Leaders of Florida's largest HOA arrested.

Lot's of lessons here for both HOA leaders and homeowners.

"Leaders of Florida’s largest homeowners association charged in $2 million fraud scheme"

https://www.miamiherald.com/news/local/crime/article268642592.html

Hopefully they aren't as corrupt. Isn't this the retirement community know as the 'STD Capital of America'?

Excerpt:

Despite judges ordering the HOA to produce financial documents, the association refused to comply, even appealing one judge’s ruling. An appeals court threw out the appeal. At one point earlier this year, an attorney for the board told a Miami-Dade judge the board voted to ignore the judge’s order because “the board doesn’t trust the state.”

I want the names of the HOA's attorneys.

OMG. I am about halfway through reading the complaint. These board members were fearless. They were paying companies owned by their husbands basically in plain sight. The "manager" was a cousin of the president who got arrested for fraud. She had the HOA pay for four defense attornies. It goes on and on and on. Everybody was getting paid and clearly there wasn't professional management to keep an eye on things. They had about 10 bank accounts and money was even being sent to accounts in Colombia.

The residents tried to have a recall election and the board simply invalidated the results and decided not to leave. The board defied a ton of court orders to produce documents and have another election.

The same board has been in place for 7 or 8 years - that's the only way this could get this bad. I do feel sorry for the homeowners who paid to line the pockets of all the board directors.

Cases like this taint all of us who serve on legitimate boards.

Good grief. And these folks have the gall to file a lawsuit in federal court to keep the state's attorney from serving the subpoenas? Good luck with that. Then again, that's a strategy in white collar crime - make all sorts of motions, objections and request separate hearings to throw out certain evidence, or just keep continuing the case so many times, it's hard to remember what you were going to court about in the first place.

Board members are homeowners before and after joining the board, which is why people need to pay attention to who they vote for. Too many homeowners have a "don't tell me about the labor, show me the baby" attitude about HOA affairs. As long as they don't get a nastygram about a CCR violation, the clubhouse pool is functioning and fees don't go up (much), who cares what the board is doing or how.

When you do become a board member, you have to remember it's no longer about you. If you don't know what you're doing, ask. Sometimes you don't know what you don't know, which is why it's so important to invest in some education about HOAs and best practices. Read your damned documents and follow them - as I said in another conversation, you don't get to ignore them just because you think the Bylaws and CCRS are stupid. If they need to be tweaked, do it right - have an attorney (a good one) look over the documents, let the homeowners know what's going on and give them a say, because they'll have to vote to approve the amendments anyway. This isn't your household budget - you are running a non-profit organization. If you don't want to do it right, sit the hell down and let someone with more work ethic and a moral compass take over.

Then again, all this is a sign of the times. Government, whether it's the state legislature or HOA, reflect the people who put them there, for better or worse. The people running things fall in love with the perks and are more interested in getting as much power as possible than actually using it to help people. The people who vote them in either don't do it at all or won't ponder the difficult questions, preferring slapdash answers to serious issues. Some are more interested in screwing other people because they don't like their race, gender preference religion, or some other trivial thing, not realizing sooner or later those problems you think you don't need to care about because they only affect "those people" will be knocking on your door sooner rather than later. While you spent your energy making sure I didn't get anything, you didn't realize the folks in charge are so in love with power, they don't care about you either and you get screwed.

It would be interesting to see what changes could be made to the Florida statutes (in this case FS 720) to make this situation any better. The HOA was required to hold board meetings - but they didn't for over 4 years. They were required by statute to have audited financial statements - but they didn't. They were required by statute to provide copies of financial statements and minutes - but they didn't. They were required to hold elections - they did, but then ended it early due to a "bomb threat". Then they had a recall election and the board simply invalidated the results.

They had court order after court order telling them to comply - and they didn't. The homeowners were using the court system as best they could but it seemed like nothing could be done. What "teeth" could they put in the statute to make people comply?

I know that California also has pretty strict HOA statues. If this happened in California is there anything that could have been done to make it better?

The article didn't give details, but it implied that homeowners tried to stop this. Quote:

Homeowners felt vindicated Tuesday after fighting what they call the “Gallego Mafia” for years. They tried to oust the board at a chaotic Jan. 3 election when hundreds of voters standing in line were not allowed to vote because of a fake phoned-in bomb threat and again during a July recall election when the board threw out two thirds of the ballots cast.

Maybe too little, too late. But they were up against determined crooks who even stonewalled investigators:

Investigators say she and the board repeatedly ignored subpoenas, failing to turn over thousands of financial records while fighting with prosecutors over tens of thousands of dollars in reimbursement for the time and expense of gathering the records. At one point, she even filed lawsuits against a Miami-Dade economic crimes investigator who was leading the criminal probe that led to her arrest.

Sitting here in the cheap seats, it appears to me that there was little the homeowners could do aside from calling in the police and the lawyers.

And if you look at the article, they uploaded a video of the bond hearing for the former president (who had already been arrested before for defrauding the association). In it the video the prosecutor said they are still working on additional charges because the board used the security team for the neighborhood as their private police to intimidate the neighbors or anyone who didn't agree with them. And they filed lawsuits against them that the HOA paid for.

The other thing I noticed is it looked like the HOA was paying her four defense attorneys directly from HOA funds. She laundered money through one of the shell companies to pay her bail. I thought that was what D&O insurance was for. So maybe they didn't have insurance either.