Monday, June 12, 2017

State Investigators Say Ex-HOA Board Members Misspent Over $1 Million Of Association's Money On Themselves; Prosecutors Ponder Criminal Charges

In West Palm Beach, Florida, the Palm Beach Post reports:
  • State regulators say former board members of the 20-building Whitehall condos on Village Boulevard misspent more than $1 million of their association’s money on themselves and shifted hundreds of thousands of dollars from reserves to cover budget shortfalls without authorization from unit owners, violations so serious that investigators forwarded evidence to state prosecutors.

    Lead Investigator Harry Hague of the Florida Department of Business and Professional Regulation’s Bureau of Compliance wrote the current board of Whitehall Condominiums of the Villages of Palm Beach Lakes Association on Jan. 26 that the former board committed a series of “major” civil violations of state condo law.

    The Florida Department of Law Enforcement also investigated and is awaiting word on whether the Office of Statewide Prosecution will bring criminal charges based on its findings, an FDLE official confirmed Thursday.

    “They’re reviewing it,” Eric Jester, special agent supervisor in the FDLE’s West Palm Beach field office, said, declining to comment further on the open case.

    Though prosecutors say they can’t talk about an ongoing investigation, the regulatory agency’s warning letter detailed 10 violations of state condominium law that occurred from 2010 through 2015. The association could be fined $5,000 per violation if the association doesn’t respond to the letter or if violations recur.

    Among the violations cited by Hague at the 480-unit complex:
  • The former board improperly paid directors Vincent Rossi, Charles Keeling and Michael Weadock more than $242,400. State condo law requires that officers serve without compensation unless the condo governing documents allow otherwise. Rossi and Weadock were paid as property managers and Keeling, a retired police officer, was paid for security services.
  • The association spent an estimated $357,200 “for expenses unrelated to condominium operations.” A more precise accounting was impossible because records weren’t kept. However, Hague wrote, evidence shows “Association funds were routinely expended for the exclusive personal benefit of a member or members of the board of directors and that these expenses were insufficiently or inaccurately reported and accounted for, or went unreported.”
  • The association “diverted” $455,000 from reserves into the operating fund without condo owner approval, and with no plans to refund the depleted accounts.
  • It was current board members, starting in 2014, before they were elected, who fired the first salvo against the former board, by filing a civil suit, seeking to remove them for alleged misuse of association money. They got the state agency to oust President Rossi from the board for failing to pay his maintenance dues for more than 90 days.

    Shortly thereafter, Keeling became president but neither he, Rossi nor Weadock are on the board anymore.
    Cary Collins, a plaintiff in the 2014 suit who has since become board president, says the records — or the lack thereof — indicate vast sums are missing, maybe three or four times what investigator Hague documented. The association has a $1 million insurance policy to cover such losses but can’t collect unless criminal charges are brought, he said.

    Meanwhile, unit owners are paying higher maintenance fees, because the new board is obligated to replenish the depleted accounts as aggressively as it can, Collins said. Unit owners now paying an average of $420 a month probably would be paying as much as $100 less, $1,200 a year less, if not for the missing money, not to mention that the higher assessments depress their property values, he said.