Former Palm Beach hotel developer Robert V. Matthews reports to prison after guilty plea

Former hotel developer Robert “Bob” V. Matthews, whose home was once a lavish oceanfront mansion in Palm Beach, is now living at a minimum-security prison in Pensacola, according to a spokesman for the federal Bureau of Prisons.

Matthews, 65, appears to have reported to Federal Prison Camp Pensacola on Monday, the deadline set by the Connecticut judge who sentenced him this summer to serve more than five years for felony fraud, money laundering and tax evasion. Matthews pleaded guilty in 2019 in the criminal case, which centered on his former role as the defacto owner of the never-completed Palm House hotel renovation project in Palm Beach.

Prosecutors said Matthews perpetrated a fraud and money-laundering scheme that ultimately bilked about 61 foreign investors in the Palm House out of more than $30 million.

David A. Ring, Matthews’ Connecticut-based attorney in the case, told the Palm Beach Daily News Tuesday it was his understanding that his client had surrendered Monday to prison authorities in Pensacola. He declined to comment further.

Matthews had been free on bond since his arrest in March 2018 at his Palm Beach mansion, which was later sold.

In April 2019, Matthews pleaded guilty to three charges in the case. This past July, in a courtroom in Bridgeport, Connecticut, he was sentenced to 65 months — or, five years and five months — in prison on one felony count each of conspiracy, illegal monetary transactions and tax evasion.

His time in prison will be followed by three years of supervised release as part of the sentence ordered by Judge Victor A. Bolden of the U.S. District of Connecticut.

Matthews must serve at least 85% of his sentence under federal sentencing rules. Any restitution to be paid by Matthews has not yet been ordered by the court.

The foreign investors who were bilked in the Palm House case were told their money would go to renovating the luxury hotel property at 160 Royal Palm Way as part of the government’s old EB-5 program. That program was designed to expedite immigration papers — so-called “green cards” — for foreigners who put money into U.S. construction projects that met certain conditions.

But Matthews spent money from the investors on himself, prosecutors said, including the purchase of a yacht, a Maserati and two homes in Connecticut, one of which he previously had lost in foreclosure. All of those purchases were mentioned in a presentencing memorandum prepared by the office of U.S. Attorney Vanessa Roberts Avery for the District of Connecticut. Among other expenditures, Matthews also paid off personal credit-card debt and local taxes with the funds, the document said.

A spokesman for Avery's office had no comment Tuesday about Matthews’ incarceration.

The case involved the illegal transfer of funds between bank accounts in Florida and Connecticut.

A pre-sentencing memo Ring submitted on Matthews’ behalf said EB-5 victims “have received over $18 million of their original $30.5 million investment from the Palm House bankruptcy proceedings and Securities Exchange Commission” as well as confidential bank settlements.

Matthews was originally set to report to prison on Oct. 23. But the judge granted him an extension to Monday after Matthews said he had upcoming medical appointments he could not reschedule. The nature of Matthews’ medical condition was not specified in Bolden’s order granting the postponement.

MATTHEWS GRANTED A DELAY: Sentenced in Palm Beach hotel fraud case, Robert V. Matthews granted a postponement to enter prison

Two other men pleaded guilty to felony counts in 2018 in related Palm House cases. Nicholas Laudano, a former construction executive at the Palm House, was sentenced in June by Bolden to supervised release and time served on two counts.  Connecticut commercial real estate broker Gerry Matthews — Robert Matthews’ brother —was sentenced Nov. 14 to probation on one count.

Matthews’ ex-wife, Maria “Mia” Sneden Matthews, was charged with one count of tax evasion in the case. She pleaded guilty to that charge in April 2019 but has not been scheduled for sentencing. The couple divorced in June.

Another man, Palm Beach attorney Leslie R. Evans, pleaded not guilty after being charged in the case in 2018 on multiple counts. Last April, the judge dismissed all of the charges against Evans and cleared his criminal record in the Palm House case after he completed a “pre-trial diversion” program.

Matthews bought the Palm House property in 2006 and announced renovation plans but lost the property in foreclosure in 2009, courthouse records show. In August 2013, he reacquired control of property, although his ownership role was cloaked in public records, according to court records. Construction came to an abrupt halt in late 2014 and did not resume until after the property was sold in May 2019 for nearly $40 million in a sale sanctioned by a bankruptcy judge.

The new owner — an affiliate of the international hospitality and real estate firm London & Regional Properties — is renovating the 79-room building and grounds.

Before it sold, the Palm House was mired for years in legal troubles, including lawsuits, foreclosure proceedings, investigations by the Securities Exchange Commission, town code violations and bankruptcy.

dhofheinz@pbdailynews.com

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Portions of this story appeared previously in the Palm Beach Daily News. 

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Darrell Hofheinz is a USA TODAY Network of Florida journalist who writes about Palm Beach real estate in his weekly “Beyond the Hedges” column. He welcomes tips about real estate news on the island. Email dhofheinz@pbdailynews.com, call 561-820-3831 or tweet @PBDN_Hofheinz. Help support our journalism. Subscribe today.

This article originally appeared on Palm Beach Daily News: Former Palm Beach hotel developer in fraud case reports to prison