After the arrests: What’s next for Hammocks HOA?
“Big kahuna” in investigation will be determining if residents lost their homes in fake foreclosures filed under ex-board, Judge Beatrice Butchko said in court

Article Courtesy of  The Real Deal

By Lidia Dinkova

Published March 15, 2023


In the weeks following the arrests of five people accused of running a massive fraud at the Hammocks, a court-appointed receiver is working to make South Florida’s biggest residential community whole.

The management and security firms that once worked at the Hammocks are now gone, and new firms are being hired, while a hotline for residents to report problems has fielded over 2,000 calls, receiver David Gersten said during a court hearing on Thursday. An overhaul of the community’s landscaping is in store, and an investigation into the former board’s potentially illegal spending will hopefully claw back misappropriated funds to residents, he said.

His report comes less than two months after four former board members and the husband of an ex-board president were arrested on charges tied to allegations they siphoned roughly $2 million from homeowners association coffers, which are mainly bankrolled by residents’ assessments.

The Hammocks, which spans 3,800 acres in south Miami-Dade County and has more than 18,000 residents, also is poised to vote for a new board. The election is expected in March, said Gersten, who reported the progress he and his team of attorneys are making at the Hammocks in front of Judge Beatrice Butchko. He was appointed as receiver in a civil lawsuit resident Ana Danton filed against the HOA last year. Butchko is overseeing the case.

FirstService Residential was appointed as the new property manager after it was “double vetted,” and a contract is being negotiated with security company Elite Guard, which is expected to start working at the Hammocks the week of Jan. 23, Gersten said.

Under the former HOA leadership, the property manager and security firm did the ex-board members’ bidding, working as their “henchmen” and targeting homeowners who raised concerns about mismanagement, according to residents and the receiver’s report.

For example, security guards with tinted windows on their cars would park in front of homes of residents who had spoken up, Butchko said in court.

“It was intimidating, so we are not going to participate in that anymore,” she said.

Fort Lauderdale-based Kapila Mukamal has been hired as the forensic accountant, as the full extent of the alleged theft is yet to be determined. The ex-board is accused of having ignored state-mandated annual audits of the HOA’s financials since 2018.

Gersten’s team has discovered 13 HOA bank accounts in four banks, which is too many and an immediate “red flag,” Gersten said.

“We need to find out if money was blatantly going out the door,” Butchko said.

“I think your honor’s fear is going to be realized,” Gersten responded, adding that new information will be shared with the state attorney’s office. “The homeowners are not going to be happy about it. But we are going to dig into it.”

The accounts have a balance of $1.1 million, giving the Hammocks at least some operating budget to go forward, though there also is a nearly $400,000 loan left to be repaid, he said.

Gersten and his team are diving into the more than 120 lawsuits involving the Hammocks to find out if some are meritless. But much depends on obtaining case files from prior HOA attorneys, Gersten said.

This includes possible fraudulent foreclosures filed against residents since 2013.

“This is going to be the big kahuna because if people were fraudulently foreclosed upon, my concern is that members of the prior board could have been buying these properties at auction, and could own them under pseudonyms,” Butchko said. “If that is true, then it is a tragedy that people lost their properties and homesteads.”

At the hearing, some residents raised concerns with the receiver and other attorney’s fees. Gersten and all other lawyers helping him reduced their rates, with Gersten dropping his fees by12 percent to $73,000 a month.

“I need the residents to hold onto their hats and understand that this is going to be expensive for the next couple of weeks, and then we need to try to recover,” Butchko said.

In the ongoing criminal case, an investigator charges that funds were siphoned through the use of fake vendors who received HOA funds under the guise of providing services to the community, such as maintenance. The state attorney’s office has warned more arrests are likely.

In November, police arrested former board members Marglli Gallego, Myriam Rodgers, Yoleidis Lopez Garcia and Monica Isabel Ghilardi, as well as Gallego’s husband, Jose Antonio Gonzalez, who ran two of the allegedly fake vendor companies. Gallego was HOA president until her first arrest in 2021 over charges of misappropriating funds.

All have pleaded not guilty.

“We are very curious to see what they [authorities] have to support those allegations, especially as it pertains to Mr. Gonzalez,” attorney Jude Faccidomo, who represents Gonzalez, previously told The Real Deal.

The Hammocks includes 6,500 single-family homes, apartments and townhouses stretching between Southwest 120th and 88th streets and between Southwest 147th and 162nd avenues.

The criminal case shone a light on the shortcomings of the state HOA law, which puts the onus of going after possibly rogue boards on residents — and not on a governmental authority.

As Gersten and the forensic accountant work to track financial spending, they will try to recoup funds misappropriated from residents, including those that could have ended up in foreign accounts.

Gallego is accused of directing some of the misappropriated money sent to a bank account with her name in her native Colombia, according to the November arrest affidavit.

The next phase will be to go after the funds “like a bulldog,” Gersten said.

“That’s what I want,” Butchko responded.