there were only two bidders on the property, according to Peru.
Under an unwritten policy developed by officials in 2012 the three highest bidders were to be recorded, in the event that the highest bidder failed to meet the ten percent deposit amount. But on the day after the auction, the winning bidder did not make the required deposit and the second highest bidder should have been contacted, Peru wrote.
On Sept. 4, 2012, a deposit of $2,000 was paid on a bid that was not noted on the record and on Oct. 11, 2012, a man paid the balance of $8,000 on the Est. Frydenhoj property and the office of the lieutenant governor transferred the property to that man for $10,000. Then, on Sept. 25, 2013, the man transferred the same property to another man, according to Peru.
A woman whose name appeared on the bidder tracking sheet told Peru that she accompanied Warner to the auction and he completed the registration form using her name, but used his address. She said Warner bid on the Frydenhoj property and told her that he was bidding for a friend. On the day of the auction, Warner bid on three other properties, but although he was the highest bidder, he failed to pay deposits or take any of the properties, according to Peru.
The investigation revealed that certain procedural changes made by officials at the office of the lieutenant governor allowed individuals to fraudulently manipulate the bidding process in a scheme in which the highest bidder purposefully makes a substantially inflated bid, then fails to post the ten percent deposit so that the property would go to another bidder or individual for a substantially low price, Peru wrote.
This manipulation prevented potential bidders from making fair and legitimate bids on properties offered at public auctions and potentially reduced the likelihood of the property owner recouping any excess proceeds from the sale after taxes and fees are paid, according to Peru.
A date for Warner’s sentencing was not set, and Warner was released on bail pending his sentencing hearing.
