HOA, condo, co-op corruption, fraud, theft roundup (July 2017)

By Deborah Goonan, Independent American Communities

Money in the form of many large bills

 

Fort Collins accountant pleads guilty to theft (CO)

Sarah Jane Kyle , sarahkyle@coloradoan.com Published 4:38 p.m. MT June 26, 2017

A Fort Collins accountant accused of stealing from two of her clients took plea deals in two criminal cases against her Monday.

Meredith Kanter, also known as Molly Hoff, appeared before Eighth Judicial District Judge Devin Odell Monday on 15 felony charges in two cases alleging she stole money from a Fort Collins nonprofit and a condo association. Kanter pleaded guilty to one count of theft in each case.

Her sentence will include probation and paying restitution to both clients, according to court proceedings Monday. Her sentencing is set to take place Aug. 14.

Read more:

http://www.coloradoan.com/story/news/2017/06/26/fort-collins-accountant-pleads-guilty-theft/428200001/

Windtrail Park Condo Association ordered an audit of financial records when they learned that their bookkeeper was arrested for theft from another local nonprofit, leading to discovery of theft and forged checks. The small condo association provides affordable rental housing to residents.  

 

Police: Scottsdale management co. employee stole $200K from 8 HOA’s

Joe Enea
11:25 AM, Jun 28, 2017

SCOTTSDALE, AZ – A Glendale couple was arrested after they allegedly stole about $200,000 from eight Homeowners’ Associations across the Valley.

Scottsdale police report that in December of 2016 the chief executive officer of ‘The Management Trust’ was alerted by an HOA president to a $53,000 discrepancy in their bank account.

‘The Management Trust,’ located near Frank Lloyd Wright Boulevard and Loop 101, manages accounts for multiple HOA’s across the Valley.

Read more:

http://www.abc15.com/news/crime/police-scottsdale-management-co-employee-steals-200k-from-8-hoas

John Michael Fewer and David Neil McAarthur have been arrested for engaging in a fraudulent scheme to invoice HOAs for services that were never performed by McArthur’s business. Fewer and McArthrur were married in 2016. They worked for The Management Trust, a large employee-owned company serving major real estate markets in six western states. 

Athens condo owners sue developer and others, alleging violations of state RICO Act (GA)

Posted June 28, 2017 04:00 pm
By Jim Thompson news@onlineathens.com

Owners of some of the condominiums in Athens’ intown Heritage Square neighborhood are suing local real estate investor and rental property owner Fred Moorman and other Heritage Square condominium owners.

The homeowners accuse Moorman of committing violations of Georgia’s civil Racketeer Influenced and Corrupt Organizations Act in an alleged scheme by Moorman to take over the neighborhood.

Broadly, Georgia’s RICO Act is designed to address “an interrelated pattern of criminal activity motivated by or the effect of which is pecuniary gain or economic or physical threat or injury,” according to the state code.

Specifically, the lawsuit alleges that Moorman and the owners named as defendants are engaged in “a scheme to acquire eighty percent (80%) of the units [at Heritage Square], partition the condominium at a reduced fair market value, and eject Plaintiffs from their homes.”

….

Moorman on Wednesday called the legal action “frivolous litigation” and suggested that condominiums are an outmoded form of residential living that are being replaced across the country.

“I think … that the train’s coming and that they need to get off the tracks,” Moorman said of the plaintiffs in the lawsuit.

Read more:

http://onlineathens.com/local-news/2017-06-28/athens-condo-owners-sue-developer-and-others-alleging-violations-state-rico

This article provides insight into how condo boards are taken over by an investor and a few allies. The process is very much like any other hostile corporate takeover. The aggressor simply purchases enough shares in the corporation (in this case, condo units) to control the board and, eventually, dissolution of the association.

A group of Heritage Square condo owners is suing Fred Moorman, in hopes of halting his effort to force remaining unit owners to sell. 

Moorman’s characterization of condominiums as “outmoded” seems to be confirmed by objective data gathered in the U.S. Census. New condo construction is way down, and terminations and conversions are getting more common. 

 

 

Law firm ordered to pay $3.1M to Las Vegas condo association (NV)

By Jane Ann Morrison Las Vegas Review-Journal
June 28, 2017 – 6:15 pm
One of Nevada’s leading law firms not only enabled a criminal conspiracy but also participated in it, according to District Judge Mark Denton.
Kummer Kaempfer Bonner Renshaw and Ferrario was so negligent it enabled contractor Leon Benzer to cheat a homeowners association out of $8 million.
On Tuesday, Denton ordered the law firm now known as Kaempfer Crowell to pay $3.1 million to the Vistana Condominium Owners Association. The judgment is nearly $2.4 million; the rest is interest.

Read more:

https://www.reviewjournal.com/news/news-columns/jane-ann-morrison/law-firm-ordered-to-pay-3-1m-to-las-vegas-condo-association/

This civil suit against a prominent Nevada law firm has resulted in a large verdict for La Vistana condo association. District Judge Mark Denton employed the young attorney, Brian Jones, who fraudulently stuffed the ballot box of the condo association’s elections. 

 

Florida couple stunned to learn $458,000 paid for gulf-front condo may be for nothing

By Susan Taylor Martin, Tampa Bay Times Published: July 3, 2017
On June 8, a condo overlooking the Gulf of Mexico in North Redington Beach sold at a Pinellas County foreclosure auction for $458,100.

The winning bidders, an Orlando couple, thought they had gotten a good deal on the 1,500-square unit in the Ram-Sea Condominiums with heated pool and Jacuzzi. Owners can use their condos as permanent homes or lucrative vacation rentals.

But the Orlando couple won’t do either. After the electronic auction was over and the money paid, they made an alarming discovery: A bank has a superior first mortgage on the condo and could soon foreclose.

That would leave them with no condo and out almost half a million dollars.

Read more:

http://www.tbo.com/news/business/realestate/florida-couple-stunned-to-learn-458000-paid-for-gulffront-condo-may-be-for/2329213

Condo foreclosure fraud, Florida style. 

The buyers should have done a title search. 

 

N4T Investigators: Tucson police investigating HOA – KVOA | KVOA.com | Tucson, Arizona

Posted: Jul 05, 2017 6:49 PM EDT
Updated: Jul 05, 2017 6:49 PM EDT
Written By Nick VinZant

After a News 4 Tucson investigation into potentially missing money, Tucson police are now looking into a local Home Owners Association.

Since it’s an open case Tucson police can’t say much about their investigation, but officials with the financial crimes division confirm they are investigating Cuernavaca Villa’s financial situation.

Residents of the Cuernavaca Villas housing community say they want to know what happened to potentially hundreds of thousands of dollars worth of HOA dues.

Sources say the money was managed by their former HOA president.

However, when residents asked to see financial records, they say the former president abruptly resigned.

“He’s left us with absolutely no money. We’re just trying to keep the lights on,” said one resident who asked not to be identified.

Read more (Video):

http://www.kvoa.com/story/35819282/n4t-investigators-tucson-police-investigating-hoa

Condo owners first contacted KVOA in May, when they discovered there was no money to py the association’s bills. Since that time, Tucson police have been conducting a criminal investigation. They say they have talked to the former HOA president, but at this point, no charges have been filed, and KVOA has not named the suspect. 

CONTACT 13: Community Manager ordered to pay $1.6 million to HOAs

Darcy Spears
6:00 PM, Jul 7, 2017

Las Vegas, NV (KTNV) – Dozens of Home Owners Associations are out a ton of money. Over a million bucks all together. Contact 13 finds out who took it and how they got away with stealing homeowners’ money.

Community Association Managers are supposed to look after homeowners and their HOAs. But the Nevada Real Estate Division says one manager was only looking out herself.

Contact 13 obtained this order from the Commission for Common-Interest Communities. It says community manager Leslie White defrauded 34 HOAs out of more than $1.6 million. White took much of that money after surrendering her community manager certificate.

Real Estate Division investigators found fraud and hundreds of violations of state law with the two businesses white ran under the names Associated Community Management and Path Community Management.

Read more:

http://www.ktnv.com/news/contact-13/contact-13-community-manager-ordered-to-pay-16-million-to-hoas

Leslie White, owner of Associated Community Management and Path Community Management, has been found guilty of stealing from 34 Nevada HOAs, to the tune of $1.6 million. A list of all 34 Associations affected bu the fraud are listed by KTNV in the link posted above.

White had been found in violation of Nevada statute in 2015, ordered to pay  $41,000 fine and surrender her CAM license for Associated Community Management. But then White simply began a new business under the name of Path Community Management, and continued to operate without a license, collecting fees well in excess of her contracts. In addition to more than $1.6 million in restitution, White has been ordered to pay more than $1M in penalties. More details at COMMON-INTEREST COMMUNITY COMMISSION ASSESSES FINES, COSTS AND RESTITUTION OF MORE THAN $2 MILLION AGAINST FORMER COMMUNITY ASSOCIATION MANAGER LESLIE WHITE.

Woodbury HOAs impacted by alleged embezzlement case

By S.M. Chavey / St. Paul Pioneer Press on Jul 12, 2017 at 11:57 a.m.

A senior executive at Durand & Associates, a property-management firm in South St. Paul, was recently fired after being accused of taking client money.

Members of Woodbury’s Eagle Valley Homeowners Association, Wedgewood Association and Woodbury Crossing received notices telling them an employee had allegedly embezzled hundreds of thousands of dollars by funneling money into newly opened bank accounts.
According to residents, an estimated $100,000 and $400,000 had respectively gone missing from Wedgewood and Woodbury Crossing’s accounts used for funding community events and day-to-day operations.

Read more:

http://www.woodburybulletin.com/news/crime-and-courts/4296528-woodbury-hoas-impacted-alleged-embezzlement-case

Another case of massive embezzlement perpetrated by a property manager, this on in Minnesota. Criminal investigations are ongoing, and so far no mention of the name of the “senior executive” from Durand & Associates that is allegedly responsible for the thefts. 

 

 

New Mexico accuses California real estate group of fraud

by Mike Torres | Jun. 5, 2017, 9:03am

SANTA FE, N.M. (Legal Newsline) — New Mexico’s attorney general is suing California real estate groups, alleging fraud.

New Mexico Attorney General Hector H. Balderas filed a complaint Feb. 22 in U.S. District Court for the District of New Mexico against Real Estate Law Center PC, Erikson M. Davis, Deepak S. Parwatikar, Chad T. Pratt, The Balanced Legal Group, and Pinnacle Law Center PC, alleging they misrepresented their business to home owners.

According to the complaint, the state of New Mexico has suffered monetary damages on behalf of residents and homeowners who were defrauded. The plaintiffs allege the defendants solicited homeowners into participating in a merit-less mass joinder actions to take advantage of their lack of knowledge and experience.

The state of New Mexico seeks restitution, disgorgement, civil penalties of $5,526 to $1,105,241 per day for violations of the MARS Rule, civil penalty of $5,000 per violation, exemplary damages of three times the compensation charged for each violation, injunction, court costs and all other relief the court deems just and proper. It is represented by Angelica Anaya Allen, assistant attorney general of New Mexico in Albuquerque.

U.S. District Court for the District of New Mexico case number 1:17-cv-00251-KBM-SCY

Source:

http://legalnewsline.com/stories/511121946-new-mexico-accuses-california-real-estate-group-of-fraud

As with most AG investigations involving fraud, this case involves millions of dollars in penalties, resitution, and damages. The target of this investigation is real estate lawyers and law firms. 

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