Many of you may have seen the news again this week concerning allegations that another licensed community association manager misappropriated over $220,000.00 from a condominium association in Hollywood. Click here if you missed it: http://www.local10.com/news/lawsuit-property-manager-embezzled-228000-from-condo-association/32977920
It certainly seems to be a growing problem. Over the last few months I have personally been involved in three significant cases of theft of association funds. In all of the cases, the one common denominator is that the person with check signing authority was involved in the theft.
In one of the cases, there was no management company managing the association. So, the President didn’t have much supervision and helped himself. In another, there was a community association manager working for the association who simply failed to catch the President steal six figures, and in the third one it’s the manager herself who is accused of the wrongdoing.by fleecing the association’s funds by writing checks to a company she owned.
So what are we learning from all this? Apparently, it may not be enough to rely on the community association manager when ensuring that the accounting is accurate and all funds are accounted for. Someone on the Board or perhaps a committee needs to check up on the manager. Next, it’s far easier for a Board member to get away with wrong doing if there is no management company and no interest by anyone else on the Board or in the community in checking up on the Board member in control of the check book. In one of the cases mentioned above, it was my client, a unit owner who was not even on the Board, who uncovered the theft. The other Board members never caught it. I should disclose however that my client actually is a rocket scientist. No joke.
When there’s access to a large amount of money, and little risk of getting caught, because nobody cares about checking the numbers, perhaps the temptation to dip into the till runs high. There’s older examples of Board members who were described as “devoted” and “kind” and “sweet” stealing association funds and losing them in slot machines at the casino. Everyone let their guard down, turned their back and had too much trust in one person. It’s all about having proper checks and balances. So what do you think? Why are some Board members and/or managers suddenly so brave? What percentage of wrongdoing do you think actually gets caught? How do we prevent it?
