Management Fraud

Admin note:  I have stopped posting to this page.  Reports of fraud are too numerous and time consuming to track.

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People in 50-plus communities are often targets of fraud because they tend to have more assets and they are less aware of these scams.

Embezzlement cases point up the need for board directors to be hyper-vigilant about the money entrusted to them. They need to use a magnifying glass to study association financial reports – and to understand what they’re reading. Likewise, homeowners should insist on having negative budget variances reviewed at board meetings and a monthly financial budget performance report available for their review. Transparency is often problematic in planned communities and this creates a hospitable environment for fraud. Board members should openly review budget performance with the Finance Committee.

Associations nationwide have been plagued by embezzlement: by community managers, by accountants, and by board treasurers.  Associations control hundreds of billions of dollars in cash comprising assessments, interest, transfer fees and other dollars collected from homeowners. Embezzlement occurs largely because there are so few controls over association money. Whoever has a pen, the bank account numbers and PIN can too easily drain the accounts.

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Hundreds of Thousand Missing

Double R Realty employee accused of embezzlement

August 1, 2014

RIO RANCHO, N.M. (KRQE) – Police say an employee at Double R Realty embezzled hundreds of thousands of dollars over the past few years from homeowners associations, businesses and people. Investigators served a search warrant at the company Friday, seizing boxes and boxes of evidence.

Double R Realty offers all kinds of real estate services, including residential and commercial association management. Police say earlier this week, someone walked into their office with a tip an employee has been embezzling money. Police investigated and say it appears money coming in would be transferred to different accounts; they think hundreds of thousands of dollars were stolen over a five year time span.

Police say the embezzlement case possibly impacts at least nine homeowner associations and three commercial associations.  Police carried out boxes, filing cabinets and computers from Double R Friday, filling two trailers with evidence. They say it’s going to take a long time to figure out how far-reaching the case is.

$528,000 Missing

THE ASSOCIATED PRESS
September 13, 2014

PROVIDENCE, Rhode Island — A Portsmouth man has been accused of embezzling nearly $528,000 from a Newport homeowners association at which he previously served as general manager.

Rhode Island State Police said Friday that 54-year-old Timothy Roche was arrested and charged with embezzlement over $100.

Authorities said they began investigating after getting a complaint from the Newport Bay Club Homeowners Association, which is a timeshare development. Police allege that Roche issued 34 unauthorized checks, totaling $527,934, for his personal benefit between July 2008 and January 2013.

No one answered Friday at a telephone listing in Roche’s name.

Roche was arraigned and released on $1,000 personal recognizance. He’s due back in court on Oct. 23.

$1,100,000 Missing

David Kobbeman, HOA embezzler, sentenced to 48 months in prison

By Jeff Manning | jmanning@oregonian.com The Oregonian May 28, 2014

Amy Boyle, president of the Arbor Terrace Homeowners Association, recalls the shock and anguish she felt upon learning more than $480,000 in her association’s bank account had gone missing. Boyle testified Tuesday at the sentencing of David Kobbeman, the former manager who allegedly embezzled the money.

Construction crews had moved onto the 160-home Sherwood development to fix certain structural problems, a project funded in part by proceeds from a construction defect lawsuit the HOA had filed. Just as the repairs were getting underway, Boyle got a panicked call from a fellow HOA board member. The $480,000 from the lawsuit settlement had disappeared. The association’s bank account was empty.

Boyle recounted the fear, guilt and anxiety she felt in those days during the Wednesday sentencing of David Kobbeman, the former HOA management company executive who admitted he embezzled more than $1.1 million from Portland-area HOAs.

Federal prosecutor Michelle Kerin said Kobbeman, 34, conducted a sophisticated campaign to grab his clients’ money and hide his tracks. More than 700 times, he transferred one HOA’s money to another or to his own pocket. Kobbeman admitted taking more than $110,000 for his personal use.

Northwest Empire was one of the Portland region’s HOA managers. Kobbeman was its chief financial officer. Kerin said Tuesday Kobbeman had been moving, commingling and taking his clients’ money and hiding it by doctoring their bank statements.

The Northwest Empire controversy has influenced how local homeowners’ associations interact with their management companies. Rich Vial, a Lake Oswego attorney who specializes in HOA issues, said associations are generally ceding less control over their money to their manager.

$1,000,000 Missing.

2013.   An Agoura Hills woman was out on $20,000 bail after pleading not guilty Monday to charges that her employer and she embezzled nearly $1 million from a Simi Valley homeowners association.  Melissa Hoff-Solomon-Ramsey, 37, was arraigned on charges of grand theft and conspiracy to commit grand theft, according to Ventura County Deputy District Attorney Howard Weiss.  She and her boss, Kristin Davis, 44, the owner and CEO of Paradigm Management Group, were arrested last weekend after a years-long investigation. Hoff-Solomon-Ramsey was the company’s chief financial officer, authorities said.  “We are relived that the thunderhead that has been developing over the last four years is finally breaking apart,” Hoff-Solomon-Ramsey’s attorney, Sharon Beth Morris, said Monday. “Be very careful who you trust.”

Soon after the allegations emerged, Davis shut Paradigm Management Group, which was in Thousand Oaks, and opened a similar company called MK Management, according to authorities.  Paradigm managed about 50 homeowners associations in Ventura and Orange counties, authorities said. King said Ventura County authorities are investigating losses by other homeowners associations.

$60,000 Missing.

The Sevier County, TN sheriff’s department has arrested two women they say misused and stole $60,000 from the homeowner’s association.  They arrested Alice Ball Thursday and Judy Hixon Friday.  Investigators say the two suspects embezzled small amounts of money totaling $60,000 over the past four years. They say an audit found the two misused company credit cards.  A Sevier County grand jury indicted them this week on embezzlement charges.

$73,000 Missing.

2013.  Charlottesville, VA.  Albemarle County Police are investigating $73,000 in unauthorized transactions from a homeowner association’s bank account.  The Hollymead Citizens Association Board of Directors told residents last month about the missing funds.  An ausit in June by a Charlottesville accounting firm identified the transactions that were made from 2008 to 2012.

 $100,000 Missing.

2013.  Embezzlement nets Boonsboro woman jail sentence  By Danielle E. Gaines News-Post Staff.  A Boonsboro woman was sentenced to 18 months in jail Tuesday for embezzling more that $100,000 from a Frederick homeowners association.  Nancy Barbara Walker, 63, who had worked for the association as a property manager, pleaded guilty in July to theft scheme fore than $100,000.  Her sentencing hearing was postponed so she could sell her house to pay the $137,280 in restitution due to Ballenger Creek Home Owner’s Association.

$55,000 Missing. 

2013.  Police Say Man Stole $55K from Homeowner’s Association  By: Melissa Foy.  Wichita Falls police arrest the building manager for a local condominium and charge him with embezzling from homeowner association funds.   Forty-eight year-old Benny Wayne Hopkins is charged with theft over $20,000 and is not now listed on the Wichita County Jail Roster.   Police were called by an officer of the association about missing funds from the Vantage Point Homeowner’s Association at 2100 Santa Fe.   That officer told police Hopkins had been writing checks from the association to himself and cashing them.

$750,000 Missing. 

2012.  Kansas City Business Owner Sentenced for Embezzling $750,000 from Homeowners Associations.  U.S. Attorney’s Office, Western District of Missouri. KANSAS CITY, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that the owner of a Kansas City, Missouri business was sentenced in federal court today for embezzling more than $750,000 from dozens of homeowners associations.  Dale Palmer, 54, of Kansas City, Missouri, was sentenced by U.S. District Judge Nanette K. Laughrey to 46 months in federal prison without parole. The court also ordered Palmer to pay $825,937 in restitution to the victim homeowners associations and their insurers.  Palmer, who pleaded guilty to mail fraud on Feb. 21, 2012, owned and operated Home Owner Association Services (HOAS), headquartered in Kansas City, Missouri. HOAS provided property management services for building and neighborhood homeowner associations and managed operating accounts for homeowner associations. It also performed administrative tasks, such as making deposits, paying expenses, and managing reserve accounts. HOAS operated in Missouri, Kansas, Wisconsin, and Illinois, with additional offices in Overland Park, Kansas; Westchester, Illinois; and other locations.

$90,000  Missing.

2012.  HOA Treasurer accused of $90,000 embezzlement.AOL Money – The Escambia County Sheriff’s Office says, since 2007 the Lillian Woods Homeowners Association’s treasurer has embezzled around $90,000. The HOA is now in debt for around $6,000.

$400,000 Missing. 

2012.  Homeowner’s Association embezzler gets 6 year sentence.  Written by Michelle Gladden.  FREEHOLD TOWNSHIP — The woman who embezzled more than $400,000 from a homeowners’ association will serve a six year prison term, Monmouth County Prosecutor Peter E. Warshaw, Jr. said.  Theresa Tierney, 60, of Oakhurst, who pleaded guilty to a second-degree theft charge in December, was sentenced Friday by Superior Court Judge Richard W. English, Warshaw said.  A Prosecutor’s Office investigation revealed, Tierney, who was property manager of the Freehold Township-based Strickland Farms Condominiums, made herself the sole signatory on a bank account she opened in 2003 in the company’s name. Instead of transferring the funds to the Solomon Organization management company, Tierney pocked the money.

$856,000 Missing. 

2010.  Woman pleads guilty to embezzlement of $856K.   K. Wernowsky.  Tina Mitchell spent lavishly on vacations, clothes and expensive liquors.  She spent a “horrendous amount of money” on Mary Kay products that she sold as a side business. She became one of the company’s big sellers, a distinction that comes complete with a cotton-candy-pink Cadillac.  The only problem: That money wasn’t hers, the man who prosecuted her said.  Mitchell lined her pockets with $856,126 embezzled from five local homeowners associations between 2006 and 2009 while she worked as an association representative for Montgomery Management Associates.  Mitchell pleaded guilty Tuesday to three counts of money laundering of more than $100,000; one count of money laundering between $20,000 and $100,000; two counts of grand theft over $100,000; and three counts of grand theft between $20,000 and $100,000.  Mitchell will face 19 to 210 years in state prison at a March 15 sentencing hearing in Escambia County before Circuit Judge Terry Terrell.

$750,000 Missing.

2010.  By the Broomfield, CO Enterprise.  A former management company employee accused of stealing thousands of dollars from area homeowners associations.  Stacey Lynn Chevarria, a former bookkeeper for Vista Management Association Inc., was arrested in November.  The amount stolen is too great to be covered by Vista Management’s insurance policy.  The alleged thefts started in 2006.

$75,000 Missing.

2008.  Las Sendas Community Association Probe. The Arizona Republic.  Las Sendas Community Association directors appear to have widespread constituent support for their investigation of more than $75,000 in questionable spending for employee salaries and programs at the Mesa uplands suburb. As police continue the probe, residents are relying on the association’s seven-member board with two new faces to improve the community’s fiscal management and clear up any irregularities identified in the probe. “Everybody is very pleased that they have looked into this and given it to the proper authorities,” said Milt Izenberg, a Las Sendas resident for four years. “That’s a lot of money. It’s a loss that could make fees go up and we don’t want that now. A lot of people are retirees and have to work.”  Police are following up on a community-financed forensic audit of bank documents, credit card statements, operating and petty cash accounts, payroll records, cancelled checks and records of two programs, one of them a childcare operation called Kids N Motion. The audit covered a period between January 2006, almost a year before the homeowners association took over operations of the community from its developer, Blandford Homes, through June 2008. Following the audit, four full-time and two part-time employees were fired, and former community manager, Michael Moore, resigned Feb. 8 after the then-new board began its inquiry. Moore could not be reached for comment.  The forensic audit, which police are looking at, indicates that former employees appropriated $30,124.58 in Las Sendas funds without authorization, “excessively spent” $45,110.13 in community funds and failed to retain “pertinent supporting documentation” for 129 credit card expenditures.

$60,000 Missing.

 2012. Treasurer who stole $60K from homeowner’s association arrested.  By Paul Smith.  The former treasurer of the Ashley Farms Property Owners’ Association has been arrested on charges he stole more than $60,000 from members. David Russell , 41, is accused of forging 76 checks totaling $53,782.88 between January of 2010 and October of 2011. In addition, Nero cashed out a Certificate of Deposit that was purchased by the Association. He used that money to replace money stolen from the original account. Bank records also show that Nero was using the Association checking account to pay his personal phone bill. Nero forged the name of another Association member on the checks that he cashed. Total loss in this case was found to be $60,624.99.  Nero faces charges of Theft by Unlawful Taking or Disposition, Receiving Stolen Property, Forgery, Tampering With Records or Identification and Bad Checks.

2 Responses to Fraud Reports

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