Corrupt Treasurer, Suggestions?

I just came on as new President of our 5 member board for a 20-unit condo assoc in NJ.

Every couple of days a new discovery showing that things were really badly run for the past five years.

Anyway, the latest is that it seems like the Treasurer was paying their personal water, gas, and electric bills from the HOA fund. We're still collecting bank statements so we're not sure of the full extent but it might be in the $1000-$2000 range.

We've already discovered enough irregularities to vote for removal. This one is just icing on the cake.

My main question is: what have people done in situations like this to recover the utilities money? Besides a basic request followed by certified letter (from Assoc/lawyer), what are the available methods to apply pressure? She is a CPA so I'd imagine there is some professional pressure (report to state licensing agency?) that can be applied. Suggestions of an overall strategy would be useful. Comments on what criminal processes might be involved would also be useful. (Are we talking about potential charges that are worth pursuing?)

A side question relates to how to pressure the Treasurer to turn over records/bank account. She is the only signer and has all the financial records. She is not in a situation to run away with the money, so that part is relatively safe. But HOA business is now at a standstill because of this crisis. I have given a time window for another board member to try to handle a peaceful transition, but there's been a lot of stalling/delaying (most, but not all of it the Treasurer's fault).

The HOA lawyer has not made any recommendation other than to try to avoid a lawsuit. Not very helpful. Treasurer is still in place as Treasurer, but as I said, she's not in a good position to do more damage. Besides if she's going to steal our reserve as the only signer, it doesn't seem like whether she's official Treasurer or not will stop her. (Removal will be done next week, tho)

I am ready to go full throttle once my deadline (July 12) passes, keeping in mind that costs should be reasonable and punishment/vengeance is a low priority.

FWIW, the Treasurer is also 4-5 years behind in fees. (But, of course, right?) Also, she turns super-defensive on almost any topic and is not really a person to be reasoned with.

This is a typical all-volunteer board/officers with no payment to be made to anyone. The Treasurer is an owner/board member who happens to be a CPA.

If anyone had access to the bank account besides the Treasurer, I would not have said that the Treasurer was the single signer with sole access to records.

I appreciate the first reply, but it doesn't seem like you read my original post that well.

Also, there was no arrangement for a trade of services for assessment fees. The newly discovered delinquency is legitimate.

Very interesting. I was hoping the CPA stuff would be straight forward like that. The no-attorney-needed aspect is even better. I'm sure the process is somewhat involved and something to be avoided, but hopefully, the threat of action will be worth a lot.

And the 1099-MISC is also very interesting. If we can't recover the utility money, at least we'll stick her with the tax bill!

Thanks Bruce.

Anyone know if the amounts involved are something worth (could be $1000-$5000) pursuing for embezzlement? Would it help us recover money? At what amounts do police/DA start caring?

Will:

Sorry to hear about your troubles.

Sou8nds though like someone turned a blind eye to this person's actions for sometime. Just hwere were the other members of your Board? Did that not see copies of checks and amounts and to whom?

So here we go..........First I would have someone qualified go through the documents you have and come up with a hard number as to how much is involved. Many times what you see of the iceberg above the water is nothing compared to what you might find underwater.

Once I had a hard number I would have the attorney send out a letter demanding repayment within a date certain. In the event they do not repay those monies I would stop down a the local PD and file a criminal complaint. Now this route is because you suggesrt you prefer taking the high road.

Now you could proceed directly to the police or DA and work with them o have charges brought against them in the case where you have verified this THEFT. Perhaps in a court as part of a plea bargin repayment could be ordered in lieu of penalty.

Now I certainly would move to remove her as Treasurer. And your suggestion she is not in a position to steal more doesn't fly with me what so ever. Just an excuse from taking action. SHE NEEDS TO GO ASAP. I would also consider making a formal request from the Board for her immediate resignation. Now as always tha requires someone to step up and assume that role. If you are like most properties good luck with that.

Lessons learned. No one person should be permitted to control the property's finances nor have possession of all documents. You should have several people who have access to bank records and financial files.
The oher members of the Board should not be spectators but rather involve themselves.

IMO this was a theft of property funds. IMO the Board has a duty to make every effort to collect those monies AND to see the person responsible is held accountable. This versus sweeping it under the rug and allowing her to go on her way. I wonder how a sitting Board member can not be paying her CCs? I wonder how the Board allowed this? And finally I wonder just who else she is stealing from and have yet to catch on to her criminal behavior?

If she steals from you why would you be the only one?

I would report her actions, I would notify the powers to be in the professional licensing bureau of your state or county and I would protect the property's money. That is job #1.

Will,

Most banks nowadays will have 3 years (or more!) worth of records available on line. This includes not only statements, but images of checks deposited and checks written.

I recommend going through all this stuff carefully, rebuilding your financial records from these source documents. Then you can see clearly what went on in the past.

(FWIW, the Treasurer is also 4-5 years behind in fees. (But, of course, right?) Also, she turns super-defensive on almost any topic and is not really a person to be reasoned with.)

These are my suggestions have the Board get her off the checking account immediately and appoint another Director to handle the finances until you get the records straight. If she hasn't paid her dues check your Covenants. Our Covenants state: Suspension of Voting Rights: No Class A member shown on the books or management accounts of the Association to be more than 60 days delinquent in any payment due to the Association shall be eligible to vote, either in person or by proxy, or to be elected to the Board of Directors. If you have this clause this would be the way to get her off the Board. Then handle like any other homeowner that doesn't pay their dues. Start with letters from the Board, then from Attorney and then lien on her property. Our Covenants state the Homeowner also pays the Attorney's fees to collect. Check with your insurance company to see if you have your Directors Bonded. Your insurance company should be able to help you. Discuss this with them. Our By-Laws state: Any Director may be removed with or without cause by a majority vote of the members of the Association. Hopefully with talks and your Covenants and By-Laws she will step down. If not, then take actions that others have suggested after absolute proof of mismanagement of monies. Good luck.

Here is some background information.

I became President of the board about a month ago. Getting me on the signer card has been a top priority but the Treasurer has stalled and delayed on this. Hence, she is still the only signer.

The Board has consisted of two members for the past 4-5 years - the treasurer and secretary. Nobody was double-checking the treasurer. She was doing electronic payments, so even tho there was a dual signature requirement for physical checks, it was almost never used. (Please don't tell me the blindingly obvious truth that this is not a safe way to operate.)

It is obvious the Treasurer needs to go. But we haven't yet because there is little point. We have people to take over. But it's all pointless without the bank account access. Whether she is officially Treasurer or not, she can still run off with all the money. Whether or not she is officially Treasurer makes little difference. Getting her off is not an issue - I have the votes to do so. If I thought it would best serve the Assoc to remove her this second, I would. Lawyer has recommended a soft approach until we have control of the account.

Please assume that I am not an idiot and that I know the basics of fiscal responsibility and oversight. Checks and balances. etc. I discovered this mess and I know how things should be generally run.

I have asked specific questions, so please respond to those questions related to how do I get there from here and what the best options might be. Being specific in the responses would be best. Speaking from experience or expert knowledge would also be good. A lot of the police/DA advice I'm seeing is not very useful since it doesn't address the issue of whether the DA will laugh at the amounts involved or what the specific charges would be that are filed. A response detailing what the police would do would be great. A response that she is stealing from the association and should be reported is not so great.

There is no reason for any billing to be to an individual - NJ doesn't need to work that way.

We are 13 years old and turned over long ago.

I picked up 7 years of bank statements Tuesday and that is how I discovered the problematic utilities payments. I am planning on paying the $5/check to get copies of the checks that are in question. I have rebuilt the payment history from available statements, tho am still missing most of 2011 - hence the uncertainty about the amount involved. But based on 2010 v. 2012 comparisons, there is no chance of the amount being much larger.

Whether she can vote or not as an owner or board member is irrelevant. Her vote will not matter since I now control enough votes.The other board members are heavily involved already.

A full audit will be done.

Wilk - I'm back. Regarding your main question. Like I stated before are the Directors (Officers) bonded. If so go talk with your Assn insurance company. They will be able to help. You have told us the ways you can apply pressure. Threaten to go to the state Licensing agency and police. I wouldn't let one board member try to handle this, all the board members need to confront her. Go back to the lawyer he will have the answers as to what you can do legally. Set up a time with the lawyer for all Board members including her to meet with him. He could write a letter to her and request all records and books to be turned over at the meeting. I gave you ideas as far as the past dues are concerned. It appears to me that you and your other Officers have already thought this out and know what you are going to do. It just take time. What we have done is just give other thoughts that might help you.

Are your officers Bonded. If you are Bonded this pays for money that is stolen by an Officer. They can tell you what is covered and not covered. They could tell you if they would handle going after her to repay. Check out all your policies. Check the D & O Policy. There may be something there. Go talk with them and ask them the questions you asked in the forum. If you don't have the correct coverage this would be a time to find out. Just explain situation to them and get information from them. This is another avenue.

Will:

Before you go an now file a claim with your insurance I would find a few things out first.

Do you have D&O coverage? Is there a fidelity bond in place? In what amount? And most importantly, at least in my mind, what is the policy deductible?

Our deductible is $5,000 so in your case we would collect ZERO file a claim and in all likihood see our policy cost increase. That's a mistake.

Now as to answering your questions people here try to cover every aspect they might think about. As none of us know you difficult to have any understanding as to what or how much you might know. My suggestion take the usefull advice and ignore the rest but don't take personal offense.

And I don't see why you simply don't drive down to the bank as Board President with some documentation to prove such, sit down with the bank branch manager and explain the situation. Now from what you have said they were willing to provide you 7 years of records so I assume they have some idea you have the authority to obtain them. Why do I suggest this method? Because I did exactly that with a former MC company.

Now as to the police and DA well IMO this act was a crime. You report crimes and then allow the police to either act or sit back and do nothing. You can't get accurate predictions of what the police might or might not do from this site or any other. Rather a trip or call to the police or DA. My suggestion I would start with the DA. In the end that office will determine whether these acts rise to a criminal offense.

And what amazes me most is the fact this woman stole not from you but from the property. She is a thief. And I cannot comprehend how or why she is sill sitting on the Board. If an employee or co-worker stole anything no less thousands od dollars they would be gone in a flash.
The "soft" approach while one method is not the path I would choose regardless of what the attorney said.

And I have one last comment. Perhaps as a new poster here you miss the intention of this site in sharing information and issues we all might have in common. These are not private exchanges and just maybe there is someone else out there sitting in the same position with either one Board member or perhaps an MC just being "so good" they handle things all by themselves while lining their pockets with associaion money. So the message you were given was not for you alone so don't take it so. I am sure your case is no unusual at all and one of the benefits of this site is hopefully to open he eyes of others who might wake up and see their problems before they wake up in the same boat. How do people steal? Because no one bothers to watch them. Because everyone else is to lazy to verify what is going on. Because people think someone else will watch their money as if it were their money. Never going to happen.

I don't take personal offense at people's less-than-helpful responses. I specifically avoided any claim that people thought I was an idiot - just to respond in a way that assumes I was not one.

After 20 years of message boards, I understand what people are trying to do here and the purposes of a forum. I find it a bit bewildering what people post here tho under the cover of "helpful advice".

Does it really need to be said that one's opinion of a Treasurer using funds inappropriately is theft? And an opinion? It's pretty much a fact. It's like someone saying, "IMO it's hot outside" during this heat wave. Oh, really?

The Bank President approach was a bit helpful, tho it's already been tried. Unfortunately, the Treasurer has all the Assoc records/documents. I have that thick book every owner gets and meeting minutes that confirm my election. Wasn't really enough. Our next step to take over the account would involved legal processes. (I can identify advice that while not applicable to me, might be useful for others)

I just see a lot of people wasting their time with advice that isn't helpful to me or most people. It's fine that people want to express their thoughts and whatnot, but I think it would make this forum a better resource if people were able to focus more helpful information. I'll ignore it on other threads, but on my own, I might try to steer conversation or "moderate" a little bit.

I do like Tim's response a lot. Even tho it has some of the obvious stuff, it is incorporated into an overall strategy/plan that could very easily be helpful to me and a lot of other people going thru a similar situation. In actuality, only like 2 pieces of info were helpful to me, but it still had a high signal/noise ratio. And no lecturing about stuff that does not need to be lectured about.

FWIW, our by-laws do not have a provision for removal of a board member. Funnily enough, there is use of the term "disqualification" but no definition of what that is or what we should do after it's discovered. So she'll probably be around til our elections in October. I'm not concerned.

I'm really hoping that no one else states that their "opinion" that there is theft involved. It feels like I'm asking how to drift a car at 100 mph and people are pointing out that I will need to use the accelerator.

Haha. I always love me a little Steve Martin.

Well Will I seem to get the picture rather clearly now.

Your problem now is not with the person robbing your property but rather the members who bothered to respond to your post. Now that's makes a lot of sense to me!

Far be it from anyone to suggest something you might not already know.
Afterall, you have been President how long? Then why did you come to a forum with 20 years of forum knowledge under your belt?

The reason I mentioned several times "theft" is because that is a criminal act and that usaully requires bringing the police in. Now as a short term Board President you find that obvious. So obvious you have done nothing about it. Just still to this point you have a person you claim is a thief sitting on your Board, as Treasurer, the only person who has control of your funds, and your plan now is to allow this person to remain on the Board till October! IMO it is obvious to me this is being handled, poorly.

But more than likely I am wrong.

But then what would I know having served just 25 years on our BOD?

Not all that much when held up against 20 years of visiting discussion forums it would seem.

What is bewildering to me is a Board President refers to their own governing documents as "that thick book" (no doubt a legal term I have yet to come across) one moment and then wastes the time of others going through what they think is useful or not. Have you read the thick book? Do you understand what's in the thick book?Have you read the insurance coverage you have? Do you have a copy of that or only the Treasurer?
My bet the answers to most would be NO. Darn...........

So at this point I can see offering you any advice will be pointless.
So I will leave you to YOUR thread ( seems that is most important to you) so that you can solicite more advice and then waste time pointing out how that advice fell short in your expert view. While you do nothing about the real issue.

Sorry for dissappointing you so badly.........

Tim,

TD Bank said, for us to add me as a signer, that we would need:

... various scenarios with or without docs, but all included having at least one of the current signers.

However, I have gotten many different answers to the same question from their reps, so I am definitely open to what you are suggesting. Especially with that template you've provided. Thanks for taking the effort to do that.

We have no seal, tho (well, it's in possession of the Treasurer if we have one)

I will ask them again using the specific of your scenario.

Perhaps you might want to sdd this statement to the bottom of the memo:

I, Name, a signature of the accounts, certify that this statement is correct and the above named individuals should be added to the signature card.

Then knock on her door and have her sign it.

Very interesting viewpoint, Larry. Certainly well thought-out.

I was under the impression that most smaller HOA's were self-managed and had officer/board "coexistence". I might be wrong, but it doesn't matter.

I'm not sure what we would pay someone to deposit 20 checks and pay out 6 bills a month (plus annual stuff). I'm not sure anyone would really be interested in a job for that sort of volume. And I can certainly do it (i.e. have done it) even tho I don't even know the difference between cash and accrual accounting. (Not even sure I'm calling it right) People seem to want $4,000 a year to do this stuff.

The Pres/VP have to be board members, so we couldn't follow a strict version of the model you propose anyway.

The more I think about it, the more it doesn't seem to make sense for our HOA.

Of course, we don't have an officer position for lawn maintenance, so we outsource that. And our "special" accounting is outsourced also. But volunteer boards do seem like a viable and sensible solution for us.

Ok. I wasn't asking. And I was being a little facetious about not knowing the difference between the two. I was trying to make the point that you don't need an expert to manage the day to day finances of a small HOA.

But still, thanks. I did learn something.

So Will after what, a month, as President you suddenly know what YOU are talking about?
This coming from the man who has a copy of that "thick book" you got when you bought but more than likely never read and would be unable to comprehend if you did so. My guess no one else wanted the job so you were willing to assume the position thinking you could learn everything on the fly or perhaps through some internet chatrooms. Like everything else you know.

The reason you offer no answers is simply because you have none. Just some hot air and BS wrapped with some arrogance.

"I thought about calling the police and having the Treasurer carted off to jail. It has a nice fairness/justice to it. But since my primary responsibility is to the Association, I am so far choosing the pathway (w/ advice from two lawyers) that provides the best (or at least close to best) pathway to achieving the sometimes conflicting goals of transitioning to the new leadership, removing the Treasurer, and preserving our funds."

Will, seriously where you come from that load of crap passes as some sort of acceptable explanation? And after 1 month serving as the association President YOU have determined "the best pathway to achieving the someimes conflicing goals of tranisitioning to the new leadership."
Were you ever the holder of political office because you sound like someone who talks but says nothing. Is that what you call it down there in Jersey? You find out someone is stealing money that belongs to other people which you are responsible for and rather than act you would rather transition. But of course only till October cause that's the easy way... IMO the the thief you have holding all the property's money and documents, which you just can't seem to get around, is just one of the problems facing your community.

But I am sure in your mind you can handle this.

Fwiw, I am working with a consensus of board members and legal advice. And I've done quite a bit in my short tenure. I'm identifying problems, proposing solutions, etc. that's how things are supposed to be done, I think.

Seriously, your ranting is really just you not knowing what you are talking about.

Really what's with the constant going on about the "thick book"? It's not really relevant what I call it as long as folks know what I'm talking about, right?

As with any system it will only be as good as the people who operate within that system. No form of property managment could make up for the failures of those who own or serve as members of the Board when they have no ability to even begin to do their job. In most cases because they feel for some reason it is so simple anyone can step in and take it on. Any real question why we see so many owners reporting issues wih their properties and Boards? The weakest link seems to stand out quite clearly.

Any doubt why this property has now had their funds stolen? My guess because the other members of the Board and owners (including Will) turned a blind eye and gave away their responsibility to watch over their own investments. Now that's not all that tough to figure out right?

Then we have Will the new President in his community who puts in the time to find ou his Treasurer has, according to him, stolen funds from the property in their role as Treasurer. How much not sure. How long not sure. How to handle this not sure.

But when asked why or suggested the police be contacted that is all to obvious for Will to even hear. Stop wasting his time. Then we get into speeding cars and other irrelevant nonsense. And Will believes that makes some point. Silly me I thought the problem was someone stealing the property's money!

As a Board member you have a duty, well many duties, one being to ensure the proper use of the funds, CCs, each owner pays to the community. But in this case factors beyond the President's control and the need to work and form a consensus have allowed this Treasurer to remain in office, and most shockingly maintain SOLE control of the property's finances and assets. But Will isn't worried he has the problem right where he wants it. Consensus with a group of Board members who can't decide to make a call to the police when their property has been robbed. Now that's something worth working on and taking your time with. But Will needs nothing in the way of advice.

Then Will the new President comes to this forum with all of his almost 30 days holding office, asks for advice and then questions the reponses and usefulness of the information he was provided.

Will has less than 30 days I have 25+ YEARS but Will is quick to point out MY limitations. Really, guess Will is either a genius or simply full of himself and his own abilities. My guess...........

Not sure for others but for me it is clear to see Will is in way over his head. Although his ego can't allow him to see this.

MCs, Will has decided his property doesn't need one. Aferall, things have gone so well without one in the past! Why screw up a good thing when you have it going so well? How much? He has no clue? No one would want the job as if he knows. And afterall, all they do is write a few checks and HE can certainly do that. Once that is after he finds a way to gain control of the property's finances from the thief. But he's working on that or maybe in October he can vote her out and then he thinks she will just hand everything right over.... La La Land.

Record keeping and accounting well you don't need to be an "expert" or anything. Will can do that too. And he can keep records, prepare for an audit, and file tax returns once he puts his mind to it. And when someone offers a clear explanation of different accounting methods well Will wasn't really asking so why bother to explain this to him. Yeah Will seems to have a lot of appreciation for those who in most cases forgot more than he is likely to ever know.

No doubt he can do reserve studies, answer the phone, and handle anything that comes up 24X7. Not a problem.

Anyone see a problem here? I see several. Will being one of them.

You have an association President unable to name the governing documents of the property he heads and his explanation "it's not really relevant"!
So obviously Will is unable or unwilling to see ANY problems with his sitting in the position of President or how he is handling this situation.

And my quesions begin with how and why is Will in his role? Do the other owners think he can handle this? I know Will does but that is IMO flawed thinking. Or was it a case of musical chairs and when the music stopped Will just had no place to sit other then the role of President.

During my working career there was a saying. You are always promoted to your HIGHEST level of incompetence. Seems like Will's rise to the Presidency supports that saying.

It is, IMO, not the sytem that fails it is the people in the system that prevent it from working. You have a thief and a man in charge who describes his governing documents as "that thick book" who lacks any real knowledge or understanding of how or why an association works or is his case ceases to function properly. Ahnd his other weakness is an inability to consider the possiblity HE is part of the problem. In this case there is IMO a problem, an obvious one, the thief. But if you think hard you can find another problem. Will. He is not the solution but rather just the next and different sort of problem waiting to develope.

Out of the mouth of Will the President...............

"Really what's with the constant going on about the "thick book"? It's not really relevant what I call it as long as folks know what I'm talking about, right?"

Well Will the answer is no you are wrong. And the fact you don't begin to even see the issue with the fact you have no knowledge of the documents your property operates under IS he problem MR. PRESIDENT.

If you don't know what it is called chances are you never read it. ONCE.
MR. PRESIDENT. Seems to me you have found your highest level.............

Sigh. Bad timing on my last reply as you were spending a good chunk of your evening making a lot of weird speculations on what is going on in my HOA.

I'll try to clear things up. Two separate lawyers have advised not making a move yet. That it would be in the best interest to at least get a handle on the bank account and records before pursuing the other avenues. I am being the most aggressive on this, but am deferring to the folks with the legal experience.

As I mentioned before things have only been getting better since I took office. All these random conclusions you are coming up with related to why there are problems don't even make sense.

i have read the governing documents. I just thought it was such a pointless thing to argue about. I know our governing documents better than anyone. I thought it was really silly/petty that you kept saying I never read them, even tho you would have no idea. It's just ridiculous a thing to debate or harp on and on about.

It's a bunch of stuff like that that proved to ke that you really don't know what you are talking about. The fact that you would write so much to make TRY to make me look bad is a really poor reflection on you. The way you try and batter me with unsupported speculations and unknowable statements... You really too much on guesses presents as facts and facts that aren't relevant.

You have proven to me that 25 years of board service doesn"t really mean all that much.

And that's my five minutes/per response, I've allocated to you. I suggested you not read/reapond to my stuff and I think you'd be better off if you followed that advice. But I don't really mind either way.

Hi, Will...

We had a problem with a corrupt treasurer, but we are in the stage where no one except the courts believe us and we have since moved and are selling. We foresee more legal problems in the future for our HOA and without support, we can't take on the liability.

I just wanted to commend your for taking on this tremendous task. I hope that your fellow members can appreciate what you are trying to do.

Perhaps now people will take reviewing all the documents more seriously. What I have to recommend is look into management companies. We went through three companies in less than three years and this was because of the unreasonable couple--one of whom is the current treasurer and corrupt. We were only 10-units and each time the company quit after contact from the couple in question.

So having a small HOA isn't necessarily a problem as much as having problem directors.

Good luck!

My concern here is the quick to judge something is wrong and to want to prosecute. You have not been president long enough to know all that is involved. You were a member first and should have caught on to this a member. So that is why I don't understand the revelation your Treasurer is a thief.

I am very experienced with dealing with conmen/thieves. The ex-president I had replaced was indeed one of those. So was some of our contractors due to his way of handling the HOA. I had to go and fire our Lawncare people and work really hard to keep the ex-President away from the HOA funds. He was still Vice-President my first year in. Supposedly to "Help me" being President. Although I was Vice-President the year before and did his job for him.

It took me alot of time to sort through the mess and make certain discoveries. So I find it hard to believe that within a month you have all the information. Plus wanting to call the police on this person really disturbs me as you haven't gotten the concept that it was NOT you that was a victim but ALL your members. So it needs to be a vote taken to decide what to do and how to handle the situation.

In the case of a small HOA that is only paying for very basic services there is a low profit margin. The company has to measure the return on investment. The couple in question are animal hoarders at the beginning stage. When we left they had 8 rabbits and two cats. The HOA CC&R only allowed two pets and rabbits were not allowed at all. I could hear the rabbits chewing on the walls. I've seen the damage to the walls as well.

Dealing with an animal hoarder is not ever a win situation as they will be continual problem and a need for too much vigilance. Animal hoarder are hard to deal with because they feel they are above the law and do not generally feel guilt. Most can justify whatever transgressions they make by the good work they are doing.

Management companies deal with a lot of people and if they have been in business for a while, they can surely detect the signs (or smell trouble coming).

I used to volunteer for a humane society and went on a few raids of animal hoarders. Yet no one wants to listen or interfere until it gets to be really unbearable.

Don't think you have that sort of problem. Good luck with your attempts to straighten out the books!