Treasurer Withdraws Funds at a Casino

Started by JimC24 • 24 replies • 1426 views

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JimC24 (Connecticut)
Posts: 60

Posted:

I am a new Condo President and I recently got access to the Condo bank account, after much effort and lack of cooperation from the Treasurer. Looking through the bank statements I am noticing many irregular and inappropriate transactions for a Condo, such as ATM withdrawals at a Casino and other places nearby, and debit card purchases for a nutritionist, speech therapist, and numerous restaurant transactions, to name a few. It also appears that the Treasurer was lax in his duties to collect hoa dues - including his own for the last 3 years or so.

It may seem obvious what to do - hire a lawyer, let everyone in the Condo know, hire an accountant ect..., but as a new President the course of action is not so clear when you don't want to incur a lot of costs and you want to maximize the recovery of revenue from past indiscretions. Hiring outside help is not cheap and we're not so well funded. I was hoping that someone might have some ideas on how to proceed. For example, if I try to collect back condo dues by hiring a lawyer and initiating a collections/foreclosure process, would I need to have an audit done given the situation. Or does it make more sense to just ask the owner for proof of payment for the period in question. I am trying to keep this under wraps for the moment until I find the best course of action - so asking an owner for proof of payment would probably tip the Treasurer off to my knowledge of his activities. I'm not sure I'm ready to do that.

Any thoughts?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

How about this? Call the police and report this as theft? It is more of a crime than a lawsuit type of thing. Plus having a police report would help any case your HOA may pursue later. May want to talk to the District Attorney's office. They may be able to guide you what charges should be brought or direction. This is theft of services.

Now keep in mind a withdraw from a casino ATM does not prove wrong doing. It may just be an indicator of where the money went. So it may be a bit frustrating when it comes to the law. What you know and what the law acknowledges are on 2 different pages many times.

Former HOA President

JimC24 (Connecticut)
Posts: 60

Posted:

I talk to the police to ask them what I need. They told me they would need to a number or an amount that was stolen before they could turn it over to their Fraud department. So they want me to do the work.

CarlJ2 (Texas)
Posts: 194

Posted:

If you have the books and amounts don't you have that information for the police?

DouglasK1 (Florida)
Posts: 2,046

Posted:

I'm not sure why you're waiting. I'd call an emergency board meeting to remove the treasurer from office and remove their access to the association accounts. From there the board should decide what to do. Even if you can't afford an accountant for a full audit, you and the other board members should be able to identify improper expenditures and put a rough number on them.

Escaped former treasurer and director of a self managed association.

PitA
Posts: 1,416

Posted:

Ya mean actually do some presiding ?

PitA
Posts: 1,416

Posted:

As our President Trump would say:

You're FIRED

TimB4 (Tennessee)
Posts: 21,059

Posted:

I agree with others.

1) Call a board meeting, explain what you found and call for the removal of the individual from the treasurers position (simple Board vote).

2) Appoint a new Treasurer and immediately collect any atm, credit card, check book and all records (even if you have to walk to their home with them after the meeting).

3) I would also ask them to tender their resignation as Director.

4) Call for an audit of the books for the entire time span they were treasurer (this will require a fair amount of work for everyone involved providing records). Cost: $3,000 to $10,000. Spend it, it has to be done.

5) Inform the individual that the Board will likely be informing the police and the Association attorney - Alternatively, the Board can decide to enter into any agreement they desire but it should be legal with a lien on the home for the amount owed.

6) Once you have the records, you should be able to highlight the suspected amounts and get a ball park figure for the police (if that is what the Board decides to do).

7) Take the process required (normally a new signature card) to remove the individual from access to the funds.

PRIOR TO CALLING THE BOARD MEETING:

A) Quietly, Line up someone to be Treasurer (another Board member, someone from the outside, etc.)

B) Call and have quotes for an audit covering the years in question so the Board can make a decision on who to go with for the audit.

General Info:

Don't worry about informing the membership at this time. It will simply raise questions you can't answer yet and, perhaps set the Association for Defamation law suit. Wait until you have proof. Better yet, release nothing until you consult with the attorney.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By JimC24 on 08/04/2017 4:49 AM

I am a new Condo President and I recently got access to the Condo bank account, after much effort and lack of cooperation from the Treasurer. Looking through the bank statements I am noticing many irregular and inappropriate transactions for a Condo, such as ATM withdrawals at a Casino and other places nearby, and debit card purchases for a nutritionist, speech therapist, and numerous restaurant transactions, to name a few. It also appears that the Treasurer was lax in his duties to collect hoa dues - including his own for the last 3 years or so.

It may seem obvious what to do - hire a lawyer, let everyone in the Condo know, hire an accountant ect..., but as a new President the course of action is not so clear when you don't want to incur a lot of costs and you want to maximize the recovery of revenue from past indiscretions. Hiring outside help is not cheap and we're not so well funded. I was hoping that someone might have some ideas on how to proceed. For example, if I try to collect back condo dues by hiring a lawyer and initiating a collections/foreclosure process, would I need to have an audit done given the situation. Or does it make more sense to just ask the owner for proof of payment for the period in question. I am trying to keep this under wraps for the moment until I find the best course of action - so asking an owner for proof of payment would probably tip the Treasurer off to my knowledge of his activities. I'm not sure I'm ready to do that.

Any thoughts?

A.) You need an attorney; B.) RUN not walk to the police station and file a report. C.) call an emergency meeting inviting the owners and have a recall vote "whatever your docs call for" D.) you and the the other board members leaving the treasurer out go to the bank and cancel the ATM card, AND you set it up so 2 signatures are required for all transactions by CHECK ONLY.

PitA
Posts: 1,416

Posted:

IN PERSON AT THE BANK - bring attorney if needed:

CANCEL any ATM or DEBIT card(s) - issue NO REISSUE EVER order.

CANCEL 'online' access to account - forever.

Obtain 'fidelity bonds' for ALL signatories to account.

Purchase replacement checks with TWO signature lines - make policy for countersignature of EVERY check.

(the bank will only require ONE signature - period - the dual signature is merely an INTERNAL BOD control - probably REQUIRED by your 'fidelity bonder'

Be prepared to change banks if y'all get any 'flak'.

In the future the BOD needs to practice MONTHLY vigilance over association funds.

Was no one checking the bank statements ?

AUDIT THE FUNDS - this is the 'hidden' cost of NOT performing due diligence as y'all went.

CONTACT THE POLICE AND FILE A REPORT

I am assuming that the 'treasurer' has already been censured and fired.

JimC24 (Connecticut)
Posts: 60

Posted:

Thanks for all the replies and useful advice.

I am hiring an accountant to do an audit. I have access to the bank account - so now he can't withdraw funds without my knowledge. It's important not to accuse someone of something (like a crook or embezzler for example) that the law considers moral turpitude because that by itself cause be used to claim libel. The fact that the accusation is true is just a defense, but it still cost money to defend. It's better to have a independent 3rd party arrive at that conclusion.

Being a condo President is really a thankless job with a lot of risk and very little reward.

LetA (Nevada)
Posts: 2,679

Posted:

I disagree, the reward is community cohesion, and your community coffers stay healthy.

NigelB (Texas)
Posts: 254

Posted:

Quote:

I'd suggest that you do not hire a lawyer. All that will do is to incur more costs for the association without any recovery.

Your best course of action is to do as follows:

1. Cancel the credit or ATM card.
2. Get copies of all bank statements from the time the treasurer was appointed and review them
3. For those expenditures that look suspicious investigate further and require that the treasurer explain the expenditures.
4. Determine the amount of suspected transactions and file a police report.

From personal experience:

When I took over as Pres of our association I discovered that the board had no oversight over the financial affairs of the association. Everything was handled by the community manager who paid the bills.

I got access to the management company's accounting system and after reviewing discovered that the board had authorized the community manager to have a credit card which was paid for out of association funds. A review of the monthly credit card bills showed numerous personal expenses the total was around $5000 in a six month period.

The management company fully reimbursed the association for the fraud, and the matter was turned over to the police who filed charges with the DA. After about a year - the outcome of the case is that the individual pled guilty, was given a suspended sentence, and required to reimburse the management company for the loss (the management company having previously reimburse the association).

Lessons learned - The board should have complete oversight over the financial affairs of the association, prior to payment invoices should be reviewed and approved by designated board members. Failure to provide oversight or allowing one individual complete control over the financial affairs of the association is foolhardy, and will frequently lead to problems such as you describe.

JimC24 (Connecticut)
Posts: 60

Posted:

Thank you NigelB for the excellent post.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By NigelB on 08/06/2017 7:50 AM
Failure to provide oversight or allowing one individual complete control over the financial affairs of the association is foolhardy, and will frequently lead to problems such as you describe.

Keep in mind that oversight doesn't have to be massive.

As Treasurer, I effectively have full control of the Association finances (I hold the records, the checkbook and only I know the online login).

However:

Every officer is on the signature card and can gain access through the bank.
We do not have an ATM card.
We do not have an Association credit card.
We do require two signatures on all checks (even if the bank doesn't).
The check book is brought to each board meeting (so is available for review if desired).
Income and Expense spreadsheet for the year (separated by months) is provided at each board meeting
Budget summary for the last three years and current year are provided at each board meeting

This works for us.

SamE2 (New Jersey)
Posts: 310

Posted:

You also should check with your insurance agent. You may have coverage if indeed the treasurer did anything illegal and waiting to report it may hurt you.

MichelleC8 (California)
Posts: 80

Posted:

A few years ago... we had a petty cash fund onsite for emergency purchases. This was before we had ATM card for the president and treasurer.

I had a small purchase of about $20 I hit up the board member to reimburse.. SHE DIDN"T HAVE IT. She used our $600 for a "loan to herself" until payday and it took a month to get my money.

She was put on alert, and informed the money had to be in place before a certain date. I had ALL intent of calling the police. It worked. Now this is nothing compared this.. but its also shocking that people think they can do this and not get caught..

GenoS (Florida)
Posts: 4,276

Posted:

ATM withdrawals at a casino? The thing speaks for itself.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I can't judge an ATM removal from a Casino if you consider the area. If your in Las Vegas, it would not be unusual for an ATM withdraw from a Casino or Atlantic city. However, where I am at, it's 4 hours to the closest casino. So it would be more suspicious. It's an indicator but not a crime. Unfortunately, your not going to prove someone used it for gambling.

Not sure how you could not produce evidence to the police to use if you already had seen the ATM withdraw or other suspicious withdraws. What did they need exactly? The records should be open to you. Copies may cost some money.

I had a scum bag ex president I always suspected of using the HOA money as his own. He most likely was. It's just when I became President I kicked his hand out the till. He tried a few schemes but wasn't that stupid. He stopped trying until I got out of office.

Former HOA President

CarlJ2 (Texas)
Posts: 194

Posted:

I once had official business travel in the military where I stayed at a local casino hotel. No kidding it was the closest place with a government rate per night so that is where I stayed. It felt really odd walking through the tables and slots in the morning while wearing my uniform on the way to my meetings for the day. I can't recall specifically, but I'm sure I drew money out of an ATM while there too. So that alone is not a crime, but it does mean it could be a flag or indicator.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Your Right Carl. I know of a few smaller cities that casino hotels are on the "government rate". Some of them have their actual hotel part separate from the actual casino. I stayed in one in Mississippi a few years ago. A few military people came through. So they may not even be IN the Casino itself but at the Hotel of the same name.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By CarlJ2 on 08/06/2017 4:19 PM

I can't recall specifically, but I'm sure I drew money out of an ATM while there too. So that alone is not a crime, but it does mean it could be a flag or indicator.

Military on orders using a government credit card is not the same as Treasurer on non-hoa business using an association credit card.

CarlJ2 (Texas)
Posts: 194

Posted:

Sure, I'm aware the comparison is not direct, but I'm just providing an example of something that might look bad, but really be ok.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By CarlJ2 on 08/07/2017 7:48 AM
Sure, I'm aware the comparison is not direct, but I'm just providing an example of something that might look bad, but really be ok.

In my area I do not know of an HOA where officers have debit cards. Generally you have contractors (such as landscaping, etc.) who bill the HOA for their services and approved by the BOD. Or you have potentially account set up at a local hardware store for items to be charged and billed as needed and approved. IMO the OP's HOA needs to ELIMINATE the debit cards and free for all spending. There is ZERO reason that an HOA debit card should be used at an ATM as there is no supplies being purchased with a proper receipt to back up the transaction.

GenoS (Florida)
Posts: 4,276

Posted:

Florida just added this to the FS 718 condo statute:

"An association and its officers, directors, employees, and agents may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expense."

Evidence of rampant abuse led to this legislative amendment. Sure, it could be innocent, but I think evidence of a director using an association debit card at a casino would probably be enough to justify a search warrant in a criminal case.

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