HOA, condo & co-op corruption and fraud roundup (Dec 2018)

By Deborah Goonan, Independent American Communities

This month’s roundup includes some high level corruption implicating real estate developers, some of them working for local housing authorities, as well as suspected money laundering in Boston.

Developer charged Wilmington residents thousands for HOA that doesn’t really exist. So, where’s the money? (NC)

Telesis is a for-profit developer that specializes in public-private housing projects; through its management company, Telesis allegedly charged residents of Wilmington’s Jervay Communities tens of thousands of dollars in HOA fees, but never formed a proper HOA with resident board members, meetings, or transparency on how the fees were being spent.

By Benjamin Schachtman – December 20, 2018

WILMINGTON — Residents of Jervay Communities say they are still looking for answers after over ten years, and thousands of dollars spent on residents’ association fees — despite the fact that the Jervay HOA only exists on paper.

According to interviews and email records from the Wilmington Housing Authority (WHA), not all residents were charged the HOA fees, but those that did paid thousands of dollars between 2006 and 2012 years. The same emails show WHA at one point promised refunds — but, to date, haven’t been able to get Telesis, the private for-profit developer who owns Jervay, to the table.

The Jervay Communities apartments and homes are technically a public-private housing project, a partnership between WHA and Telesis, a D.C.-based developer.

As CEO of the housing authority, Quattlebaum oversaw the privatization of the Jervay property under the U.S. Department of Housing and Urban Development’s Hope VI program in the early 2000s.

In 2002, the process of privatizing Jervay also created a residents association, which like other HOAs is a non-profit that could assess fees and use them to maintain the property. According to the 2002 covenant, the Jervay HOA – known legally as the Jervay Place Residents Association, Inc. – was initially run by three directors, including Telesis founder and president Marilyn Melkonian, as well as Quattlebaum.

The first houses were sold around 2003 and within several years the development had reached the 75 percent mark.

Still, except as a legal technicality, the HOA was never formed — Jervay residents paid fees, but had no elections, no representation, and no idea where their money was going. It was a residents association that excluded the residents.

Read more:

Developer charged Wilmington residents thousands for HOA that doesn’t really exist. So, where’s the money?

Two of Wilmington Housing Authority’s staff members promised condo residents that something would be done, that they should receive refunds of their fees paid to a nonexistent HOA. Both of those staff members are no longer working for the Housing Authority. One was arrested on DUI charges and subsequently fired. The other took another job in Asheville. Clearly, the city botched this Private-Public Partnership for affordable housing, because, after 6 years of “investigating” the matter, owners/residents of Jervay Communities have not been repaid their wrongfully collected HOA fees.

Edgardo Defortuna faces lawsuits over two of his condo developments (FL)

He was accused of cheating sources of financing for Jade Ocean and blocking the sale of a low-rise condo next to the 52-story Ritz-Carlton condo in Sunny Isles Beach

December 16, 2018 03:05PM
The Real Deal

In a third lawsuit, the owners association at the Tropicana Condo in Sunny Isles Beach alleges that Defortuna and a partner blocked a sale of all 48 units at the Tropicana to advance their development of a taller condominium on an adjacent site.

According to the lawsuit, Defortuna formed a partnership with two other defendants, Chateau Group and its principal Manuel Grosskopf, to build a 52-story condominium under the Ritz-Carlton brand next to the nine-story Tropicana Condo.

The lawsuit alleges that the developers arranged for straw buyers to acquire five of the 48 units at the Tropicana Condo, just enough to vote against and block a deal to sell the entire Tropicana building for $115 million.

Glen Waldman, an attorney for the Tropicana Condo owners association, told the Miami Herald that Defortuna and Grosskopf arranged for the unit purchases by straw buyers because they were promising potential buyers of units on the upper floors of the Ritz-Carlton condominium that they would have unimpeded views of the ocean and beach to the south, where the shorter Tropicana building is located.

While acquiring condos through straw buyers is legal, Waldman said the inability of Tropicana owners to sell their units to a developer prevented them from collecting about $2 million each. [Miami Herald] – Mike Seemuth



At least one of the three lawsuits against a condo developer has been dismissed, but the lawsuit brought by Tropicana Owners Association remains active. Condo owners accuse the developer of blocking the sale of their condominium, so that he could assure buyers of an adjacent hi-rise Ritz-Carlton project a clear view that wouldn’t be blocked by future construction on the site of the Tropicana! The lawsuit alleges that Defortuna arranged for straw buyers to vote against a condo sale and termination at the Tropicana. (See previous IAC post for details)

Suspected embezzlement at Orange homeowners association rises to $400K (VA)

The Daily Progress staff reports Nov 27, 2018

The Orange County Sheriff’s Office says nearly a half-million dollars may have been embezzled from the Lake of the Woods Association.

Sheriff Mark Amos said the total funds suspected to have been embezzled now appears to be more than $400,000, up from the $94,000 estimated in August.

The association represents Lake of the Woods community residents.

Read more:

So far,no arrests in this investigation. But it looks like the HOA is missing a LOT more money than originally thought.

Orlando attorney indefinitely suspended following allegations of misappropriating about $37,000

By Karen Kidd | Dec 2, 2018

TALLAHASSEE — Orlando attorney Elizabeth Jayne Anderson has been indefinitely suspended following an Oct. 8 Florida Supreme Court order over misappropriation allegations, according to a recent announcement by the Florida Bar.

“Anderson appeared to be causing great public harm by misappropriating client trust funds and neglecting client matters,” the state bar said in its Nov. 30 announcement of the discipline and the Supreme Court’s order. “While representing a homeowners’ association, Anderson had a shortage of $37,000 in her trust account. She used the client trust funds for her own benefit or the benefit of her law firm, and she failed to maintain minimum required trust account records.”

The high court approved the state bar’s petition for emergency suspension and suspended Anderson until further court order.

Read more:

The Florida bar suspends one of its own attorneys.


(Pixabay.com free image)

Former executive director of Collinwood development corporation indicted on federal theft charge

Thursday, November 15, 2018

(Source: cleveland.com) CLEVELAND, Ohio — The former executive director of the Collinwood & Nottingham Villages Development Corporation was arrested by federal authorities Thursday on accusations that she stole money from the CDC.

Tamiko Parker, 46, of Cleveland is charged with theft concerning programs receiving federal funds. The CDC, a nonprofit on the city’s East Side that develops and leases property, lost more than $172,000. She embezzled the money between 2014 and 2016, while she worked as the CDC’s executive director, according to the U.S. Attorney’s Office.

Read more:

Believe it or not, Parker “has prior convictions for theft, forgery and misuse of credit cards, is a flight risk and danger to the community, and failed to appear in court for hearings in her previous cases,” according to Assistant U.S. Attorney Brian McDonough. Why, then, was she placed in charge of managing and collecting funds for the Collinwood Developement Corp.?


(Pixabay.com free image)

Boston’s Luxury Towers: A Shell Game For the Global Elite? A New Study Makes The Case

WBUR 90.9
September 11, 2018
Simón Rios

Opponents of Boston’s luxury housing boom are warning of another prospective danger beyond raising rents and forcing out longtime residents — tax evasion and money laundering under the cover of the multimillion-dollar condos sprouting through the sky.

“Boston’s past and current city administrations have permitted an explosion in luxury real estate property construction that is reshaping the city’s skyline and economic composition,” reads a new report, titled “The Perils Of The Luxury Real Estate Boom For Bostonians.” “With thousands of new luxury units either under construction or seeking permits, city officials ought to be seriously exploring the perils these units pose.”

Those perils are far from a foregone conclusion, but the report warns Boston’s housing market could become (or already is) a major haven for people trying to hide money from prying governments.

Read more/listen to podcast:


A recent study suggests that anonymous LLC purchasers of luxury condominiums in Boston could be hiding illicit money. While Miami and New York remain under federal investigation for possible money laundering, Boston is not included in FinCEN’s monitoring program.

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