Recently in Fraud, Theft and Abuse Category


New Case of Theft, Fraud by a South Florida Homeowners Association President

September 15, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgYet another case of theft and fraud inflicted on an association by an HOA president made local South Florida headlines recently. According to news reports, Michelle Changar-Coe, a former homeowners association president, has been arrested and stands accused of embezzling more than $180,000 from her Tamarac community. Police reports indicate that she forged dozens of checks totaling $181,441.85 which were deposited into her bank account. The authorities reported that the fraud and theft occurred at the Mainlands Section 7 homeowners association from January 2009 through December 2013. Changar-Coe, 44, forged the signatures of four persons without their consent between May 2011 and October 2013. While conducting an audit of financial records, a board member found several checks from community funds that appeared to be forged with his signature and reported it to police. He later found a check for $20,475 that he never recalled signing and had been made payable to a "Michel Chandar," a name that was later found to be bogus.

Changar-Coe (pictured below) is being accused of creating a fraudulent agreement for the association to pay a "city liaison" $2,575 per month for representation at City Hall. However, "no such position existed with the city of Tamarac, according to two city officials who provided sworn statements," reads the police report. mcc.jpg She continued to invoice and collect from the association for the fake job from May 2011 to November 2013 using the name of Michelle Charger. Investigators found checks deposited into Changar-Coe's personal bank account bearing the supposed city liaison's name. She has been charged with first-degree grand theft of more than $100,000 and four counts of fraud.

An article by Tamarac Talk (www.tamaractalk.com) further details how the fraud was finally uncovered, detailing that "[r]resident Steve Soloff was suspicious, and informed the board that he had visited the City of Tamarac and spoke with City Clerk Pat Teufel" who had informed him ". . . that in her 10-year tenure with the city, she has never heard of any agreement by a homeowners association to hire a city liaison . . . " and that ". . . she knew of no person named Michelle A. Charger."

Apparently, key details of the fraud were uncovered as a result of a former director's investigation of discrepancies uncovered in connection with the association's finances in early 2012, when a fraudulent court document was presented demanding that such director and another director both resign immediately or face a $1 million lawsuit.

The above account underscores the importance for association directors and managers to implement procedures and policies aimed to avoid the victimization of the association and its members. These efforts may include requiring that at least two board members sign all checks, the requirement for background checks and screenings for managers and employees, the thorough review of all bank statements and financial records presented to directors and managers, the establishment of low limits on discretionary expense approvals without board authorization by the property manager, and a detailed review and understanding by directors of the association's yearly financial audits performed by independent professionals.

Additionally, the foregoing story also highlights the relevance of what a thorough review of association records may reveal following a detailed inspection of official records by or on behalf of owners having reasonable suspicions of wrongful activity by directors or other association representatives. Lastly, this story suggests that in the event that directors have doubts or questions regarding suspicious activities or documents presented to the association, then such concerns should be promptly reported to association counsel for evaluation.

Our firm's other HOA and condominium association attorneys and I work very closely with our clients to help them to avoid and detect theft and fraud in their communities. We write in this blog about important legal and administrative issues affecting associations in Florida, and we encourage association directors, members and property managers to enter their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.


HOA Takeover Case in Las Vegas Provides Lessons for Florida Community Association Elections

June 23, 2014, Posted by Roberto C. Blanch


Roberto Blanch 2013.jpgCommunity association boards control the purse strings of the communities they govern, and as such they have been long-standing targets of individuals seeking to defraud associations. A recent case involving the takeover of a number of Las Vegas HOAs in a scheme to steer large construction contracts to a Nevada general contractor appears to have set a new bar for the heights to which individuals will go in their efforts to defraud HOAs for contracts worth millions of dollars.

The accounts of the Nevada case read as if they come directly from the pages of a novel about a wild and far-flung criminal enterprise, proving yet again the old adage that reality can be stranger than fiction. The U.S. Justice Department investigation revealed that 11 homeowners associations were defrauded of millions of dollars in the takeover scheme that took place from 2003 to 2009, and federal prosecutors are seeking jail time for the defendants in addition to approximately $25 million in restitution. The alleged mastermind behind the scheme has pleaded not guilty to conspiracy and fraud charges leveled against him and 10 others.

Besides conspiring to commit mortgage fraud in order to secure mortgages for straw buyers in the communities, the defendants are accused of getting their straw buyers elected to the boards through bribery, ballot stuffing, intimidation and dirty tricks. Once on the board of the HOAs, these directors would secure lucrative construction contracts benefiting the organizers of the fraud. Accounts tell of co-conspirators travelling to Mexico to print phony ballots and counting ballots in co-conspirators' offices, and one co-conspirator used his master key at a condominium complex to remove ballots from mailboxes. Other tactics involved "dumpster diving" efforts to retrieve discarded ballots at a condominium complex that would be used to fix an election, and attending HOA board meetings in order to intimidate board members who were not friendly with the individuals involved in the scheme. It is also alleged by a co-conspirator that he regularly witnessed HOA board members come to the office of another co-conspirator to receive cash payments.

A total of 35 defendants have now pleaded guilty in the case, leaving the remaining defendants to stand trial on Oct. 14. The investigation into the scheme is considered to be the largest public corruption case ever brought by the Justice Department in Nevada.

meeting vote.jpgThis case serves as an important reminder for Florida community associations about the level of involvement and vigilance that is necessary in order to help avoid becoming a victim of this type of fraud. It is imperative for unit owners to monitor and participate in their association's elections and meetings, and they should always be on alert for suspicious tactics by owners or other groups surrounding board member campaigns and elections. Owners should also ensure that they vote in all elections and submit their own ballots whenever possible, as fraudsters will typically attempt to secure and utilize ballots from those who do not normally vote in the elections or do not reside in the community or condominium. In addition, owners should determine whether their ballot was counted or disallowed at the election due to the submission of more than one ballot for their unit.

If association members believe that suspicious political activity has taken place and the integrity of their board of directors and their election has been compromised as part of a conspiracy to commit fraud, they should consult with highly experienced legal counsel in order to discuss and determine their next steps. Election recalls, court appointed receivers, and injunctive relief precluding boards from awarding contracts to conspiring vendors are among the measures that can be pursued in order to correct or avoid injustices that may have occurred or may be in the works. Additionally, experienced community association legal representation may aid in processes related to criminal investigations by state and federal law enforcement agencies in such cases.


Safeguards Necessary to Prevent Theft, Fraud in Condominium, Homeowners Associations

Condominium association lawyers in Miami and throughout South Florida have seen their fair share of fraud and theft involving the officers of local community associations, and the recent case involving the Hillcrest Condominium came as no surprise to the lawyers of Siegfried, Rivera, Lerner, De La Torre & Sobel , P.A. who represent more than 500 condominium associations and homeowners associations throughout the state.

According to newspaper reports about the matter, president Bonnie Andrews Soloman of the building's association was arrested by local police after bank statements revealed more than $46,000 in unauthorized ATM withdrawals. Appallingly, all of the withdrawals were made at ATMs located inside of the Hard Rock Hotel & Casino and the Seminole Indian Gaming Casino over the course of a year. The condo association has hired auditors to review all of the finances, and the group fears that additional funds may also be missing.

It seems cruel to lay blame on the member of this condominium association who were bilked by Soloman, who they describe as very well liked and seemingly trustworthy and good natured, but the facts of this case point to serious lapses and inadequate safeguards that made the theft possible. First and foremost, associations should not provide their officers with ATM cards for the group's operating accounts. A credit card for use in case of an emergency where a check is not an option is acceptable, but the limit should be set at less than $1,000. In addition, the checking account for the association should require two signatures from authorized individuals for all checks, and the bank statements should be reviewed by the group's treasurer, who should provide an overview of the group's finances at the monthly meetings.

In today's economy with so many individuals dealing with personal financial setbacks, the potential for theft and abuse by trusted officers of community associations becomes more prevalent. Our highly experienced condominium and homeowners association attorneys will continue to work very closely with the community associations that we represent to help them to implement and maintain all of the necessary precautions and safeguards to help to prevent their becoming victimized by unscrupulous officers and managers.