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Subject: Treasurer reimbursed for mileage
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BobB31
(Florida)

Posts:136


08/05/2019 3:40 AM  
The former treasurer (I will refer to him as "her") submitted a mileage sheet and wrote herself a check for the reimbursement. I believe this would normally be allowable per FS 720.303(12)(b), which lists as an exception to the prohibition against compensation of directors, officers and committee members:

Reimbursement for out-of-pocket expenses incurred by such person on behalf of the association, subject to approval in accordance with procedures established by the association’s governing documents or, in the absence of such procedures, in accordance with an approval process established by the board.

In our case, there were no such written procedures established. When an officer spends money on something for the HOA, he simply submits the receipt and request for reimbursement to the treasurer.

However, it has come out that the mileage claim might have been spurious. While the treasurer was indeed picking up the supplies needed by the committee of which she was a member, the branch of the store at which they were purchased was quite a long way from the community. Specifically, it was in the same town where the treasurer used to live before leaving her spouse who still lives there while the divorce is ongoing. There are a couple branches of the store much closer to the community. So the possibility exists that she would have had to make that trip anyways to take care of personal issues.

So, while it seems fishy, does it rise to the level of extortion? The amount was $150 (260 mi.).
BobB31
(Florida)

Posts:136


08/05/2019 3:46 AM  
Not "extortion". I meant "embezzlement".
SteveM9
(Massachusetts)

Posts:3414


08/05/2019 4:13 AM  
Posted By BobB31 on 08/05/2019 3:46 AM
Not "extortion". I meant "embezzlement".




Its stealing, but not on a criminal level. She is gaming the system.

If I was on the board I would deny the reimbursement and demand repayment. I would then make policy on how mileage is reimbursed and how it is approved before checks are written.

JohnT38
(South Carolina)

Posts:130


08/05/2019 4:35 AM  
"...might have been", "...so the possibility exists", "...it seems fishy"

Although you may be right, it appears you don't have the facts to back up your accusation.

SueW6
(Michigan)

Posts:614


08/05/2019 5:00 AM  
I’m the treasurer of a group. If I submit a reimbursement form to be paid to myself, there has to be another signature on the form.

The whole story seems suspicious, especially if the same store branch was closer. But we aren’t hearing the other side if the story.
SamE2
(New Jersey)

Posts:195


08/05/2019 5:28 AM  
How much would the expense have been if she went to the closer branch? Instead of $150 might would it have been $100? I think she might have been using her time wisely, which you are not paying her for, so going to the branch she did was better for her and she did nothing wrong. I believe in picking my battles and if you decide to micro-management volunteers eventually you will have none. I doubt it rose to the level of embezzlement.
PaulJ6
(New York)

Posts:378


08/05/2019 5:34 AM  
Posted By SueW6 on 08/05/2019 5:00 AM
I’m the treasurer of a group. If I submit a reimbursement form to be paid to myself, there has to be another signature on the form.

The whole story seems suspicious, especially if the same store branch was closer. But we aren’t hearing the other side if the story.




This is exactly correct.

The reimbursement should have been approved by at least a majority of the other directors.
BobB31
(Florida)

Posts:136


08/05/2019 5:43 AM  
Posted By SueW6 on 08/05/2019 5:00 AM
I’m the treasurer of a group. If I submit a reimbursement form to be paid to myself, there has to be another signature on the form.

The whole story seems suspicious, especially if the same store branch was closer. But we aren’t hearing the other side if the story.


At this point, there were two board members: herself and the former chairman. So getting another signature would have been easy if we hat a requirement for it.

Posted By JohnT38 on 08/05/2019 4:35 AM
"...might have been", "...so the possibility exists", "...it seems fishy"

Although you may be right, it appears you don't have the facts to back up your accusation.




You've got that right. It's not my accusation; but the coincidence of the store location and her former residence has got tongues wagging, with some demanding that the current board, of which I am chairman, demand the return of the money. I could do that but she will likely refuse, and then what? Take her to court with no real proof she did anything wrong? Huge waste of time.
NpS
(Pennsylvania)

Posts:3913


08/05/2019 6:46 AM  
Posted By BobB31 on 08/05/2019 5:43 AM
You've got that right. It's not my accusation; but the coincidence of the store location and her former residence has got tongues wagging, with some demanding that the current board, of which I am chairman, demand the return of the money. I could do that but she will likely refuse, and then what? Take her to court with no real proof she did anything wrong? Huge waste of time.


My questions are: Is there a policy now? Or is there a meeting scheduled to establish a policy?

IMO, you've learned that you need one. Ok, do it.

Some corporations have a shake-up at least once per decade. Someone in accounting finds out that there's a new way to game the system. So the rules get changed.

Don't waste your time going after someone who didn't have clear cut directives about charging costs to the HOA.


Sikubali jukumu. Read all posts at your own risk.
SheliaH
(Indiana)

Posts:2763


08/05/2019 8:48 AM  
In a sense, your community did have a procedure for reimbursement in that most people submitted the receipt for whatever he/she purchased for the association. Mileage, however, is different, because it’s easy to inflate the numbers – and that’s probably what the treasurer did. Personally, I wouldn’t pay for mileage at all unless there was a valid reason to drive from here to way out yonder, and based on what you said, there was no reason for this.

Even then, I’d go to Google Maps to see exactly how far it is and reimburse based on that, using something like the rate state employees may get for travel. And the treasurer would still need to get approval from the entire board before getting a check (which should have been signed by two people because theft is easy when you have sole access to the checkbook).

You might want to have someone take a close look at the association account during the treasurer’s tenure to see if there are other questionable checks. If she can’t explain them, you should demand a refund and consider legal action if she doesn’t. That's when embezzlement might come in, although you may have a problem with pursuing criminal charges because the association DIDN'T have any policies and procedures to protect itself. This may end up being an expensive lesson for the board, so I do hope you've established policies and procedures procedure for reimbursement
BobB31
(Florida)

Posts:136


08/05/2019 8:53 AM  
Posted By SheliaH on 08/05/2019 8:48 AM
In a sense, your community did have a procedure for reimbursement in that most people submitted the receipt for whatever he/she purchased for the association. Mileage, however, is different, because it’s easy to inflate the numbers – and that’s probably what the treasurer did. Personally, I wouldn’t pay for mileage at all unless there was a valid reason to drive from here to way out yonder, and based on what you said, there was no reason for this.

Even then, I’d go to Google Maps to see exactly how far it is and reimburse based on that, using something like the rate state employees may get for travel. And the treasurer would still need to get approval from the entire board before getting a check (which should have been signed by two people because theft is easy when you have sole access to the checkbook).

You might want to have someone take a close look at the association account during the treasurer’s tenure to see if there are other questionable checks. If she can’t explain them, you should demand a refund and consider legal action if she doesn’t. That's when embezzlement might come in, although you may have a problem with pursuing criminal charges because the association DIDN'T have any policies and procedures to protect itself. This may end up being an expensive lesson for the board, so I do hope you've established policies and procedures procedure for reimbursement



This was discovered because former board members made a record access request and inspected the financials. I'm in my second month of directorship so there has not been time for creating new rules and procedures. But it's on my list.
SheliaH
(Indiana)

Posts:2763


08/05/2019 8:57 AM  
Then they're just as responsible as she is - she may have been treasurer, but EVERYONE on that board should be taking a look at the financial reports. The treasurer may have a bit more expertise on it (he/she is charged with keeping a close eye on it), but if she was writing checks to whoever, especially herself, why the hell did it take a records access request to find this out? What were THEY doing during their tenure???? Good thing they're now former board members.
KerryL1
(California)

Posts:6712


08/05/2019 9:01 AM  
I agree entirely with NpS: "Don't waste your time going after someone who didn't have clear cut directives about charging costs to the HOA."

Instead, spend your time reading about your obligations to your HOA as a director. There's a lot to learn about current topics and issues vs. old ones. But perhaps your HOA is very small with a tiny budget? If so, I can see where the $50 might matter.
MarkM19
(Texas)

Posts:459


08/05/2019 9:06 AM  
As Sheila has just stated there should be some checking into recent transactions. You mention that this person is going through a divorce and when that happens and living separate lives expenses are usually doubled. I would not blame anyone but I would certainly check things out very closely. How did this mileage issue come to light? Did she bring it to the board for approval as in past cases? It seems like a very frivolous charge and should be rejected.

I would think this could be a serious concern. HOAs have every homeowners money in those accounts. It is pretty easy for someone will bad intentions or desperate needs to take advantage. It is very hard to recover funds once they leave the accounts. I would have an emergency meeting today if this happened in my HOA.
BobB31
(Florida)

Posts:136


08/05/2019 10:03 AM  
Posted By SheliaH on 08/05/2019 8:57 AM
Then they're just as responsible as she is - she may have been treasurer, but EVERYONE on that board should be taking a look at the financial reports. The treasurer may have a bit more expertise on it (he/she is charged with keeping a close eye on it), but if she was writing checks to whoever, especially herself, why the hell did it take a records access request to find this out? What were THEY doing during their tenure???? Good thing they're now former board members.



They were on the board prior to 2019. Most of them chose not to run for reelection. The 2019 board that was elected was down to 3 members (from 5), one member of the 2018 board and two write-in candidates. In April the then-president resigned due to incompatibility with the other two. Sometime in May they asked me to fill the seat and I agreed. It took until June before they called a meeting in which I would be appointed. It was during that meeting that the former board members who had made the record access request shared some of their findings, including failure to assess late fees in a few instances, and this mileage reimbursement which they claimed was illegal for directors to be reimbursed for. The treasurer resigned and walked out of the meeting, leaving the weak president and me to face the crowd that was after his blood too. The following day he resigned.
The following week I had found a couple volunteers and appointed them to the board, holding a special meeting to ratify the unanimous consent forms I had used to appoint them. It did not take long for the crowd to start asking when I was planning to collect those late fees that had been waived by the former treasurer, as well as demand the return of the mileage reimbursement. I declined to do either.
In the first meeting, they were ready to ambush me telling me that the selective enforcement made it impossible to collect late fees in the future, illustrating the slippery slope by threatening not to pay their maintenance fees for a few months. I don't believe that. Someone would have to be willing to risk a foreclosure and spend thousands of dollars taking us to court on the off-chance that they could convince a judge or jury that they were the victim of selective enforcement. All to avoid paying a $25 late fee? I don't believe it will happen.
MarkM19
(Texas)

Posts:459


08/05/2019 10:12 AM  
Bob,
So I am a little confused some of your comments make your HOA seem small and other make is sound larger. How many homes or Condos are in you HOA? Seems odd that everybody bailed on the board. It sounds like the few that left were probably not worth keeping so good riddance to them. Is the HOA self managed?

I would really take a close look at the checks and the expenses. They may know that things are not in good shape. I surely hope for you that I am totally wrong about this but I could not rest till I knew the answers.
BobB31
(Florida)

Posts:136


08/05/2019 10:24 AM  
small self-managed 48-townhouse HOA

Which of my comments made it sound larger?

The bailout at the end of 2018 was due to burnout, with a couple having served several years. Another sold her townhouse and was in the process of moving. Another thought it was too much work and pushed through a budget to include hiring a management company. A group of homeowners opposed to paying for a management company initiated a write-in campaign to elect the two new members who were also opposed. That worked. We are still self-managed but their incompetence has created many headaches for me.
NpS
(Pennsylvania)

Posts:3913


08/05/2019 11:15 AM  
Posted By BobB31 on 08/05/2019 10:03 AM
In the first meeting, they were ready to ambush me telling me that the selective enforcement made it impossible to collect late fees in the future, illustrating the slippery slope by threatening not to pay their maintenance fees for a few months. I don't believe that. Someone would have to be willing to risk a foreclosure and spend thousands of dollars taking us to court on the off-chance that they could convince a judge or jury that they were the victim of selective enforcement. All to avoid paying a $25 late fee? I don't believe it will happen.


When I first got on my BOD, all kinds of people I didn't know took the opportunity to tell me about things that the prior BODs did wrong. After a bit, I came away with a new understanding of how long people can hold a grudge when they don't get their way.

Now that I'm off the BOD, I've watched these same people approach the new BOD members with the same issues that they came to me with. Hard not to chuckle when I see it happen.

I think the same tired old skeletons get drug out of their coffins every time there's a line change. What a waste of everyone's time.

Sikubali jukumu. Read all posts at your own risk.
KellyM3
(North Carolina)

Posts:1433


08/06/2019 8:30 AM  
Posted By BobB31 on 08/05/2019 3:40 AM
The former treasurer (I will refer to him as "her") submitted a mileage sheet and wrote herself a check for the reimbursement. I believe this would normally be allowable per FS 720.303(12)(b), which lists as an exception to the prohibition against compensation of directors, officers and committee members:

Reimbursement for out-of-pocket expenses incurred by such person on behalf of the association, subject to approval in accordance with procedures established by the association’s governing documents or, in the absence of such procedures, in accordance with an approval process established by the board.

In our case, there were no such written procedures established. When an officer spends money on something for the HOA, he simply submits the receipt and request for reimbursement to the treasurer.

However, it has come out that the mileage claim might have been spurious. While the treasurer was indeed picking up the supplies needed by the committee of which she was a member, the branch of the store at which they were purchased was quite a long way from the community. Specifically, it was in the same town where the treasurer used to live before leaving her spouse who still lives there while the divorce is ongoing. There are a couple branches of the store much closer to the community. So the possibility exists that she would have had to make that trip anyways to take care of personal issues.

So, while it seems fishy, does it rise to the level of extortion? The amount was $150 (260 mi.).




The treasurer should be reimbursed for the mileage between her previous home and the store in question. The HOA should not fund her choice to drive so many miles when other chains are more convenient and reflect common sense.

The HOA funded the gas for her optional, out-of-town trip.
BillH10
(Texas)

Posts:410


08/06/2019 10:04 AM  
I spent a number of years in my corporate career in the marketing department of a major telecommunications provider. The company reimbursed us, at the prevailing IRS rate then in effect, for the use of personal vehicles on company business.

The formula for calculating reimbursable mileage was simple: we noted our beginning and ending mileage for the day and deducted the normal round trip commute mileage between home and office. The remainder, if any, was reimbursable. The formula was applied even if we did not actually make a trip to the office on a particular day.

In my view, this lady should have been reimbursed for incremental mileage incurred on association business over and above her round trip personal mileage, which is what I believe Kelly has posted.

However, in an earlier post, someone suggested leaving sleeping dogs lie as the association did not have a reimbursement policy, or mileage calculation policy, in place. I agree with that statement as well, the incremental expense should be viewed as a relatively cheap learning experience as there are no viable alternatives to recoup the payment which was made.

Of course a reimbursement policy should be developed and put in place by Friday, to include words regarding calculation of reimbursable mileage.
KellyM3
(North Carolina)

Posts:1433


08/07/2019 7:10 AM  
I don't think the lack of a policy indicates acceptance of the Treasurer's poor business decision to fund personal travel. The HOA needs a partial/majority refund of that trip. This was a great "catch" by the other board member.
BobB31
(Florida)

Posts:136


08/07/2019 9:33 AM  
1. If there had been a policy requiring approval by the board, when this happened there were two board members. The president verbally approved the reimbursement. Does the lack of his signature on the check invalidate his approval, even with the lack of a policy requiring such? If so, I would have a leg to stand on when demanding the partial return of the money. I would still expect the former treasurer to refuse. Further pursuit would require paying our lawyer to go after the amount. His hourly rate is much larger than the amount being demanded.

2. Does fiduciary responsibility include the requirement to correct the mistakes of prior boards? If so, how far back am I expected to go? Am I supposed to go combing through 7 years of records to try and find fees that were not corrected and, if the homeowners are still here, go after them for the amounts that should have been collected?

GenoS
(Florida)

Posts:3364


08/07/2019 1:00 PM  
Posted By BobB31 on 08/07/2019 9:33 AM
Does fiduciary responsibility include the requirement to correct the mistakes of prior boards?

I don't think so, but that would depend on the nature of the mistakes and if there are any ongoing and negative reprecussions. Would it be proper to fix the mistakes of the past? I can also see where that might be the right thing to do (again, it depends), but I don't think it rises to the level of fiduciary duty.
BobB31
(Florida)

Posts:136


08/07/2019 1:11 PM  
Posted By GenoS on 08/07/2019 1:00 PM
Posted By BobB31 on 08/07/2019 9:33 AM
Does fiduciary responsibility include the requirement to correct the mistakes of prior boards?

I don't think so, but that would depend on the nature of the mistakes and if there are any ongoing and negative reprecussions. Would it be proper to fix the mistakes of the past? I can also see where that might be the right thing to do (again, it depends), but I don't think it rises to the level of fiduciary duty.



Thanks
NpS
(Pennsylvania)

Posts:3913


08/07/2019 2:56 PM  
Posted By BobB31 on 08/07/2019 9:33 AM
1. If there had been a policy requiring approval by the board, when this happened there were two board members. The president verbally approved the reimbursement. Does the lack of his signature on the check invalidate his approval, even with the lack of a policy requiring such? If so, I would have a leg to stand on when demanding the partial return of the money. I would still expect the former treasurer to refuse. Further pursuit would require paying our lawyer to go after the amount. His hourly rate is much larger than the amount being demanded.


In corporate law, there is a concept called "implied authority." If someone, acting in good faith, relies on an officer's implied authority, even though he doesn't actually have that authority, then she shouldn't be disadvantaged by it.

Sikubali jukumu. Read all posts at your own risk.
SteveM9
(Massachusetts)

Posts:3414


08/08/2019 7:18 AM  
one other thing to think about........

if she has the personality to do shady financial things like this...... what else is she doing? personally id prefer a goody too shoes running the finances, not a scammer.

time to look at all the books.
SteveM9
(Massachusetts)

Posts:3414


08/08/2019 7:21 AM  
everyday there is someone in the news who volunteered to handle money and now being prosecuted. hoa officials, private club officials, union officials, etc. and then there are those who are never caught or are clever enough to evade detection.

be aware of what is going on...... at all times
BobB31
(Florida)

Posts:136


08/08/2019 12:03 PM  
Posted By SteveM9 on 08/08/2019 7:18 AM
one other thing to think about........

if she has the personality to do shady financial things like this...... what else is she doing? personally id prefer a goody too shoes running the finances, not a scammer.

time to look at all the books.



Oh, she resigned last June.
MarkM19
(Texas)

Posts:459


08/08/2019 12:44 PM  
Bob,
That is why a audit needs to be done asap. Because she resigned does not mean she can't be prosecuted if your HOA is missing funds.
BobB31
(Florida)

Posts:136


08/08/2019 2:04 PM  
Posted By MarkM19 on 08/08/2019 12:44 PM
Bob,
That is why a audit needs to be done asap. Because she resigned does not mean she can't be prosecuted if your HOA is missing funds.



This entire discussion is the result of an audit performed by members of the board prior to her tenure, including the treasurer. She resigned as a result of that audit.
Are you saying I should have a professional audit performed?
MarkM19
(Texas)

Posts:459


08/08/2019 2:16 PM  
Bob,
Yes if the same people look you get the same results. An independent auditor is not nearly as expensive as you might think. We did a Forensic Audit in Ca. (Deep Dive) a few years ago and if my memory serves me correctly it was less than 4K and that was for a 1 million annual budget and expenses.

I just worry that if people will cheat on little things they may have done it on larger items. Maybe I watch to much American Greed but it happens all the time.
GenoS
(Florida)

Posts:3364


08/08/2019 2:32 PM  
Posted By MarkM19 on 08/08/2019 2:16 PM
Bob,
Yes if the same people look you get the same results. An independent auditor is not nearly as expensive as you might think. We did a Forensic Audit in Ca. (Deep Dive) a few years ago and if my memory serves me correctly it was less than 4K and that was for a 1 million annual budget and expenses.

Just a couterpoint, we're 100 homes on 25 acres with a $350k annual budget. We've paid about $2,500 each of the last few years for an outside, independent accountant to prepare Reviewed Financial Statements for the HOA at the end of the fiscal year. We asked last year about having a full audit done and were quoted something in the $9,000 range. So it seems as though the cost of an audit can vary widely and the only real estimate on cost is, "it depends".
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