Vicepresident gathering owners against president

Hi all,
I am the new vice. The President/owner of the hotel is also the president of the association. After looking at the CPA statements, I realized that the 10million dollars that have been using from 2 special assessment (totaling 5 years)showed that 2 millions are unaccounted for, and the association is %500,000 on the negative side. The association has never reported anything of this nor showed documents when asked but now it is different because I am the vice. I will meet with CPA this coming Monday and already met with a legal counselor to see how do I proceed.
Is it wise for me to send a letter to all 609 owner explaining the financial mess we have and to request funds to hire an attorney and also a CPA to conduct an audit? Even the association attorney knows the issue and has covered it up.
Owners are putting lots of pressure over me for results because everyone knows the issue but no one challenged them.
Please advise....

I advise taking this to the board and getting them to authorize steps to ensure the HOA's accounts are safe. Do either your Bylaws or Declaration require an audit periodically?

The board is the one corrupted and ruled together since 1998. i just became the new vice and just saw all these mess. Can't count on them at all and they have the majority of votes 2:1

You said you consulted an attorney - what was his/her suggestion?

Since you don't yet know what happened to the money or who's responsible, the best you can tell people at this point is you've recommended that the board do a complete audit of the association finances and will give them an update as soon as you can. Better yet, where is the rest of the board on this issue? If they're as concerned as you are, an executive session might be in order to remove the president (and possibly the treasurer, if you have one) from their positions effective immediately and then order a full audit by a forensic accountant. You're the newbie, so it may be no one's interested in rocking the boat (because they may be just as responsible).

In that case, the homeowners may have to pursue a recall of this board and then get an audit. You didn't say how you know the association attorney has "covered this up", but if trust is an issue, you may want to discharge him/her and get another attorney. Don't be afraid to file a complaint against the attorney with the bar association, but be sure you are specific in your concerns (and can back them up). Ditto for pursuing criminal charges against whoever's responsible

The outsider attorney already drafted a letter to owners and wants to go forward, off-course she will make tons of money with this. We are on a unique situation due to being a hotel &condo in which both sides are ruled by same person as awarded in bylaws in 1995, huge problem. Now I heard that they want to make another special assessment to cover missing funds, owners will go crazy on this one and I can't be part of that. I am a 22year vet retired as a Lieutenant Colonel and owners are counting on me to take them to court.

If I resign, they will bring the past vice and that means more trouble. At least from the inside, I can monitor expenses and other issues.. I am the last one from the board that approves payments so can't leave now.
As far as control:
We have three chairs at the board. Two chairs belongs to the commercial side and one to the residential. That is why the president and secretary rule the majority. They both owned the hotel and also owned two chairs against one. We are on a unique situation based on bylaws and on a tremendous disadvantage. Owners are sick and tired thus want to audit them. if I decide to go forward I will be also declaring war within the board and will get very nasty.

Question? Does the President and Secretary still own the hotel? It seems if that is the case, you may be dealing with a similar situation if it were Developer owned. Which puts your power play down the way...

There are several things unclear about your post. It's like your determined this all fraud and guilt. Which I don't necessarily smell. The lawyer being in on it? Really hard stretch for me to believe. Even though many people don't like lawyers much they do have ethic standards. Plus I don't see the connection between the money and the lawyer.

Sometimes you can't see the forest for the trees. (A Chinese cookie told me that). I agree with an audit should be performed first and foremost. It is most likely already a requirement to conduct one. Even if the HOA doesn't pay for it, doesn't mean you and your interested members can get one. You and your neighbors are the ones who want it.

I am a trained auditor. Which can tell you that the results of one may not lead you down the path of fraud. What then? What your saying now and convinced of does it change? Keep an open mind on this and don't go down the path that leads you to the dark. You want to put light on the path not dirt...

Project manager sounds different than management company. Depends on state you live what qualifications are for that job.

If they still own it, then do not sound like owners are in charge of the HOA. They do not sound like the owner part are owners of the HOA or condo association. You just seem to be their representative. So that limits what you and neighbors can do.

Still can demand and pay for an independent audit you and neighbors pay for. Just do not expect the hotel/condo dues to do it.

This is really confusing, Angel. What's the legal relationship between the hotel and the condo. Are they in the same building? How many condo owners? If your annual budget is over $500,000 then FS 718 requires a condo association to have an annual audit. What was grandfathered in in 1995?

If enough of your neighbors - the ones who keep asking you to do something - are willing to vote the president off the board, then you should do that. Let him own the hotel, but the condo unit owners should be able to send him packing from the board.

I hope you will prepare yourself for the likelihood of some serious retaliation by those in power. As you have pointed out, you do not have the numbers that would guarantee real change. You are military, retired Lieutenant Colonel. Perhaps you believe in duty and honor. I still do but only at a personal level. I do not know how one can function in corporate America today and sincerely retain these values. Truth and justice too often do not win. They certainly often lose unless a protracted, expensive legal battle is undertaken.

As I think one of the regular posters pointed out recently (Janet from Colorado?), sometimes it is easier not working within a board but working outside it. One's hands are less tied.

I hope you check the law on certification. If you are referring to CMCA certification, I do not feel it is worth the paper it is written on. In my opinion, CMCA promotes employees looking out for their own interests first.

I have wondered if the CPA can give you more guidance. He or she has certain professional standards to uphold. I am glad you are talking to counsel as well.

What is needed to remove board members? Do you have anyone else who would help? Change is likely what you need here. Someone being on a board for that long is crazy.

HomeE - The President/Secretary are business partners in the COA/Hotel. So they can't be removed as board members as it's still under Developer control. The members do not own the COA. Just are allowed to have 1 representative which is the poster.

I too was wondering about the advice to go to the police and/or state attorney general. The news does have a fair amount of reports of charges of embezzlement and fraud by volunteer HOA directors. Doesn't a sub-site of hoatalk.com report like one of these every few months? Maybe it takes a certain fuzzy threshold to get the attention of district attorneys and the police.

I hear you, Ben. What I am not so sure of is whether the evidence AngelS2 has so far is something the police or a DA would consider. It seems like the HOA embezzlement cases I have read typically involve a HOA volunteer writing checks to him- or herself or to a vendor who is doing services for the volunteer. Or transfers of funds are being made from the HOA account to the HOA volunteer's account.

Melissa's point about whether this HOA is essentially still developer-run may throw a big wrench into analysis of the books. I see the phrase "$500,000 on the negative side." Something seems obviously crooked to Angel. Maybe she has the expertise to know fraud or embezzlement when she sees it. From her synopsis, I cannot tell.