Board member destroys check for deposit

I recently became a board member as Treasurer and the Board hired a new Management Company in 2015. My first responsibility was to work with the President of the Board to reconstruct the finances from 2011-2014 because there were several homeowners that had not paid dues in the last 4 years and the association was now 30K in the red. I discovered a letter dated May 2014, sent from the previous Management company to the President and Treasurer at the time, stating "You will find enclosed the $4,000.00 check that the Board wants to add to the Reserve Fund with the Associations Tax ID number." First of all the Tax ID number was not our Association number, second I did not find any deposit for the $4,000.00 in May-December 2014. This check was supposed to be added to another check for $15,000.00 to open a money market account. I inquired about this to the other Board members and only the President responded to me stating he would ask his neighbor who was treasurer at the time where the check might be. The response was the check was made out to the Association, destroyed and never deposited. My question was why would anyone destroy a check? From what checking account was this check made out from? I can not let this go and I repeatedly inquire about why we can't look into this further and get no response other than it happened in 2014 and nothing we can do about it now because the previous Management company has not cooperated with us when we asked for the books for last year. During the reconstruction of the 2011-2014 bank statements we have found payments by credit card were never deposited into our checking account. The previous Management Company owes us approximately $6,000.00.

If anyone has a suggestion on how to go about inquiring on how to collect this money owed to the Association I welcome all responses.

Thanks!

Start with getting an accountant (you may have to spring for a forensic accountant) to do a complete full audit so you’ll get a better picture of what’s accounted for and what’s missing. Methinks someone may have put their hands in the cookie jar on that $40K check, so you may have to get your association attorney to work with you, as I’m sure some people are going to have to be persuaded (upon pain of death, as it were) to provide details on what they did, when they did it and why. Answers to a few of your questions may also be in the board meeting minutes, so give those a reading as well. If there aren’t any or they’re extremely sketchy, be very worried.

Don’t be surprised if you have to go after the former treasurer and other former board members – this smells as if you have a major breach (several) of fiduciary duty

As for the homeowners who haven’t paid, they will need to prove they paid assessments or be sued. Hopefully, your statute of limitations hasn’t expired on collecting debts (isn’t it 5 or 7 years in most places). Be sure to do everything according to your collection policy. Oh, wait, if no one’s gone after delinquent homeowners in 4 years, it could be because there isn’t one or it’s really inadequate. That means you’ll have to look into developing a tighter one.

In fact, the accountant can help you develop a number of financial controls to reduce the chance of this mess repeating itself. I hope you’re able to collect as much as you can, but you may find the association will have to write off some things and go from there.

Hold the pitch forks and back up the horses!!! Could this check have been a "Donation" of sorts? It sounds like someone may have tried to "Donate" money to the HOA. That tax number may be their company's tax ID. Trying to get a tax write off.

The HOA is most likely a non-profit corporation but NOT a charitable one. Meaning if someone wanted to donate money like you would Red Cross, the HOA would be responsible for paying the taxes on it. The accountant could have recognized this and toss the check out.

So before you go to a lawyer and forensic, find out more about the check and who wrote it. It may be something else going on. Don't just jump to the worst conclusion.

One explanation:
The board ordered the management company to write a check from the operating account, made payable to the association and to be deposited into the reserve account. Later, the board decided to keep the money in the operating account, so they destroyed the check.

First and foremost, contact the previous management company and ask if the check was ever cashed.

If it was, ask for a copy of it (front and back) as this can tell you who cashed it.

If it was not cashed, explain that per your records the check was lost and ask that it be reissued.

If it was cashed and not deposited into an Association account, then and only then, should a police report be filed.

SHOULD