ETHICS OF BOARD MEMBER WITH JUDGEMENTS

Started by JoanneD1 • 9 replies • 1631 views

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JoanneD1 (Arizona)
Posts: 447

Posted:

Hello again and Happy New Year to All! We have a sitting BOD who has amassed financial judgments against him for over 2 million dollars due to a failed business. He was voted in as the treasurer/secretary last year despite the exposure to the membership that there were red flags. I do not think our governing documents address this but I am wondering that since these red flags have now turned into court ordered judgments if there would be grounds for removal. That type of action ALWAYS causes a great uproar. I do not believe that there is a danger to any of the funds being in danger, but it does seem like kind of an oxy moron. Thank you.

BradP (Kansas)
Posts: 2,640

Posted:

Joanne

if you have proper safeguards in place I don't see a need to remove him. If you don't then I woudl get the safeguards in place.

SusanW1 (Michigan)
Posts: 5,202

Posted:

By "safeguards", I'd suggest a Finance Committee to oversee all paid expenditures and track incoming revenues and looking at all accounts (if any have been accessed)
How many signees do you have on the checking account

If you have a management company, your worries might be lessened.

(you should have a Finance Committee, anyway0

JoanneD1 (Arizona)
Posts: 447

Posted:

Thanks for the responses! The property manager who pays little to no attention to anything is one signer and this treasurer is the other. He has threatened a fellow board member with a lawsuit because she told the membership that he was involved in some business activities that did not present him in a favorable light. The person in question is always ready to sue someone who says something that he doesn't like and now there are over 2.2 million in judgments on him. The finance committee is under control of the board and though our bylaws mandate two members to the committee, no one else in the community will step up so nothing gets done as far as audits that are mandated by AZ state statute.

SusanW1 (Michigan)
Posts: 5,202

Posted:

You may object to this person's personal business dealings, but unless you can make him responsible for the HOA problems, you really ought to not get involved.

Has he done anything criminal?

If not, then you can make your own judgement on his personal character, but unless that spills into HOA business, people should keep quiet.

JoanneD1 (Arizona)
Posts: 447

Posted:

Thanks again for this reply and oddly enough it is beginning to spill into HOA business as currently the HOA does not have a practice of calling the homeowners to ask permission for entry to send in a process server. We are in a manned gate 24/7. In a legal opinion that we got sometime back, one of the opinions stated that could be seen as an obstruction! We had some folks in foreclosure and other tax stuff and that was for the legal opinion. I would advise ANYONE to not allow folks with pending or potential legal difficulties to sit on their boards. Why make the job more difficult than it already is. Apparently this BOD is objecting to not being warned from the gate that a process server is wanting to get into the community to serve him. Funny how these things can go full circle.

BradP (Kansas)
Posts: 2,640

Posted:

I personally think looking down your nose at folks who are in foreclosure or have other financial issues is petty and small minded. There can be a million reasons why someone is in financial difficulty and not all relate to them being irresponsible or criminal. I know of a couple who had a child with severe medical problems that eventually passed and they went through financial hell. I would be extremely careful of what I spread and how I spread it, bankruptcies and all that stuff are public record, there is no need for anyone else to spread the word.

As to serving on boards, if your association has a waiting list of potential board members great, otherwise I would be open to anyone. Again, proper safeguards make it hard to steal. Another thing to remember, every criminal at one point or another had a clean record, so don't just judge those with sketchy financial pasts.

JoanneD1 (Arizona)
Posts: 447

Posted:

Thank you for the response and how could you know that is NOT the situation. I assure you if it were a sympathetic financial situation, this discussion would not be taking place. This is a case of a man who took investor money and did deceitful acts to hide assets such as hiding equipment etc. It is something that was in the local paper several times. The point is that this is now spilling into the HOA and that is the difficulty. Our gate staff has instructions adopted and are felt to be the appropriate legal protocol when process servers request entry to our community. There should be no requests to alter that process for ANYONE.....let alone a sitting BOD. If the person being served refuses to answer the door, that is an action of their choosing and not of the gate staff. If the process server comes at odd hours, maybe the person should just answer the door and accept the documents. That is how it is spilling into the community. NO HOA RULES TRUMP THE RULE OF LAW. Thanks again and I appreciate your contribution to this discussion.

BradP (Kansas)
Posts: 2,640

Posted:

If he is breaking the law report him to the authorities. If there are concerns over his handling of money take away the office of treasurer.

JoanneD1 (Arizona)
Posts: 447

Posted:

And I totally agree with both of your statements and after the next meeting, there should be some resolution. The fact that there are judgments speaks to half of that. Thanks again Brad.

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