Multiple U.S. HOA management agents, board members arrested for fraud and theft

From depleted Reserve Funds to unpaid contractors, homeowners pay the price when dishonest people embezzle the community’s money

By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com

In this post, community association management agents of five different companies are under investigation for mishandling HOA money. One former HOA Treasurer is also under investigation.

Alabama: HOA manager arrested, charged with stealing from Rouland Management, and at least four HOA clients

According to a report on WVTM13, 47-year-old Aimee Louise Statham, of Chelsea, is charged with wire fraud and embezzlement of funds from her former employer, Rouland Management Services (RMS), and four HOAs that the company services in Shelby and Jefferson Counties.

The U.S. Attorney and the FBI apparently began their investigation last September, when the principle of Rouland Management noticed financial discrepancies. Statham was charged in March 2022. If convicted, she faces a fine of $250,000 and up to 20 years in prison.

According to the report, Statham is accused of transferring money from RMS and HOA banks accounts to her personal bank account, and using the money for her own personal expenses. The unauthorized transfers occurred between 2018 and 2021.

Last year, four HOAs sued RMS and Statham, claiming a collective loss of $200,000 from their accounts. The four plaintiffs in that lawsuit are Timberlake Homeowners Associations, Inc., Weatherly Residential Associations, Inc., Silver Lakes Homeowners Association, Inc., and Stone Creek Homeowners Association, Inc. The owner of RMS, Darrell Rouland, is also named a defendant in that lawsuit.

In a separate lawsuit, Black Creek Station Subdivision is suing RMS and Union Bank, the holder of the HOA’s deposit account. According to a report on WBRC, the HOA alleges that the RMS agent was the sole account holder for HOA, therefore Union Bank would not allow HOA board members access to statements or funds in their accounts. The lawsuit accuses Union Bank of its failure to stop suspicious withdrawals by RMS employees.


Sources:
Jefferson County HOA sues management company and bank
By David Buchholz Published: Feb. 2, 2022 at 10:10 PM EST|Updated: Feb. 2, 2022 at 11:41 PM EST

Shelby County woman charged with stealing from employer, HOA groups they managed WVTM13 Updated: 3:55 PM CST Mar 3, 2022

WVTM 13 Investigates: Rouland Management accused of mismanaging HOA moneyWVTM13 Updated: 7:14 PM CST Dec 15, 2021

Florida: HOA account manager charged with felony fraud, investigators suspect additional victims

According to a report on WFLA, a woman by the name of Jamie Fonville, 46, of Tarpon Springs is accused of stealing nearly $230,000 from three different HOAs in Pinellas County. Fonville is a former account manager of First Choice Association Management. While employed she “issued checks on behalf of 58 different HOAs” in the Palm Harbor area.

Arrest records state that Fonville created fraudulent checks containing account information from three HOAs she managed, then deposited those checks into her personal bank account. She has been arrested for Felony Scheme to Defraud, and released on bail.

A report from WTSP confirms at least five HOAs have filed complaints against Fonville, that she is no longer employed by First Choice Management, and that the woman has a previous arrest record for theft and fraud.

Deputies suspect additional victims of fraud, and encourage former clients to contact Corporal Kyle Cruise with the Economic Crimes Unit at (727) 582-5711.

Sources:

Florida woman stole $228K from HOAs, spent some money on Bucs tickets: deputies
by: Athina Morris (WFLA) Posted: Jun 27, 2022 / 05:41 PM EDT Updated: Jun 27, 2022 / 05:46 PM EDT

Accounting manager accused of stealing $228K from HOAs to pay for groceries, Bucs games
Author: Andrew Krietz, Shannon Clowe (WTSP) Published: 2:00 PM EDT June 27, 2022 Updated: 6:01 PM EDT June 27, 2022

FL: Condo manager charged with scheme to defraud, accused of creating fake invoices

A report from WMBB last month states that Bay County Sheriff’s investigators have charged 42-year-old Lucinda ‘Cindy” Carey with one count of on-going scheme to defraud. Carey was the manager of Sand Castle West Townhouses and Condos from 2016 to 2019, and is accused of stealing $35,000 from the condo association.

According to charges, Carey created fake invoices from real companies for services never provided to the HOA. She then pocketed the money and used it for her personal expenses.

Source:
Calhoun Co. woman accused of stealing from PCB homeowners association
by: Tom Lewis (WMBB) Posted: May 13, 2022 / 10:33 AM CDT Updated: May 13, 2022 / 10:32 PM CDT

MS: Property manager pleads guilty of bank fraud, stealing $2.7 million from HOAs

According to the DOJ, former property manager David Luke Lane, 78, opened HOA accounts at Community Bank of Mississippi, then misrepresented himself as an account holder authorized to make withdrawals. Lane then used the money for personal expenses.

Previously, WLBT reported that Lane was the president and co-owner (along with his son) of a management company, Ridgway Lane. Lane and his company were sued by a dozen different HOAs in 2019, including those governing communities in Stonebridge, Bridgewater, Oakhurst, Dinsmor, Palisades, and Pebble Creek. A judge later consolidated those cases.

The FBI, U.S. Postal Inspection Service, and the IRS investigated the case. Sentencing ib criminal charges was scheduled for February 2022, but IAC could fine no information available on the terms of Lane’s sentence at this time of this posting.

Meanwhile, the courts have ordered David L. Lane’s assets to be liquidated, including several properties he formerly owned. The value of those assets, at this time, falls far short of the total losses to the twelve HOAs named as Plaintiffs in a civil lawsuit.

One notable fact was reported by the Clarion Ledger. At least one HOA board member claims that Lane provided them with regular management reports, which concealed the true balances in HOA bank accounts. This is a common theme in many HOA management fraud schemes.

It’s another reminder that, if you’re serving on your HOA board, it is your duty to review all actual bank statements each month, and do not rely on secondary management summaries or reports.

Sources:

Property Manager Pleads Guilty in Homeowner Association Fraud Case
Department of Justice, U.S. Attorney’s Office, Southern District of Mississippi, November 10, 2021

Ex-property manager pleads guilty to embezzling HOA money
By Jacob Gallant (WLBT) Published: Nov. 10, 2021 at 5:43 PM EST

Multimillion-dollar embezzlement scandal: Where the Ridgway Lane lawsuit stands a year later
Justin Vicory, Mississippi Clarion Ledger, Jan. 11, 2022 9:00 PM CDT

TX: Austin PD investigating management company’s Treasurer — money missing from seven HOAs

Austin Police are investigating theft of hundreds of thousands of dollars in reserve funds from Riverside Grove/RG Townhomes, Boulevard Condominiums, and at least five other HOA governed communities. The one thing all of these HOA-governed communities had in common: all were formerly managed by the Plateau Property Management Corporation.

At RG Townhomes, the HOA attorney alerted owners to the fact that the former Treasurer of Plateau Property Management has been terminated, and that law enforcement investigator are working with Plateau to determine the extent of the alleged thefts.

Several homeowners interviewed by KXAN report they now have nearly empty reserve funds, and that their HOAs had to issue special assessments to cover the gap. They say the assessments are necessary to pay various contractors that performed work in the communities, but have never been paid for their services.

This case — and another one in Utah highlighted below — illustrate why so many homeowners are reluctant to hand over HOA dues for a reserve fund, which, if not properly safeguarded, can be stolen right from under their noses.

Source:

Money missing from Austin HOAs, attorney says
by: Arezow Doost, Posted: Nov 7, 2021 / 07:00 AM CST, Updated: Nov 8, 2021 / 07:34 AM CST

UT: Former HOA Treasurer reportedly admits to stealing $159,000 to satisfy gambling addiction

The former HOA Treasurer of Lava Bluff HOA in Hurricane admitted to stealing at least $159,000, according to a Fox13 interview with homeowner Tim Mullicane. The report does not name the former Treasurer accused of the theft.

However, the report provides several important details of the case.

The woman who once served as Treasurer of the 55+ older adult community, is accused of covering up fraudulent transfers of HOA funds to her bank accounts, as well as accounts she held at casinos in Nevada. Apparently, Mullicane has suspected financial fraud for at least the past eight years, but was unable to get previous HOA board members to take him seriously enough to investigate.

Eventually, a former HOA board filed a complaint with the Hurricane Police Department, then dropped charges. Following Mullicane’s persistence, and a recent forensic audit conducted by a CPA, Hurricane PD has reopened its investigation.

Homeowners say that their reserve account has been depleted, and that they now lack the money to address road repairs that are needed in their community. HOA members had been paying $60 in monthly dues.

Source:

FOX 13 Investigates: HOA Treasurer confesses to embezzling more than $150K thanks to persistent homeowner
By: Adam Herbets, Posted at 9:46 PM, Jun 30, 2022 and last updated 9:04 AM, Jul 01, 2022

Bottom line: Common themes in cases of HOA fraud

To wrap up this post’s roundup of HOA fraud, let’s look at the common themes that spell trouble for owners of HOA-governed property.

This post illustrates that HOA board members would be unwise to put absolute trust in their management agents. These professionals have access to hundreds of thousands, potentially millions of dollars in HOA funds. Dishonest managers know how to falsify records and prepare bogus financial reports to conceal their fraudulent activity.

That’s why it’s so critical for all HOA board members to review actual bank statements, every month, every time. If the bank is not willing to provide statements, that’s a huge Red Flag. Make sure the bank has current signature cards for at least two HOA board members. The management agent should have NO authority to withdraw money from HOA accounts without HOA board authorization, and should never have access to debit or credit cards.

HOA board members can also be tempted to steal from their neighbors. That’s why at least two board members, preferably all board members, must have free and open access to HOA bank and credit card statements.

HOA board members and local police investigators need to take homeowners seriously, when they question discrepancies in financial reports and records. Unfortunately, people who commit HOA financial fraud know that owners — including board members — rarely pay close attention to financial reports, and are often unaware of how their money is managed. That creates ripe opportunities for theft and embezzlement.

The more eyes on HOA financial records, the better. That’s why state Legislatures should enact easily enforceable transparency laws for HOA-governed communities. Some states (for example, Florida) have ’access to records’ laws on the books, but when HOA boards or management agents resist or delay in honoring records requests, home and condo owners have little recourse — beyond filing unenforced administrative complaints or paying a lawyer to sue their HOA.

Without strict oversight and enforcement of transparency at the state level, millions of property owners will remain in the dark about the status of their HOA’s financial stability. They won’t find out about fraud until it’s been occurring for several years.

Some HOA-industry experts advise their clients to pay for insurance policy riders to help cover losses due to theft and embezzlement. But that’s not an ideal solution to the problem. An insurance company is likely to seek technical exclusions to deny claims, and is equally likely to set relatively low limits on the amount that owners can recover.

Prevention is the best solution, and, of course, that begins and ends with guaranteed HOA transparency. Until state legislators step up to that challenge, until they reject HOA-industry trade groups’ resistance to accountability for board members and management professionals, HOA fraud will be a pervasive problem.

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