By Deborah Goonan, Independent American Communities
HOA embezzlement and fraud stories have become so common that I have begun combining several per month into a single blog. But I’m highlighting this particular case from Kansas City, Missouri, because the crime was substantial, yet the former HOA treasurer, Loretta A. Lock, won’t do any time.
Not even one day.
Yes, Lock is 78 years old. She admitted the crime. She acknowledges her gambling addiction. She repaid over $100,000 that she stole from her neighbors. But 2 years probation, in this case, just doesn’t seem like justice served.
Lock violated the trust of hundreds of her fellow homeowners and neighbors. And, as a seasoned professional real estate agent with a Broker’s license, shouldn’t Lock be held to an even higher standard?
Former Kansas City HOA treasurer gets probation for stealing more than $100,000
The former treasurer of a Kansas City homeowners association who admitted to stealing more than $100,000 from her HOA has received two years’ probation, an action that angered many residents who sought a more severe punishment.
Loretta A. Lock pleaded guilty in Clay County Circuit Court in August to embezzling from the Charleston Harbor Homes Association. At a hearing last week, Clay County Circuit Judge Shane T. Alexander suspended the imposition of her sentence and placed her on probation.
The judge ordered Lock to pay $109,000 in restitution to the HOA, complete counseling and treatment for a gambling addiction and perform 100 hours of community service. He also prohibited her from serving as treasurer or in any other financial capacity for any organization.
Read more here: http://www.kansascity.com/news/special-reports/hoa/article110424967.html#storylink=cpy
What message does this sentence send? Any clever opportunist in the state of Missouri now knows that stealing from an Association Governed Community is easy to do. You can get away with it for years. And, if you get caught, you can plead guilty and promise to repay the money, but you won’t have to worry about going to jail.
Could the Kansas City Council Treasurer get away with such a light sentence? Or the Accounts Manager for any business in Missouri?
In Missouri, apparently it depends on the nature of the charges filed. Check out the loophole in Missouri criminal code for “stealing,” created in 2002, but amended in 2014, and expiring as of January 1, 2017.
The loophole basically made it impossible to classify stealing as a felony in the state of Missouri for a 15-year window between 2002-2017. However, related charges of forgery or receiving stolen property are not affected by the loophole.
So, reading between the lines, could Lock have been charged with forgeries? Then felony charges – and stiffer penalties – would have been possible.
Look at the facts reported in the August 25, 2016, article by Judy L. Thomas of the Kansas City Star:
Former HOA treasurer admits embezzling more than $100,000
At her hearing, Lock admitted to writing 97 checks to herself on the HOA account, ranging in amounts from $250 to $3,200. She also wrote five checks to her husband — who was the HOA’s attorney at the time — for what she described as legal services, but some of those checks had been voided or stubs were missing. According to prosecutors, Lock also made numerous cash withdrawals from ATMs at area casinos.
Read more here: http://www.kansascity.com/news/local/crime/article97923567.html#storylink=cpy
Now the question is, when Lock wrote 97 checks to herself and 5 checks to her husband, was she authorized to sign HOA checks without a second signature by another board member? Because, if two signatures had been required, and if Lock had forged the second signature, then why wasn’t she charged with multiple forgeries?
Or was it standard procedure at Charleston Harbor Homes Association to allow a single signature on HOA checks – that of the HOA treasurer? If so, the HOA engaged in a very bad business practice, one that invites theft and fraud.
Readers, take note. Always require two signatures on HOA checks. And make sure the other Board members receive copies of bank statements every month, so they can reconcile the account by reviewing invoices and receipts.
Charleston Harbor HOA was very fortunate to receive full restitution. Most HOAs never fully recover their losses, even if they happen to be insured against crimes of infidelity.
One important lesson to be learned with regard to HOA theft, fraud, and embezzlement: prevention is critical. Homeowners are far better off to take prudent precautions to stop financial crime before it happens.
For more great tips on how to safeguard Association funds, see this list from Escaping Condo Jail, written by Sara E. Benson and Don DeBat.