Stealing HOA funds

Started by PaulS28 • 15 replies • 911 views

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PaulS28 (Florida)
Posts: 11

Posted:

An employee used HOA money as their personal bank account. All has been recorded and sheriff report filed and SA is involved. Board was notified by management company that suspicious activity was happening but treasurer shrugged it off after talking with the person involved. Board never informed homeowners of theft. Should the board have at the very least informed the homeowners that this had happened and reassure them it is being handled? What responsibilities did the board have to the homeowners in this matter? This happened over 4 years ago and not a word from the board until new members came on and started digging thru financials.

What legal recourse do the homeowners have towards the board members that didn't take the issue serious enough to stop it before a huge loss was taken? Can the board member(s) be removed without a vote from the HOA? Five member board and three are as thick as thieves while two are uncovering the mess.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Paul,

Board members can only be removed by vote.
It's easier to gather support and simply not reelect.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The HOA should have told the members. However, I don't think they need to be held liable for their past actions. Their choices were to file a police report and to vote to remove the board member. If it was just a non-board member, then they can only press charges. The police can't drop charges. They would have to face a judge/court.

Former HOA President

GenoS (Florida)
Posts: 4,276

Posted:

Recourse now? Four years after the fact? Publicize the incident and vote out the bums at the next election. A majority of all homeowners can vote/petition to recall directors if you don't want to wait until the next election.

JenniferG11 (Texas)
Posts: 667

Posted:

How big of a loss are we talking about? How much of it could have been saved if the treasurer did not shrug off the concern expressed by the management company?

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By PaulS28 on 07/26/2018 3:04 PM
This happened over 4 years ago and not a word from the board until new members came on and started digging thru financials.

What legal recourse do the homeowners have towards the board members that didn't take the issue serious enough to stop it before a huge loss was taken? Can the board member(s) be removed without a vote from the HOA? Five member board and three are as thick as thieves while two are uncovering the mess.

Four years later ... potentially NO recourse unless your State Laws allow for a longer period of time to file a lawsuit for violation of Fudiciary Duty or other statute violated. No BOD member can be removed without the membership having a legal “recall” of any BOD members. They were elected by the membership (unless appointed by BOD and then can be replaced by BOD) so the members can only recall and replace.

PaulS28 (Florida)
Posts: 11

Posted:

The amount was almost $40K. Grand theft. If stopped when found by management company was about $10K.

Sheriff did their work and direct filed with the SA office after their investigation.

Two existing board members that have been on the board since this happened have managed to keep it from the homeowners.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Mmmm… Did this not make the news? I mean you would think going to trial it would have hit the airwaves at some point. It's kind of public information when one gets arrested. So maybe they just thought it making the news would put your HOA in bad light? Do you think people in your HOA would have kept their mouth shut and it not hit the media?

Former HOA President

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By PaulS28 on 07/27/2018 4:36 AM
The amount was almost $40K. Grand theft. If stopped when found by management company was about $10K.

Sheriff did their work and direct filed with the SA office after their investigation.

Two existing board members that have been on the board since this happened have managed to keep it from the homeowners.

Paul, how was the loss recorded in the HOA's (1) Profit and Loss statements and (2) Balance sheet? Do the HOA's covenants require a CPA review of the financial statements periodically? If so, how often, and when was the last time? If not, have the HOA's financial statements ever been reviewed by a CPA? Depending on your answer, I think there may be grounds for criminal charges or a civil suit against either all or certain board members.

Was it $40k or $10k that was stolen?

About every month or so the news section of this site has a report of either a HOA employee, HOA officer, or HOA board member having been charged with theft. How did the theft occur at your HOA?

Does SA = state attorney?

PaulS28 (Florida)
Posts: 11

Posted:

Total stolen was almost $40K. The amount was listed as receivables. No arrest has been made as of yet which is very concerning.

GenoS (Florida)
Posts: 4,276

Posted:

Tens of thousands of dollars listed in the Annual Financial Report (reguired by statute) failed to elicit questions from the homeowners? Sadly too typical when you've got apathy on steroids.

Can't you alert the other homeowners yourself?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

What is the HOA supposed to arrest this person? All the HOA can do is provide the police/DA's office with EVIDENCE. IF the DA/Judge hasn't deemed there is enough evidence to convict, then no one will be. There is a certain amount of evidence that has to meet a standard of proof. Plus the HOA has to be a participant in pressing charges. Not every HOA is co-hesive enough to go that stretch.

I would say it's just too late to do much now. The police/DA would have done something if they had been presented with evidence.

Former HOA President

GenoS (Florida)
Posts: 4,276

Posted:

Name and shame.

JenniferG11 (Texas)
Posts: 667

Posted:

Quote:

Posted By MelissaP1 on 07/27/2018 5:05 AM
Mmmm… Did this not make the news? I mean you would think going to trial it would have hit the airwaves at some point. It's kind of public information when one gets arrested. So maybe they just thought it making the news would put your HOA in bad light? Do you think people in your HOA would have kept their mouth shut and it not hit the media?

Homeowners had a right to know, and no duty to 'keep their mouths shut'. I've had it up to my eyeballs all the secrecy, secrecy, secrecy when almost everything regarding an association is within the scope of members' right to know.

JenniferG11 (Texas)
Posts: 667

Posted:

Quote:

Posted By JanetB2 on 07/26/2018 11:28 PM

They could remove him from his officer position but 3 out of 5 are 'thick as thieves' according to the OP.

Members could 'riot' if enough can't be gathered to replace him (and maybe the other two). I don't mean a real riot, I mean an angry mob at the next meeting strictly verbal of course.

GenoS (Florida)
Posts: 4,276

Posted:

A group of angry owners showing up at the next meeting could do wonders. They might demand that the directors who knew of the theft but kept quiet about it pay back the money personally. That's not likely to happen, of course, but the pressure brought to bear by owners armed with previously unreleased information about a substantial theft might bring forth a few resignations. If directors knew but didn't say anything then that, in my book, makes them complcit. Morally, if not legally. "John Jones stole tens of thousands of dollars from us, you knew about it and didn't tell anyone?!??!?"

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