Stealing Money?

Started by PattyB1 • 9 replies • 4394 views

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PattyB1 (Kentucky)
Posts: 40

Posted:

I really need some help with this one. I just found out the other day that the previous board that I was VP of had been taking $400.00 out of the HOA account and deviding it up with the President, a friend of their's, and sending part of it to the Treasurers' husband over in Iraq. I had thought that the friend was mowing for a hundred dollars a cut,but when I found out that he was getting $400.00 a month weather he mowed our common areas or not, and splitting the money with our President,I fired him after I was elected President.He had been prepaid for July and we (the new board)asked for the $400.00. back, which he refused to do. The attorney that they had also blew it off. This had only gone on for 3 months because I stopped it as soon as I found out. I've been told that what they've done is steal money from the HOA and it should be looked into.None of the homeowners know about this. What should we do? Can the new BOD be held liable if someone finds out? We want to do the right thing. Patty

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Patty,

Do you have irrefutable documentation? You say you "thought" only $100 a cut. Could it have been $400? If you're seeing a kickback here, that being from cutter to Board members, it certainly sounds unethical, but I can't say if it's illegal. I'd say cutter is not your problem and that you probably can't recover from him; the kickbackees are your problem and should be dealt with by you and Memberhsip -IF you can prove it.

JohnO6 (Georgia)
Posts: 424

Posted:

You don't provide much info on your HOA, but essentially this hinges on your accounting/billkeeping practices. It highlights the need to have sound practices on receiving invoices for expenses and only paying against such invoices.

If you do this, then it's a simple matter of "follow the paper" and "follow the money".

If this is what you describe and you have "paper" and "money" to follow, it represents fraud and could and should be pursued.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Fraud requires deception. Stealing requires taking something that doesn't belong to the supposed stealer.

Hypothetical: Cutter's deal was $400 a cut. Cutter gives some of his fee to Board members (or their relations).

Unethical on behalf of Board members? Probably. Fraud or stealing? We'd need more info, but tossing those terms around at this juncture might be ill-advised.

SusanW1 (Michigan)
Posts: 5,202

Posted:

An audit will track down the paper trail, from the contract, the motion to accept the contract in the minutes, the invoices, and the checks written for the services.

Who or what the fellow did with the money after payment is his business - but if you have a Conflict of Interest statement in your documents, a "kickback" to Board members could be grounds for dismissal, and perhaps legal conseqences.

Have someone do an audit for you and give the Board a report. You are too close to the situation. You need a fresh set of eyes, IMHO. So have an accountant or bookkeeper come in and investigate ALL your contracts.

No, other current board members cannot be held responsible for this dabaucle. You are sincerely trying to clean up the mess.

KirkW1 (Texas)
Posts: 1,665

Posted:

Good luck proving that the man kicked back $300 of his fee. I doubt he will cooperate with your investigation. And I doubt that you will be able to interest a DA into taking the case. You can try and see. I probably would at least make an appointment to talk to him/her. But I wouldn't hold my breath.

JohnO6 (Georgia)
Posts: 424

Posted:

Quote:

Posted By JohnK3 on 08/25/2008 10:32 AM
Fraud requires deception. Stealing requires taking something that doesn't belong to the supposed stealer.

Hypothetical: Cutter's deal was $400 a cut. Cutter gives some of his fee to Board members (or their relations).

Unethical on behalf of Board members? Probably. Fraud or stealing? We'd need more info, but tossing those terms around at this juncture might be ill-advised.

It's fair to suggest that the term "fraud" MAY be premature, but the originally described situation involved paying for something that wasn't done - ergo presenting a bill or invoice that is deceptive - ergo fraud.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

JohnO,

I agree that if the work was not done but billed, that would be fraudulent behavior. My Hypo assumed it was done and billed.

KirkW1 (Texas)
Posts: 1,665

Posted:

...I just found out the other day that the previous board that I was VP of had been taking $400.00 out of the HOA account and deviding it up with the President, a friend of their's, and sending part of it to the Treasurers' husband over in Iraq. I had thought that the friend was mowing for a hundred dollars a cut,but when I found out that he was getting $400.00 a month weather he mowed our common areas or not, and splitting the money with our President,I fired him after I was elected President.He had been prepaid for July and we (the new board)asked for the $400.00. back, which he refused to do. The attorney that they had also blew it off. ...

Without proof that a kickback was taking place the person mowing is completely within their rights to keep the prepaid monies. Short of the iron clad proof, the only option is to allow the mowing to take place as paid for.

While I don't like the rate our landscape service is charging us, the fact is that their contract calls for a 30 day notice to fire them. And they have every reason to expect to be paid for the 30 days since that was the contract. When you prepay for a service you are essentially entering into a contract and without some (written) provision you will be out the money should you terminate prematurely.

BradP (Kansas)
Posts: 2,640

Posted:

Patty:

Based on the little info we have now it would be hard to prove theft...I am all for throwing them up a creek, but I think you have already done the right decision by cutting bait with them. Unless you have hard evidence I would move on.

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