Owner of HOA-management firm accused of fraud, theft

Article Courtesy of The Arizona Republic

By Sarah Muench and Edythe Jensen

Published January 20, 2007

A man whose company manages the finances of more than 20 homeowners associations across the Valley has been arrested on suspicion of fraud, forgery and theft.

Police say $145,000 is missing, but Timothy Lee Reedy, owner of the Reedy Group management company, denies the allegations.

"Right now, it's just accusations," he said Friday.

Chandler police raided the company Thursday and seized documents and computers. Police said they received information from a tip and they think the $145,000 was stolen over the past three months.

The firm manages HOAs in Phoenix , Glendale , Mesa , Chandler , Gilbert, Queen Creek, Fountain Hills and Prescott .

Court documents show that Reedy was convicted in 1989 of selling unregistered securities, a Class 4 felony, and theft. He was sentenced to probation, which he violated, and a judge revoked his civil rights. For the probation violation, he spent 18 months in state prison. After his term was up, a judge reinstated his civil rights and expunged his conviction.

Reedy, 56, said he could not comment on the new allegations. "I'm right in the middle of this," he said. "It's gotten out of hand as it is."

Reedy said he doesn't know why his office was raided or where the large dollar amount came from.

"I don't have any idea. I have hypothetical (reasons why), but I'm not going to discuss this," Reedy said.

He said he will still keep in contact with the HOAs under his company's management and his business would remain open and running.

Police will file charges with the Maricopa County Attorney's Office, said Sgt. Rick Griner, a Chandler police spokesman.

"These types of cases can take quite a while to get through all the computer work, paper trails and files (detectives) have to go through," Griner said.

At least two Chandler HOAs, Carino Estates and Monterey Vista, have dropped the Reedy Group as their management company and hired different firms during the past year.

Diane Howard, a resident of Western Skies HOA, said her Gilbert association was managed by the Reedy Group until they fired it six months ago.

"All kinds of red flags went up," Howard said. "We were being double billed on things, we found that our taxes hadn't been filed, and when we gave them notice (to terminate their services) they wouldn't give us our paperwork; they said they didn't have it."

According to court records, two companies won lawsuits against the Reedy Group, which was formed in 1997.

In 2006, Computing Resources Inc. won nearly $4,000 and in 2005, BC Management Inc. won more than $48,000, court records show.

In 2004, the state filed a complaint against Reedy's company requesting payroll records after Reedy failed to comply with a subpoena for them, court records show.

Cynthia Dunham, head of the East Valley-based Leadership Centre, which works with HOAs, said the Reedy Group developments have spurred her to consider new education programs to help residents protect themselves from problem management companies.

In the past, the Leadership Centre has advised HOAs to check with professional organizations for property managers. However, Reedy was a member of these organizations.

Ironically, Dunham's neighborhood HOA, Wind Drift in Gilbert, also has Reedy as its manager.

"You have to do your due diligence, but what does that involve?" Dunham said. "It's almost frightening nowadays. You just can't turn around without someone being indicted."