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

By Deborah Goonan, Independent American Communities

debgoonan@icloud.com

This month: HOA managers, administrators investigated for theft and embezzlement; allegations of political conflict of interest in Mississippi; and Delaware DOJ pursues real estate developer for deceptive marketing practices.


Police investigation: $100,000 in “reimbursement” checks to former HOA manager (CA)

Chula Vista police are investigating a former HOA manager for possible embezzlement of funds at Camelot at Eastlake Shores HOA.

In an interview with Channel 10 News of San Diego, Howard Gatbonton insists he’s done nothing wrong. He says he wrote more than $100,000 in checks to himself as “reimbursement” for supplies purchased for the HOA. Gatbonton also blames the HOA board for “turning a blind eye” to financial irregularities that he says existed before he started working for Camelot.

The current HOA president says Gatbonton isn’t showing them documented proof to back up his claims, and the board cannot access records on the association’s computer, because the hard drive has been corrupted. The former manager denies tampering with computer records, and insists the data is stored “in the cloud.”

Current homeowners in Camelot are disturbed by the news, as they wait for updates following the police investigation.

In this case, the investigation could be hampered by a lack of evidence.

There’s a lesson here for HOA boards. Don’t store all your financial records on the hard drive of a single computer, with no backup. And if using storage “in the cloud,” make sure the server is regularly backed up, and that you know how to access the information.

Source:

Accusations of possible financial abuse by former Chula Vista HOA manager
Posted: 1:49 PM, Sep 11, 2019
Updated: 11:55 AM, Sep 12, 2019
By Jennifer Kastner | Team 10 Investigates (San Diego)


 

HOA politics intersects with state politics in AG conflict of interest probe (MS)

Just like many of their constituents, state politicians live in HOA-governed communities, too. And sometimes, the spouse of an elected official or candidate for office serves on their HOA board.

After the local press reported that Lt. Gov. Tate Reeve’s wife voted to allow rights of way for a state highway project, it prompted a state investigation of Reeves by his opponent in a hotly contested Gubernatorial campaign.

Reeves was accused of using political influence to fast track construction of a road connecting his HOA-governed community with a nearby shopping district.

In his defense, Reeves accuses Mississippi Attorney General Jim Hood of “abuse of office,” and says the investigation was prompted purley by political motivations.

The Mississippi Department of Transporation road project has since been called off. AG Hood has issued his report, but isn’t taking any further action at this time.

Source:

AG Hood releases investigation report on frontage road to Tate Reeves’ neighborhood (MS)
Luke Ramseth and Geoff Pender, Mississippi Clarion LedgerPublished 3:51 p.m. CT Sept. 11, 2019 | Updated 5:38 p.m. CT Sept. 11, 2019


 

Former administrator pleads guilty to theft and embezzlement totaling $558,000 (CO)

Robert Polich admits that, for fourteen years, he deposited $558,000 of unauthorized checks from Hamilton Creek Homes Association into the business account of his bookkeeping company.

The planned community is part of the Hamilton Creek Metropolitan District of Silverthorne.

A criminal investigation was opened in 2014, when the Hamilton Creek HOA treasurer noticed a suspicious deposit made by Polich, shortly after his arrest for embezzling more than $150,000 from the Enclave Homeowners Association in Keystone.

Polich served 90 days in jail and 4 years of probation following his conviction for the Enclave thefts, and pleaded guilty to charges of theft and embezzlement of public property in Hamilton Creek.

If convicted, Polich could serve four to fifteen years in prison.

According  to a report in Summit Daily News, Polich served as system administrator for the District from 1995 – 2015, and had sole check-writing authority at Hamilton Creek.

Another lesson for HOA governing boards — always require two signatures on each check, and make sure all board members review bank statements and invoices every month.

When no one is comparing bank statements to financial records, it’s way too easy for an embezzler to hide criminal behavior — sometimes getting away with thefts for many years.

In short, the more eyes on the community’s money, the better.

Source:

Robert Polich pleads guilty in Hamilton Creek embezzlement case (CO)
Summit Daily News | September 3, 2019
Sawyer D’Argonne
sdargonne@summitdaily.com


 

Delaware DOJ sues Developer of 55-Plus HOA-governed community in Delware, multiple fraud allegations

In one Delaware master planned community, the developer and his affiliated entities control two HOAs, the Community Clubhouse, and several utilities.

The Delaware DOJ’s 64- page complaint calls for the developer to cease and desist false advertising, deceptive marketing practices, and unlawful self-enrichment via collection of mandatory fees related to use of the Clubhouse, telecommunications and propane services.

If the DOJ’s prosecution is successful, Harry D. Miller and his various legal entities will be force to reimburse homeowners for illegally-collected fees, and buy back the homes of owners who wish to sell and escape from the tryanny of The Villages of Noble’s Pond.

This is a case to watch closely, since the facts of the case closely resemble the conduct of other developer-controlled or dominated common interest communities across the U.S.

Sources:

DOJ Sues to Stop Fraudulent and Deceptive Practices by Developer of Dover “55-Plus” Community
Department of Justice | Department of Justice Press Releases | News | Date Posted: Friday, June 28, 2019

Read the complaint:

STATE OF DELAWARE, ) ex rel. Kathleen Jennings, Attorney ) General of the State of Delaware )
) Plaintiff, ) ) v. ) ) REGAL BUILDERS, LLC, ) GALAXY NETWORKS, LLC, ) COUNTY PROPANE ) OF DELMARVA, LLC, ) EDDIE EVANS FARM PHASE I, LLC, ) EDDIE EVANS FARM PHASE V, LLC, ) EDDIE EVANS FARM PHASE VI, LLC, ) EDDIE EVANS FARM PHASE VII, LLC, ) THE VILLAGES OF NOBLE’S POND ) HOMEOWNERS ASSOCIATION, INC., ) THE VILLAGES OF NOBLE’S POND ) SERVICE CORPORATION, INC., and ) HARRY D. MILLER, III, ) ) Defendants. )


Former Texas HOA board member charged with theft spanning 6 years (TX)

On August 23, Marion County Sheriff’s Department arrested Deborah Ann Brown, a 63-year-old former secretary/treasurer for Mockingbird Hill Townhomes Homeowners Association. Brown is charged with theft of more than $17,000 from the HOA between 2013 and 2019.

In May, a former HOA President filed a complaint against Brown, presenting evidence in HOA financial records. That led to an investigation and, ultimately, criminal charges. ♦

Source:

HOA treasurer arrested for theft
Josh Dooley, Baxter Bulletin | Published 3:14 p.m. CT Aug. 27, 2019 | Updated 12:51 p.m. CT Aug. 28, 2019