Polygon Pays $900,000 to Settle U.S. Suit Over Land Buy
Polygon Communities Inc. has paid the federal government $900,000 to settle a so-called whistle-blower lawsuit alleging that the developer lied to the Resolution Trust Corp. to buy a large parcel of land from the government agency in 1995.
Under federal law, the maximum fine in such a case is $1 million.
Polygon’s was the first case in Southern California alleging wrongdoing against the RTC, which was formed to dispose of real estate acquired when the government seized insolvent savings and loans in the 1980s and early 1990s.
Polygon officials could not be reached for comment. In announcing the settlement, the U.S. attorney’s office in Los Angeles said neither the company nor its officers or employees admitted wrongdoing.
The case stemmed from a 1996 suit against Polygon’s Southern California operation by Daniel Lively, former vice president of the Irvine-based unit.
Lively, now an Irvine accountant, sued the company for unpaid wages. His attorney, Stephen Duringer, said Wednesday that Lively alleged in the suit that he left Polygon after he was asked to perform improper or illegal tasks. That got the government interested, said Duringer, whose Irvine firm usually represents developers in real estate litigation.
Federal prosecutors ultimately charged Polygon with concealing a kickback scheme from the RTC when it acquired a Pacific Palisades real estate project from the government agency in 1995 for $15.1 million.
The broker who handled the deal received a $302,000 commission, the government said, but kicked $270,000 of it back to Polygon. The developer had signed a statement, however, certifying to the RTC that it was not acting as a broker and had no agreement to receive any part of a broker’s commission in connection with its purchase of the property.
Lively will receive up to 25% of the $900,000 settlement under the federal False Claims Act, which establishes a reward system for citizens who file whistle-blower suits alleging wrongdoing by their employers or others.
Lively’s suit against Washington-based Polygon, in which he is claiming $270,000 in damages, is pending, Duringer said.
