FRAUD AND EMBEZZLEMENT IN FLORIDA'S CONDOMINIUMS

An Opinion By Jan Bergemann
President, Cyber Citizens For Justice, Inc.

Published September 23, 2008

Are our senior condo owners just too trusting? Are they willing to ignore warning signs -- just to try to live in peace? Are they shutting down their business sense just to "fit in”? Or are they plainly too gullible and impressed by somebody who is well-spoken and nice?

A female board member of a condo was totally shocked when she had to realize that a fellow board member had embezzled funds: "He was such a nice guy, didn't even forget my birthday!"

A judge who recently sentenced a board member to 20 years in jail said it just the way it is (quote): "These people saw you as their knight in shining armor, and that made it easier for you to do your scheme.''

That's exactly it and that’s what makes it so easy for scam artists to hit our associations. The latest chapter in the long embezzlement story comes from the Charlotte Square Condominiums in Port Charlotte . Please read: "$1 million condo account theft suspected."

A manager from Star Hospitality Management, Inc. has allegedly embezzled somewhere around $1 million in association funds. Sherry Danko, president of the management company, acknowledged in a special meeting that money is missing.

But nobody knows how much, since the management company has refused even board directors access to their own records.

Insurance bonds will cover each building in the complex up to $50,000, a far cry from the amount that appears to be missing. I guess the management company should be liable, no matter what? Aren't they getting paid to mind the store?

But often these senior condo owners make it too easy on the bad guys. Even Senior Citizens have to understand that associations are serious business -- with lots of money at stake. It's not all potluck dinners and bridge tournaments!

Suspicious of certain activities, one board member called for an audit, but was ignored. He requested audits again in 2006, 2007 and 2008. "But the board said it was too expensive and voted it down!" I know hindsight is 20/20 -- but an audit would have been a lot less expensive!

In a nearby condo association, with mostly elderly residents, a newly elected board member was just recalled because she asked too many questions and let the neighbors know that former president and now vice president of the board, Richard Sikorsky, is actually working for Star Hospitality Management, Inc., the association's management company She asked politely if that might not be considered a conflict of interest? The answer from The Powers That Be: Recall by ambush! They recalled the board member for being too nosy and convinced the neighbors that her inquiring mind would get costly for the association. Since the recall wasn't quite kosher, the only one profiting from this recall is association attorney Ernest W. Sturges, Jr., who seems to have a difficult time to explain to the arbitrator why this recall should actually be certified!

When the same owner ask questions why money from the reserve funds in the amount of $100,000 was moved into a "Capitol Improvement Fund" without the necessary percentage of owners voting for approval -- the minutes of the meeting spilled the beans -- she received nasty and threatening e-mails. Obviously quite a few of her neighbors, mostly elderly, think that it's OK to violate the association's rules and Florida Statutes "Just a Little!"

The big question remains: "What is just a little?" It seems that certain elderly condo owners just start to pay attention when it's too late and the damage is already done. It's one thing trying to enjoy retirement, but when checks need to be written because too many folks were wearing blinders and were even getting mad at people who tried to watch their life savings, the fun has to stop.

Otherwise these owners may find themselves in a situation a community activist from the Charlotte Square Condominiums described (quote): "I never imagined I would be in such a helpless situation. I've been a senior advocate for 25 years here in Charlotte County, solving other people's problems and was probably so busy not realizing we were sitting on one ourselves!"

It can happen faster than you think -- many of Florida's community association members can attest to that!