J.R. from Hartford County, Connecticut writes:
Dear Mister Condo,
I am writing from a HOA (PUD) with single family homes where the homeowners own their property. There has been some questionable activity from the previous BOD who all resigned after nine years. We have found that the Management Company, Attorney and BOD President was requiring kickbacks to the President on all maintenance jobs. We have found the BOD has violated the 15% over budget rule for the 9 years, by spending down the Capital Reserves to pay bogus bills submitted for payment. The Management Company, lawyer and several of the bogus bills are being paid out of the Capital Reserves so there is no recorded payment on our financials. We replaced all of the resigned BODs, Management Company and Attorney for just cause. We have found large sums of money missing over the 9 years. Without a doubt we can prove all of this and at the very least, we can prove mismanagement of funds. The new BOD are all relatively new and have no experience, but we do not know how to present this to the homeowners in an open meeting where the previous BOD can attend and hear all that we say. We have been very careful with who is aware of this situation so as not to create a liability. Very little maintenance of the roads and common elements have been done in the past 9 years, so we are definitely underfunded and in need of a lot of maintenance. As soon as we have hired a new Attorney to represent our Association, we plan on filing criminal charges. We have hired a new Management Company. The old Management Company is refusing to forward 9 years of stored documents that we pay storage on and refuse to turn over our funds to the new Management Company because they themselves are an illegal management company and not licensed in the State of CT, we have verified all of this through the Attorney Generals’ Office and Department of Consumer Protection. I understand you are not an Attorney and cannot give legal advice. My question is, at what point do we advise the homeowners that the previous BOD has already spent all of the money in this year’s budget along with violating the 15% over budget each year? We know it has to happen, but should we wait to the end of the year for the Annual Budget Meeting or should we announce this at our regular monthly board meeting? The old Management Company represents approximately 50 other Condo and HOAs, the Attorney is not a partner but their firm is within the CT-CAI family. I have been a resident for over 20 years, we have never had any issues like this in the past. Again, the previous BOD were bullying many of the homeowners, we have also found instances of harassment and discrimination and illegal Board action and to be honest with a new Board, they are worried about neighbor to neighbor conflicts once this information is made public. Thank you!
Mister Condo replies:
J.R., I am so terribly sorry that you and your fellow homeowners are having to go through this very serious corruption. You are correct that I am not an attorney and offer no legal advice in this column. This absolutely one of those times where the association needs an attorney to properly represent them and give advice as to stolen funds recovery. We can use words like “missing” or “mismanagement” of funds but let’s be clear, these funds were stolen from the association. Kickbacks are also illegal and in addition to seeking recovery of funds, your attorney may well advise the association to seek criminal charges against the offenders as well. Any management company practicing without a license is performing illegally in Connecticut. Your new Board will certainly have their hands full over the next few months and years. The good news is that it sounds like you have documentation to prove these allegations and it is never too late to get the association back on track. It is a shame that the previous Board got away with their illicit activities for so long. My guess is that you and other association members will pay closer attention moving forward. As for when it is best to let other members know of the discovered corruption, I say the sooner the better lest the new Board want to be accused of covering up the old Board’s behavior. Owners are going to react angrily to the news. Make sure they vent their anger at the responsible parties, not the messenger. Good luck and please keep us posted on how this saga ends.
1 thought on “HOA Corruption Finally Revealed!”
My thoughts are the sooner you have this meeting with the owners the better, to help foster trust. And the safest strategy is to have the attorney speak at the meeting, as the condo atty can know better how much to say, esp at such a preliminary point of taking a new direction. Also, if you haven’t yet, check with your insurer about any D&O or other coverage for what has occurred. In case you aren’t happy with any of your new choices for management, or attorney, you can research FOIAs, DCP complaints, attorney reprimands, look up their juris for lawsuits they handle, lawsuits involving the management company, criminal history on the judicial website, even googling can be revealing. For instance, you may find public testimony about condo issues, for instance, some condo attys take a strong stand against legislation such as the state having a condo ombudsman.