HOA, condo & co-op corruption and fraud roundup (March 2019)

By Deborah Goonan, Independent American Communities

This month: more condo HOA managers under investigation, several sentenced after pleading guilty to theft and money laundering; FBI probe in Miami; condo owners catch maintenance worker stealing their stuff.


Illinois

Condo President says former management company left them bankrupt

CBS2 Chicago, reports that Drexel Condo Association President Natasha Neptune, has filed a complaint with Illinois Department of Financial Professional Regulation against the association’s former management company.

Neptune says Phoenix Rising Management admitted to double charging the association more than $8,000 for an insurance policy. But instead of reimbursing the condo association, Phoenix Rising billed them $12,000.

The company says those fees represent charges for transferring association files to a new management company, after the condo board terminated their contract.

How’s that for nerve?

Neptune also accuses the former management company of leaving the condo association bankrupt. Now the 16-unit community needs at least $25,000 in repairs, which they’ll have to raise with a special assessment.

The CBS report also notes that another condo association recently sued Phoenix Rising in a dispute over “email” fees, and a half dozen more filed complaints with Illinois Attorney General in the past three years.

As is the case in many states in the U.S., Illinois AG does not have an online consumer database of management professionals that work for homeowners, condo, and co-op associations.

In addition to checking public records for pending lawsuits and AG complaints, boards of association-governed communities would be wise to conduct a criminal background check of managers and management companies, and check references.

Small associations such as Drexel often suffer from a shortage of board members, and little to no supervision of management, which can lead to waste and fraud.

Property Management Firm Accused Of Repeatedly Overbilling Condo Associations

March 13, 2019 at 8:08 am
CBS2

CHICAGO (CBS) — One of the biggest complaints among condo owners is the monthly assessments.

Ever wonder why you’re always being asked to pay more? CBS 2 Investigator Dorothy Tucker uncovers one condo association’s budget battle with a management company, leaving them penniless.

Read more (video):
Property Management Firm Accused Of Repeatedly Overbilling Condo Associations


Florida

CDD approves, then promptly voids contract with unlicensed lighting company tied to felons

The details of this Jacksonville Business Journal story are eye-opening.

Heritage Landing HOA President, Thomas Lance Clyce, also served on the board of his Community Development District. In February, Clyce recommended a lighting contractor, Michael Sawyer of New Creation Consulting, to supply the CDD with LED bulbs for the community pool area.

Then on March 1, Clyce was arrested on charges of fraud, grand theft, and scheme to defraud. The charges are related to a lending company he owns, eLease International. Although Clyce resigned from the CDD board before his arrest and before the CDD contract vote was taken, Sawyer and NCC were awarded the contract.

The CDD later checked the Sawyer’s credentials. They learned that he wasn’t a licensed electrician, that he made false claims about the efficiency of the LED light bulbs, and that he’s a registered sex offender. Needless to say, the CDD voided the contract within a month after its award, and elected a replacement for Clyce on their board.

Perhaps it’s not a good idea to allow people to serve on their HOA board and CDD board at the same time? And this story makes a strong case for doing a criminal background check of all board members — for both the HOA and the CDD.

‘Eyebrow-raising’ St. Augustine lighting contract void after CDD meeting

By Will Robinson – Reporter, Jacksonville Business Journal
Mar 14, 2019, 2:19pm EDT
In a corner of Heritage Landing’s 600 idyllic acres, about 40 residents crowded the amenity center on Thursday to learn what became of the neighborhood’s pool lighting contract.

Exactly one month prior, the board awarded the $48,000 contract to a registered sex offender based largely on the advice of an alleged fraudster, who claimed the company, New Creation Consulting Co., had a lightbulb more than four times better than any known LED bulb.

Read more:

‘Eyebrow-raising’ St. Augustine lighting contract void after CDD meeting

See also: Updated: St. Augustine residents avoid $48,000 contract for ‘eyebrow-raising’ lightbulbs


Money-100-dollar-bills-theft-embezzlement
(Pixabay.com free image)
South Carolina

Vacation rental agent under investigation for embezzlement

WMBF News reports that Walter Pigg of Keye Beach Rentals has been operating a vacation rental management business without a license for months. He now faces at least 20 charges filed by vacation renters and condo owners.

Vacationers say they paid deposits, only to be told, when they arrived in North Myrtle Beach, that their reservations were cancelled.

Meanwhile, condo owners say they haven’t been paid by Pigg in months.

This report definitely highlights the risks of investing in a condo at a vacation resort, and relying on a manager to book vacations and collect the rent on your behalf.

 

SLED investigates NMB vacation rental company accused of owing thousands to renters, owners

By Samantha Kummerer | March 1, 2019 at 9:04 PM EST – Updated March 1 at 9:07 PM
NORTH MYRTLE BEACH, SC (WMBF) – More than a dozen police reports filed with the North Myrtle Beach police department describe months of unpaid rent and owners owed more than $50,000 from Keye Beach Rentals.
Months after the first reports were filed, the company and its owner, Walter Pigg, are at the center of an ongoing multi-agency investigation.

Read more:
SLED investigates NMB vacation rental company accused of owing thousands to renters, owners


Massachusetts

Former maintenance worker pleads guilty to stealing from multiple condo owners

Do you know who has a Master Key to your “carefree” condo unit?

Residents of 19 condos learned that a former maintenance worker with a serious criminal record, and a substance abuse problem, stole jewelry and other valuables, while they were away from their homes.

The thefts took place over a two-year period. Delestre was finally caught stealing by a condo owner’s surveillance camera. After pleading guilty, a judge sentenced him to two and a half years in prison.

Did the condo association do a background check on Delestre before they hired him? And who was supervising his work while he was employed at Georgetown?

Condo owners must make sure their association carefully screens any employees, especially if they will have a Master Key to enter units.

Anthony Delestre admits stealing from residents of Springfield condo complex where he worked

Updated Mar 7, 2:15 PM; Posted Mar 5, 2019

By Buffy Spencer | bspencer@repub.com

SPRINGFIELD — A former maintenance worker on Tuesday pleaded guilty to 23 charges connected to the theft of items from 19 Georgetown Condominiums residents over several years.

Anthony F. Delestre, 52, of Orange Street, pleaded guilty to breaking and entering in the daytime with intent to commit a felony and larceny over $250. He also pleaded guilty to 12 counts of receiving stolen property valued in the amount of over $250 and nine counts of receiving stolen property in the amount of under $250.

Read more:

Anthony Delestre admits stealing from residents of Springfield condo complex where he worked


Pixabay.com free image
New Jersey

Court orders former condo manager to pay $228K restitution in addition to serving 5 years probation

As reported last month, Ira Binder was former club manager, who overpaid himself for seven years, to the tune of $352,000.  Twenty condo owners attended a February sentencing hearing and were disappointed he didn’t get jail time.

Press of Atlantic City reports that Binder has already repaid $25,000.

Former Galloway condo club manager must pay back $228K, judge says

MOLLY BILINSKI Staff Writer March 7, 2019

MAYS LANDING — An Egg Harbor Township man was sentenced to 90 days of house arrest and is required to pay $227,620 in restitution after pleading guilty to taking money from The Club at Galloway Condominium Association.

Ira Binder, 68, was also sentenced Feb. 22 to five years of probation for the second-degree theft by unlawful taking charge by Superior Court Judge John Rauh.

Read more:
Former Galloway condo club manager must pay back $228K, judge says


Arizona

Three more managers sentenced in $1.2 million money laundering scheme

Last month, the owner of Eagle Property Management (EPMI), Harlow White was sentenced and ordered to pay $292,00 in restitution.

This month, three managers who worked for White were also sentenced and ordered to pay restitution as follows: $439,000 from Kelsey Powell, $152,000 from Michael Powell, and $110,000 from Rachel Ellerbrock.

Kelsey Powell and Rachel Ellerbrook are White’s daughters.

Source links:
3 Sentenced for Defrauding Phoenix Homeowner Associations Associated Press, March 4, 2019

Remaining EPMI Property Managers Sent to Prison for Defrauding Homeowner Associations, U.S. Department of Justice, March 4, 2019


Florida

New FBI probe in Miami

A crackdown on international corruption in South Florida. Cash sales of luxury property are commonplace in Miami. So this investigation could uncover corruption tied to development and purchase of condominiums and HOA-governed real estate.

 

Washington, D.C.
FBI National Press Office
(202) 324-3691
March 5, 2019
FBI Announces New International Corruption Squad in Miami Field Office

The FBI announces the creation of a dedicated international corruption squad based in its Miami Field Office. The FBI made the decision to expand the program to the Miami Field Office after the success of the FBI’s international corruption squads operating in New York, Los Angeles, and Washington, D.C. The Miami International Corruption Squad will begin operating in March 2019.

The international corruption squads were created to combat international corruption by addressing foreign bribery, kleptocracy, and international antitrust matters. Investigations conducted by these squads generally focus on criminal acts occurring outside U.S. borders but having a nexus to the U.S. The squads routinely partner with foreign law enforcement and FBI legal attaché offices as a force multiplier to combat international corruption matters.

Read more:

FBI Announces New International Corruption Squad in Miami Field Office