WARNING LETTER BY DBPR:
FAILURE TO MAINTAIN ACCOUNTING RECORDS;
USE OF ASSOCIATION FUNDS FOR OTHER THAN COMMON EXPENSES
COUNTRY CLUB CONDOMINIUM ASSOCIATION NO. 11, INC.
Opinion By Jan Bergemann
Published September 28, 2009
Owners that complain about money missing or not properly accounted for are more and more often facing lawsuits for libel and slander. It doesn't matter if the owners are right or wrong, it's just a common weapon to shut up owners who are -- in the opinion of board members and managers -- too outspoken. And it serves as a warning to other owners who might be tempted to join in: "Shut up or we add you to the list of defendants!"
An owner of the Palm Aire Country Club Association #11, Inc. in Pompano Beach had to learn it the hard way. She found herself listed as a defendant in a lawsuit accusing her of libel and slander. She may have been guilty of using a few wrong words -- like theft -- or forgot to add the word "alleged" to her sentences, but she surely had a good case as a WARNING LETTER issued by the DBPR to the association now proved.
In a flyer distributed to all owners, Exclusive Property Management, the management company working for PACC 11, had to admit that it was their fault in the first place that owners got suspicious (quote): "The $300,000 that Exclusive allegedly ‘attempted’ to steal was an error in calculation on the special assessment and was immediately corrected and the special assessment reduced."
Meaning the mistake was made by the management company, but the owner was blamed for getting suspicious and was sued for making her suspicions known.
But you know the old saying: "Where there is smoke there is fire!"
And that was exactly the case here!
The DBPR found violations of the Florida statutes and the Florida Administrative Code when investigating a complaint, according to a WARNING LETTER dated July 14, 2009, sent to the association attorney Stuart J. Zoberg, now with the law firm of Katzman Garfinkel Rosenbaum.
Zoberg had tried in vain to dissuade Constance McCallum, a Financial Examiner/Analyst of the Bureau of Compliance, from issuing a warning letter, trying to minimize the actual existing problem: MONEY NOT PROPERLY ACCOUNTED FOR and USE OF ASSOCIATION FUNDS FOR OTHER THAN COMMON EXPENSES.
financial analyst didn't buy the lame excuses Zoberg had used in an E-MAIL
DATED JUNE 22, 2009 calling the
violations "practices were in place for
decades without complaint." The lamest excuse of all was
in my opinion (quote): "...
person complaining lived in the community for years before levying
the complaint, which was likely due to an election loss."
That's the old "disgruntled" homeowner’s defense: Blame the owner for filing a complaint against the board -- the board that violated the statutes. Could it possibly be that it was very difficult to get necessary documents from the association in order to file the complaint?
Actually, the list of checks in the WARNING LETTER speaks for itself. Various checks were written (up to $4,115) to Michelle Herzmark, Chuck Wiggins (CAM) and "Petty Cash". Some were explained as bonuses given to the manager for good and "extra" work and/or Christmas bonuses. Giving bonuses to an employee of a company that has been contracted to do the work? I wonder if all this extra income found its way into the IRS income tax filings?
Others were explained as "catering expenses". Gee, the owners attending these meetings must have feasted on Beluga caviar and Krim champagne.
The warning letter clearly explained what could be considered COMMON EXPENSES:
None of it could be considered common expenses. But despite attorney Zoberg's explanation to the DBPR financial analyst, that "many of the policies of the Association have been changed as a result of the Division investigation and inquiry," the board of Palm Aire Country Club Association #11, Inc. "donated" so-called seed money to the PALM-AIRE COUNCIL OF PRESIDENTS to help to create Palm Aire Special Recreation Tax District. This so-called council has about as much legal standing as your neighborhood potluck dinner club -- meaning none! Legally it's non-existent. A COMMON EXPENSE? Definitely not according to the above explanation of the DBPR. Much less did this money serve the general benefit of the unit owners. Shouldn't that be considered another violation?
But the owner, who dared to complain about the financial irregularities, (See WARNING LETTER) is stuck with the legal cost of defending the lawsuit that was obviously abandoned -- since it was frivolous anyway.
BUSINESS AS USUAL IN FLORI-DUH!