Update on Kornerstone Management embezzlement investigation: Est. $500K missing

By Deborah Goonan, Independent American Communities

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It appears that the embezzlement investigation of Kornerstone Community Management is picking up steam and getting more complicated. Police have now received complaints from 29 different homeowners and condo associations in the Garner, North Carolina area.

As is typical of these cases, the main suspect in the case – company owner Diana Ellis Kelly – is missing, along with tens of thousands of dollars from each affected Association that was once managed by Kornerstone.

 

Police estimate $500K missing in Garner HOA embezzlement investigation
WRAL (VIDEO)

GARNER, N.C. — Two dozen more homeowners associations in the Triangle have come forward in connection to the possible embezzlement of tens of thousands of dollars.

Last week, two HOAs had filed reports with Garner police and four others filed complaints with the Consumer Protection Division of the state Attorney General’s Office in connection to money missing from their accounts.

As of Monday, police said that 29 HOAs have filed similar reports. Police said it is too early in the investigation to determine how much money is unaccounted for, but they said they expect it will be more than $500,000.
Read more at http://www.wral.com/police-estimate-500k-missing-in-garner-hoa-embezzlement-case/15932902/#t6iRXSp3qKbQTEzx.99

 

More details will follow as Garner Police meet with each affected HOA, and hopefully all of these associations are adequately insured against loss from theft. The legal battles that will emerge from this saga are likely to be costly and take years to resolve.

You’ll recall from last week’s blog that Kornerstone Community Management is listed as a member of the NC chapter of Community Associations Institute, and has been designated as an FHA Certification Specialist by the trade group.

It does not appear that Diana Ellis Kelly held any CAI professional certifications, nor does it appear that Kornerstone Community Management was accredited by CAI.

Did you know?

Community Association Managers do not require a license to practice in the state of North Carolina. In fact, only nine states currently require licensing of this profession. (See below)

Furthermore, while CAI is happy to provide training and certification of community association managers (and generates substantial revenue doing so), the trade group does NOT favor licensing, according to their website:

 

CAI encourages the national certification of community association managers. In states that propose mandatory regulation of community association managers, CAI will support a regulatory system that incorporates adequate protections for homeowners, mandatory education, and testing on fundamental management knowledge, standards of conduct and appropriate insurance requirements. CAI opposes the licensing of community association managers as real estate brokers, agents or property managers.

This resource center will provide state-specific information on enacted manager licensing/registration/certification/standards laws and pending legislation. It will also provide guidance and resources for those members and states that are discussing this issue.

Synopsis of Current State Laws:

Alaska
California
Colorado
Connecticut
Florida
Georgia
Illinois
Nevada
Virginia

Source: https://www.caionline.org/Advocacy/StateAdvocacy/PriorityIssues/ManagerLicensing/Pages/default.aspx

 

Of course, CAI would prefer “self-regulation” and recognition of its own certification program as a substitute for state mandated licensing: Certified Manager of Community Associations® (CMCA) administered by the Community Association Managers International Certification Board (CAMICB).

Even in states that require licensing, CAI insists that the regulatory board consists primarily of community association managers.

And that explains why states such as Florida and California, where licensing of community association managers is required by law, continue to experience similar issues with embezzlement and fraud committed by members of the profession. As a matter of self-preservation of community association management as a profession, and the trade group that protects the business interests of its members, the bar for revoking a license is set rather high.

Theoretically, licensing requirements should raise the bar of professionalism and prevent bad actors from harming consumers. In reality, self-regulation of licensed professionals tends to fall short on protecting consumers from malpractice and dishonesty.

States considering licensing of community association managers should carefully consider who will provide training and vetting of professionals as well as who will be responsible for oversight and discipline of managers and companies that fail to live up to high competency and ethical standards.

 

For further details, see CAI’s official Public Policy on Manager Licensing and Model Legislation:

https://www.caionline.org/Advocacy/PublicPolicies/Pages/Manager-Licensing-and-Model-Legislation.aspx

 

Cases of embezzlement in states that require licensure of Community Association Managers

$2.8M embezzled from HOA: After two-year investigation, former Woodlake manager charged, booked for theft; pleads not guilty (California)

http://www.smdailyjournal.com/articles/lnews/2015-09-17/28m-embezzled-from-hoa-after-two-year-investigation-former-woodlake-manager-charged-booked-for-theft-pleads-not-guilty/1776425150295.html

 

Owner of Aurora HOA management company allegedly diverted funds, state officials say (Colorado)

http://www.bizjournals.com/denver/blog/finance_etc/2015/12/owner-of-aurora-hoa-management-company-allegedly.html?ana=e_du_pap&s=article_du&ed=2015-12-18&u=rFuEtNnpCoSO1qd%2BFguvKNdYeb8&t=1450542275

 

Kristin Glansen pleads not guilty in embezzlement scheme after fleeing to Clearwater (Florida)

http://www.local10.com/news/florida/kristin-glansen-pleads-not-guilty-in-embezzlement-scheme-after-fleeing-to-clearwater

 

Ex-Lake Redwine manager guilty of pocketing HOA fees (Georgia)

http://times-herald.com/news/2016/07/ex-lake-redwine-manager-guilty-of-pocketing-hoa-fees

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