Ok - recognizing that the ranters don't want to leave their names for obvious reasons, I'm removing both of you.
The guy who is upset about the ruts in the runway. Yes, it is being dealt with. I'm upset about it too and I have spoken to Joe about it. It is on the list of things to be fixed in the spring. But before you rant about it, have the courage to list your name.
To the guy who is presumably the guilty party and took such offense to the rant, you're being removed as well. (I am making a presumption that you are the guilty party as everyone else found it to be quite a chuckle, however, you clearly, have some pressing issues on your mind which leads me to think you are probably the one who drove across the runway).
I assume you think it was me and if you do, by all means you are welcome to come discuss it with me directly. I am making that assumption that you were referring to me as the guy who is here every other weekend, which would of course, be me, as well as a host of other people, so, if it wasn't directed at me, well, even better. But since I also seem to tbe at the epicenter of drama at Seven Bays, I narrow it back to me again. Either way, you're off the blog for not putting your name up there.
So thankfully, since the rant was read at the board meeting aloud, it is now clearly in the eyes of the community. I asked Linda to send a letter to all the airport residents that no one should drive on the runway. I also asked Joe to put the signs back in place so that people will know not to drive on the runway.
To be fair, everyone has to put their names on their posts. Even me.
Jay Jump
Seven Bays Homeowner and Board Member
Monday, January 21, 2008
Sunday, January 20, 2008
Signing off for now
Last night I had what I would classify as a meaningful e-mail exchange with a board member, I promised them that I would not blog without getting there side of the story.
Since I am not taking a position one way or another here I feel that I will not be breaching that promise.
I will sit back for now and let the community decide, I have learned this blog is not necessarily the best way to communicate and I will let the political will of the community decide how this saga ends. I have learned through this experience that I have no voice in how our community is run except (and this goes back further then this board) during the second weekend in July and maybe I will do my speaking then in how I vote, or maybe I will just say screw it and spend the morning on the lake, we will see.
Have a great Winter Seven Bays!
Good bye for now.
Sean
Saturday, January 19, 2008
Missive to the Blogger
To the last blogger, DO NOT EVER SIGN from the community, because you do not speak for me, and by signing it as you did you show no more courage then the blogger to which you were responding to. I to was not going to ID myself but since I decided to send this to the board I realize what the hell.
Regardless of which side of the board you agree with we as a community must agree that 5 people are destroying us though they all may have ran with the best intentions.
I only get to spend a few weeks a year up there and until now I have enjoyed it and had fond memories. Now I look at 7 bays and want to puke. All winter my mail box has been littered letters, all summer we had to deal with dust, and our dues went up. Yet there is no shortage of bad feelings. Is the board in such a mess because one board member did not get their way or is it that other board members are taking on too much too fast, or is it community apathy? My guess it is a little bit of everything.
Now is the time to ask the board to resign, hand the bill paying authority to our accountant and run a new election quickly. Or as a compromise ask that Linda and Margot stay on board (I believe their terms just started) and the rest resign NOW, and we re-elect three new folks. This way both “interests” are represented and we maintain some continuity I was told all but one has offered to resign come July, can we survive that long?
If this board can not work things out soon what do we do?
Withhold dues?
Become part of the county?
None of these are desirable options in my opinion.
I ask the community what is the solution?
Sean
Wednesday, January 9, 2008
Vindication! Thy name is Seven Bays!
Dear homeowners:
Last week I received a mysterious email from Linda requesting my presence at a meeting on Friday, January 4 at 10:00 a.m. The request arrived on Thursday, less than 24 hours before the event. In addition, George Cordier called me that evening and asked me to attend the Friday Meeting.
Aghast at why I would ever receive a call from Linda or George, I figured something must have gone terribly wrong and now the blame would attempt to be spread far and wide. When I arrived at the maintenance office, I found the Lincoln County Fire Commissioner and our Engineer from E&H present.
I asked George what was going and what was wrong and he replied, "Nothing, we're meeting to discuss doing Phase III after Phase II is finished." Of course! I smelled a set up and that this meeting was intended to clear the path for Phase III immediately.
So the meeting commenced with four members present. Margot was stuck in Spokane at work. George started off asking the fire commissioner when we were going to get a 500 gpm pumper truck. Dean politely acknowledge they knew the area would eventually need one and said it wouldn't happen for a few years.
There was some more discussion about fire protection until finally, the fire commissioner asked "Why are you in a rush to do Phase III? Is it to lower your insurance?" Well, you and I both know that the insurance won't go down until we have a fulltime dedicated fire departent, so that clearly wasn't the answer.
As the fire commissioner stated - there isn't any reason to do Phase III. Lincoln County doesn't particularly care. As the fire commissioner said, "If there is a fire, we'll get four or five trucks up here and then you'll have over a thousand gallons per minute."
George continued to push on for reasons why Phase III should be done, but our own engineer was shaking his head!
"I think there has been some misunderstanding," he said, "This water project was never designed for you to do all at once. It was set up so you could do it in pieces when money and time was available."
He went on to further state "The State has no mandate at this time that the water system be upgrade."
Now, here I am, listening to this discussion. I had been expecting a complete push for Phase III and here are our two experts telling us it simply wasn't necessary. While I didn't come out and ask, I got the impression that Phase II wasn't necessary either.
Now, I think that George had been expecting the conversation to go towards his position as well, because he kept on asking questions and trying to get the fire commissioner and engineer to admit and state that Phase III was absolutely necessary. And yet it didn't happen.
Then what to my amazed ear should I hear, but Linda Schindler state "I see no justification for Phase III." Oh my gosh, I just about fell off my chair. Could it be, did I hear correctly? Thank God she was recording the conversation so I could go back and verify it later. But oddly enough, I did not have to verify it as she sent an email thirty minutes later advising Margot that Phase III was not necessary!
Now George did continue to push for Phase III or for some reason to justify Phase III but he just wasn't getting it. Finally, he did concede that he saw the point, but didn't know how he was going to explain it to the community. Since I know that there is really only one homeowner close to George pushing for Phase III, it didn't take me long to realize that George was trying to figure out how he was going to explain this to his handlers. George concluded by saying essentially "He saw the point, but I guess everyone is entitled to their opinion."
Now, I do mean to gloat here, because our board is in a terrible state what with all the assertions that the three members have been making about necessary water systems. I've been saying all along it wasn't necessary, it could be done over time. The community has said the same thing. But then you have George with his agenda and Roy pushing him right along. In fact, it was Roy who told our community that he had the WAC code that mandated it. Of course, it has never been produced. . . and I've never found it.
Now folks, I want to get this out to you. Because I think it says two things. One, we were right. Two, the board now has to face the fact that we were right. This community has been ramrodded into doing unnecessary projects that cost an enormous amount of money while jeopardizing our own financial situation and disregarding other projects that had already been started.
I hope that you will speak up at the next public meeting and all the public meetings that occur between here and July. I also hope that you voice coalesces into an action to deal with the ENTIRE board, myself included, and get some quality leadership into position.
Yes, these are my own opinions. But since the board has unilaterally decided that they don't like this website and have created an official one, I can assert my own opinions on here.
I should note that these are your opnions as well. I want to thank all of you who have emailed, called, or dropped by to voice your support. I appreciate it and look forward to carrying on the battle for you.
As an aside, you should take a moment to thank Nancy Wolfrum. Nancy is a pillar of our community and she has watched from the sidelines for the past year what has been going on in the board. She took the time at her own expense to send you copies of the minutes from the last two meetings. Minutes which the three member board has refused to accept. She did this on her own accord and her own time. She paid all the expenses. While you might disagree with her putting the message out to everyone, take comfort in the fact that she feels strongly enough about something to let you know. Imagine what would happen if we had people who just didn't care and were apathetic to the condition of Seven Bays. Take pride in the fact that there are people in this community who care enough to take the time to let you know what is going on. Those are the people who should be applauded.
So to summarize, Phase III is not necessary at this time according to the following:
(1) ME
(2) Lincoln County Fire Commissioner
(3) E&H Engineering (the guys who designed the water systems upgrades)
(4) Linda Schindler
I think Rick also doesn't support Phase III because saw him nodding his head in agreement with Linda when she made her bold statement, but I won't put words in his mouth.
People who are still in support of Phase III?
(1) The uninformed.
Jay S. Jump
Seven Bays Board Member and Homeowner
Last week I received a mysterious email from Linda requesting my presence at a meeting on Friday, January 4 at 10:00 a.m. The request arrived on Thursday, less than 24 hours before the event. In addition, George Cordier called me that evening and asked me to attend the Friday Meeting.
Aghast at why I would ever receive a call from Linda or George, I figured something must have gone terribly wrong and now the blame would attempt to be spread far and wide. When I arrived at the maintenance office, I found the Lincoln County Fire Commissioner and our Engineer from E&H present.
I asked George what was going and what was wrong and he replied, "Nothing, we're meeting to discuss doing Phase III after Phase II is finished." Of course! I smelled a set up and that this meeting was intended to clear the path for Phase III immediately.
So the meeting commenced with four members present. Margot was stuck in Spokane at work. George started off asking the fire commissioner when we were going to get a 500 gpm pumper truck. Dean politely acknowledge they knew the area would eventually need one and said it wouldn't happen for a few years.
There was some more discussion about fire protection until finally, the fire commissioner asked "Why are you in a rush to do Phase III? Is it to lower your insurance?" Well, you and I both know that the insurance won't go down until we have a fulltime dedicated fire departent, so that clearly wasn't the answer.
As the fire commissioner stated - there isn't any reason to do Phase III. Lincoln County doesn't particularly care. As the fire commissioner said, "If there is a fire, we'll get four or five trucks up here and then you'll have over a thousand gallons per minute."
George continued to push on for reasons why Phase III should be done, but our own engineer was shaking his head!
"I think there has been some misunderstanding," he said, "This water project was never designed for you to do all at once. It was set up so you could do it in pieces when money and time was available."
He went on to further state "The State has no mandate at this time that the water system be upgrade."
Now, here I am, listening to this discussion. I had been expecting a complete push for Phase III and here are our two experts telling us it simply wasn't necessary. While I didn't come out and ask, I got the impression that Phase II wasn't necessary either.
Now, I think that George had been expecting the conversation to go towards his position as well, because he kept on asking questions and trying to get the fire commissioner and engineer to admit and state that Phase III was absolutely necessary. And yet it didn't happen.
Then what to my amazed ear should I hear, but Linda Schindler state "I see no justification for Phase III." Oh my gosh, I just about fell off my chair. Could it be, did I hear correctly? Thank God she was recording the conversation so I could go back and verify it later. But oddly enough, I did not have to verify it as she sent an email thirty minutes later advising Margot that Phase III was not necessary!
Now George did continue to push for Phase III or for some reason to justify Phase III but he just wasn't getting it. Finally, he did concede that he saw the point, but didn't know how he was going to explain it to the community. Since I know that there is really only one homeowner close to George pushing for Phase III, it didn't take me long to realize that George was trying to figure out how he was going to explain this to his handlers. George concluded by saying essentially "He saw the point, but I guess everyone is entitled to their opinion."
Now, I do mean to gloat here, because our board is in a terrible state what with all the assertions that the three members have been making about necessary water systems. I've been saying all along it wasn't necessary, it could be done over time. The community has said the same thing. But then you have George with his agenda and Roy pushing him right along. In fact, it was Roy who told our community that he had the WAC code that mandated it. Of course, it has never been produced. . . and I've never found it.
Now folks, I want to get this out to you. Because I think it says two things. One, we were right. Two, the board now has to face the fact that we were right. This community has been ramrodded into doing unnecessary projects that cost an enormous amount of money while jeopardizing our own financial situation and disregarding other projects that had already been started.
I hope that you will speak up at the next public meeting and all the public meetings that occur between here and July. I also hope that you voice coalesces into an action to deal with the ENTIRE board, myself included, and get some quality leadership into position.
Yes, these are my own opinions. But since the board has unilaterally decided that they don't like this website and have created an official one, I can assert my own opinions on here.
I should note that these are your opnions as well. I want to thank all of you who have emailed, called, or dropped by to voice your support. I appreciate it and look forward to carrying on the battle for you.
As an aside, you should take a moment to thank Nancy Wolfrum. Nancy is a pillar of our community and she has watched from the sidelines for the past year what has been going on in the board. She took the time at her own expense to send you copies of the minutes from the last two meetings. Minutes which the three member board has refused to accept. She did this on her own accord and her own time. She paid all the expenses. While you might disagree with her putting the message out to everyone, take comfort in the fact that she feels strongly enough about something to let you know. Imagine what would happen if we had people who just didn't care and were apathetic to the condition of Seven Bays. Take pride in the fact that there are people in this community who care enough to take the time to let you know what is going on. Those are the people who should be applauded.
So to summarize, Phase III is not necessary at this time according to the following:
(1) ME
(2) Lincoln County Fire Commissioner
(3) E&H Engineering (the guys who designed the water systems upgrades)
(4) Linda Schindler
I think Rick also doesn't support Phase III because saw him nodding his head in agreement with Linda when she made her bold statement, but I won't put words in his mouth.
People who are still in support of Phase III?
(1) The uninformed.
Jay S. Jump
Seven Bays Board Member and Homeowner
Friday, November 30, 2007
Duties of the Board
What duties must board members of nonprofit corporations uphold?
Duty of Care. Community association boards must give the business of their associations the same degree of care and diligence that prudent persons would exercise in their own affairs in similar circumstances. The duty of care requires directors to invest time and attention in association business, make reasonable inquiry into association matters to enable informed decision-making, and take reasonable, not arbitrary or capricious, actions.
Duty of Loyalty. Directors of community associations, like their counterparts in for-profit corporations, have a duty to the association and to its members to act for the association’s benefit only and with an eye to its best interests, without regard for any personal interest the directors may have. Courts take this duty very seriously, using expressions such as “utmost good faith.” If a transaction is challenged, courts place the burden on the director to demonstrate the fairness of any transaction in which the director is personally involved.
Duty to Act within the Scope of Authority. Directors owe a duty to their associations and to their members to perform their duties in accordance with the authority granted to them by statute and in their governing documents. If directors exceed this authority and damage results, the directors may be personally liable for their unauthorized actions.
Duty of Care. Community association boards must give the business of their associations the same degree of care and diligence that prudent persons would exercise in their own affairs in similar circumstances. The duty of care requires directors to invest time and attention in association business, make reasonable inquiry into association matters to enable informed decision-making, and take reasonable, not arbitrary or capricious, actions.
Duty of Loyalty. Directors of community associations, like their counterparts in for-profit corporations, have a duty to the association and to its members to act for the association’s benefit only and with an eye to its best interests, without regard for any personal interest the directors may have. Courts take this duty very seriously, using expressions such as “utmost good faith.” If a transaction is challenged, courts place the burden on the director to demonstrate the fairness of any transaction in which the director is personally involved.
Duty to Act within the Scope of Authority. Directors owe a duty to their associations and to their members to perform their duties in accordance with the authority granted to them by statute and in their governing documents. If directors exceed this authority and damage results, the directors may be personally liable for their unauthorized actions.
Thursday, November 29, 2007
Free Speech in the 21st Century
This is rich. I greatly enjoyed this story.
Click on the title to access the link to the story.
Jay
Click on the title to access the link to the story.
Jay
Food for Thought
a quote from Thomas Jefferson over 200 years ago:
"But I have always found that rogues would be uppermost, and I do not know that the proportion is too strong for the higher orders and for those who, rising above the swinish multitude, always contrive to nestle themselves into the places of power and profit. These rogues set out with stealing the people's good opinion, and then steal from them the right of withdrawing it, by contriving laws and associations against the power of the people themselves."
--Thomas Jefferson to Mann Page, 1795. ME 9:306
"But I have always found that rogues would be uppermost, and I do not know that the proportion is too strong for the higher orders and for those who, rising above the swinish multitude, always contrive to nestle themselves into the places of power and profit. These rogues set out with stealing the people's good opinion, and then steal from them the right of withdrawing it, by contriving laws and associations against the power of the people themselves."
--Thomas Jefferson to Mann Page, 1795. ME 9:306
Not guilty plea in embezzle case
By Robyn Moormeister
A Story from Nevada
12:01 a.m. PT Nov 22, 2007
A Nevada City woman accused of embezzling more than $100,000 from her homeowners association as its treasurer pleaded not guilty Wednesday to felony embezzlement and theft charges.
Linda Balch, 61, appeared in Nevada County Superior Court to face three charges of felony embezzlement and one count of theft from an elder. She was joined by her attorney, Thomas Leupp of Auburn, and her husband Tom Balch, a former Nevada City mayor.
Eight of Balch's alleged victims sat in the back row of the crowded gallery, accompanied by two county victim advocates.
When Judge Candace Heidelberger called Balch's case, Balch stood before the judge while Leupp entered the not guilty plea. With Leupp's arm sheltering her, she quickly left the courtroom without responding to questions.
"Is there any chance we'll recover the money?" Woodbridge Townhomes Homeowners Association board secretary Uli Kaestner asked District Attorney Cliff Newell outside the courtroom.
Newell told Kaestner and the other alleged victims that restitution is possible.
"The Balches have assets," Newell said. "They're not destitute, as opposed to some of these cases, where the defendants have nothing."
Balch allegedly used her position as association treasurer to embezzle more than $100,000 from the Woodbridge homeowners association between September 2005 and Sept. 30 of this year and used the funds for personal gain, Grass Valley police Sgt. Doug Hren said.
Grass Valley police arrested Balch Oct. 25. Her bail was set at $100,000, and she posted a $10,000 bond the same day of her arrest.
Balch told residents at a recent homeowners association board meeting that she would do "everything in her power" to pay the money back, Kaestner said.
"She said she did it to keep up her lifestyle," Kaestner said.
Leupp did not return a phone call from The Union.
Mishandling of homeowners association funds is nothing new, said Marjorie Murray, president of the Center for California Homeowners Association Law.
"This is an issue we've been tracking for a long time," Murray said. "There are few controls over money collected by a homeowners association."
According to the center, California law does not demand financial accountability by homeowners associations. Residents hand over more than $200 million in assessments annually to association boards, but they often have a difficult time finding out how boards are spending the money they have entrusted to them, according to Murray's Web site.
Newell said every homeowners association is different, and it is up to the board to assure adequate oversight of its funds.
"This might be a wake-up call to homeowners associations," he said. "They need to be sure there is a system of checks and balances and their procedures are followed."
Since Balch's arrest, the association board removed Balch from her position and assigned four people to run the treasury position instead of one, Kaestner said.
After Wednesday's court hearing, the DA reassured the group of elderly homeowners it is possible that Balch could change her plea in coming months and be ordered to pay restitution.
Newell said he would like to resolve the case as quickly as possible, and he is confident that Leupp - with whom he has worked before - will also help to ensure an expedient resolution to the case.
The maximum possible sentence for Balch's alleged crimes is 13 years in prison if she is sentenced consecutively for each count, but that's not likely, Newell said.
"It could end up being anything down to probation and community service," he said.
According to California law, many crimes occurring out of the same set of circumstances can't be sentenced consecutively, Newell said.
In addition, a clause exists in the sentencing guidelines for the alleged crimes Balch is facing that allows the judge to take into account unusual circumstances.
"It's really up to the judge," Newell said. "It's very unlikely for a first-time offender to go to prison, but there are aggravated circumstances. The victims are elderly and the amount of money is large. These are things a judge would consider."
Balch is set for a pre-trial hearing at 1 p.m. Dec. 13 in Nevada County Superior Court.
ooo
To contact Staff Writer Robyn Moormeister, e-mail robynm@theunion.com or call 477-4236.
A Story from Nevada
12:01 a.m. PT Nov 22, 2007
A Nevada City woman accused of embezzling more than $100,000 from her homeowners association as its treasurer pleaded not guilty Wednesday to felony embezzlement and theft charges.
Linda Balch, 61, appeared in Nevada County Superior Court to face three charges of felony embezzlement and one count of theft from an elder. She was joined by her attorney, Thomas Leupp of Auburn, and her husband Tom Balch, a former Nevada City mayor.
Eight of Balch's alleged victims sat in the back row of the crowded gallery, accompanied by two county victim advocates.
When Judge Candace Heidelberger called Balch's case, Balch stood before the judge while Leupp entered the not guilty plea. With Leupp's arm sheltering her, she quickly left the courtroom without responding to questions.
"Is there any chance we'll recover the money?" Woodbridge Townhomes Homeowners Association board secretary Uli Kaestner asked District Attorney Cliff Newell outside the courtroom.
Newell told Kaestner and the other alleged victims that restitution is possible.
"The Balches have assets," Newell said. "They're not destitute, as opposed to some of these cases, where the defendants have nothing."
Balch allegedly used her position as association treasurer to embezzle more than $100,000 from the Woodbridge homeowners association between September 2005 and Sept. 30 of this year and used the funds for personal gain, Grass Valley police Sgt. Doug Hren said.
Grass Valley police arrested Balch Oct. 25. Her bail was set at $100,000, and she posted a $10,000 bond the same day of her arrest.
Balch told residents at a recent homeowners association board meeting that she would do "everything in her power" to pay the money back, Kaestner said.
"She said she did it to keep up her lifestyle," Kaestner said.
Leupp did not return a phone call from The Union.
Mishandling of homeowners association funds is nothing new, said Marjorie Murray, president of the Center for California Homeowners Association Law.
"This is an issue we've been tracking for a long time," Murray said. "There are few controls over money collected by a homeowners association."
According to the center, California law does not demand financial accountability by homeowners associations. Residents hand over more than $200 million in assessments annually to association boards, but they often have a difficult time finding out how boards are spending the money they have entrusted to them, according to Murray's Web site.
Newell said every homeowners association is different, and it is up to the board to assure adequate oversight of its funds.
"This might be a wake-up call to homeowners associations," he said. "They need to be sure there is a system of checks and balances and their procedures are followed."
Since Balch's arrest, the association board removed Balch from her position and assigned four people to run the treasury position instead of one, Kaestner said.
After Wednesday's court hearing, the DA reassured the group of elderly homeowners it is possible that Balch could change her plea in coming months and be ordered to pay restitution.
Newell said he would like to resolve the case as quickly as possible, and he is confident that Leupp - with whom he has worked before - will also help to ensure an expedient resolution to the case.
The maximum possible sentence for Balch's alleged crimes is 13 years in prison if she is sentenced consecutively for each count, but that's not likely, Newell said.
"It could end up being anything down to probation and community service," he said.
According to California law, many crimes occurring out of the same set of circumstances can't be sentenced consecutively, Newell said.
In addition, a clause exists in the sentencing guidelines for the alleged crimes Balch is facing that allows the judge to take into account unusual circumstances.
"It's really up to the judge," Newell said. "It's very unlikely for a first-time offender to go to prison, but there are aggravated circumstances. The victims are elderly and the amount of money is large. These are things a judge would consider."
Balch is set for a pre-trial hearing at 1 p.m. Dec. 13 in Nevada County Superior Court.
ooo
To contact Staff Writer Robyn Moormeister, e-mail robynm@theunion.com or call 477-4236.
Hand in the HOA's Cookie Jar
by Richard Thompson
An excerpt from a recent news story read: "Bridgett Freeman of Sheboygan stole more than $11,000 from the Westridge Homeowner's Association in West Bend. Thursday, she was sentenced to six months in jail and three years probation, and was ordered to pay back $11,617.41. She said she was sorry."
From time to time, these stories hit the local rag with the really big ones making national news. While embezzlers can be found in virtually every type of business, homeowner associations are not immune. In fact, because of the volunteer nature of HOAs, business practices tend to be somewhat lax and HOAs are even more vulnerable than traditional businesses.
In the past, big time embezzlement was less likely because most HOAs had little money to steal. It was like mugging a panhandler. What was more likely to happen, is something, like board members buying themselves dinner or other perks on the HOA's dime. Those so engaged, view it as a legitimate expense for a volunteer position. Trouble is, since directors usually serve for no compensation (see your governing documents) and there is rarely a budget line item called "Board Perks," this is just another form of petty embezzlement. Like Enron, this kind takes collusion of the board members to keep the practice alive.
With reserve planning for homeowners on the rise (thankfully) comes increased amounts of cash which can add up to hundreds of thousands of dollars. With larger amounts of cash comes the unfortunate temptation to dip into the HOA's cookie jar. Embezzlement can happen by either a board member or management company that has access to the funds. Usually, managers are restricted (or should be) from reserve accounts where most of the HOA's money is. This leaves the HOA cookie jar under the control of the Board President and Treasurer.
When it comes to protecting against embezzlement and other forms of fraud, it's best to have a number of controls in place that are designed to preempt the act. In other words, if there is a good chance an embezzler is going to get caught, the temptation is much less than if stealing is a piece of cake.
Getting caught with a hand in a cookie jar is no big thing if you're five years old and the goal is a macaroon. But when the prize is the HOA's cash, the Board needs to place aggressive measures in place to help keep those "certain someones" from helping themselves.
An excerpt from a recent news story read: "Bridgett Freeman of Sheboygan stole more than $11,000 from the Westridge Homeowner's Association in West Bend. Thursday, she was sentenced to six months in jail and three years probation, and was ordered to pay back $11,617.41. She said she was sorry."
From time to time, these stories hit the local rag with the really big ones making national news. While embezzlers can be found in virtually every type of business, homeowner associations are not immune. In fact, because of the volunteer nature of HOAs, business practices tend to be somewhat lax and HOAs are even more vulnerable than traditional businesses.
In the past, big time embezzlement was less likely because most HOAs had little money to steal. It was like mugging a panhandler. What was more likely to happen, is something, like board members buying themselves dinner or other perks on the HOA's dime. Those so engaged, view it as a legitimate expense for a volunteer position. Trouble is, since directors usually serve for no compensation (see your governing documents) and there is rarely a budget line item called "Board Perks," this is just another form of petty embezzlement. Like Enron, this kind takes collusion of the board members to keep the practice alive.
With reserve planning for homeowners on the rise (thankfully) comes increased amounts of cash which can add up to hundreds of thousands of dollars. With larger amounts of cash comes the unfortunate temptation to dip into the HOA's cookie jar. Embezzlement can happen by either a board member or management company that has access to the funds. Usually, managers are restricted (or should be) from reserve accounts where most of the HOA's money is. This leaves the HOA cookie jar under the control of the Board President and Treasurer.
When it comes to protecting against embezzlement and other forms of fraud, it's best to have a number of controls in place that are designed to preempt the act. In other words, if there is a good chance an embezzler is going to get caught, the temptation is much less than if stealing is a piece of cake.
Getting caught with a hand in a cookie jar is no big thing if you're five years old and the goal is a macaroon. But when the prize is the HOA's cash, the Board needs to place aggressive measures in place to help keep those "certain someones" from helping themselves.
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