|
Article
Courtesy of YourObserver.com By Pam
Eubanks Published
March 23, 2012
TARA
-- Cypress Strand resident Charlie Lowe simply can't let the issue die.
Although it's been months since Lowe, president of the Cypress Strand
Condominium Association, first became suspicious the company previously managing
his association may be unlawfully using the association's assets, the notion now
is being heard by the Department of Business and Professional Regulation.
With the department's formal investigation
complete, the complaint lodged against William Sutton, chief
executive officer of Progressive Community Management, now is
being reviewed by the DBPR's Office of General Counsel.
"I'm just trying to do my little part," Lowe said of
why he filed the complaint. "This country needs to get back
to accountability and morality."
Lowe is alleging Sutton and his firm used two certificates of
deposit owned by Cypress Strand to create a line of credit in
PCM’s name and to withdraw funds by that line of credit for
private purposes. Lowe said this was done concurrently with 36
other associations managed by PCM, allowing it to withdraw $1.4
million against roughly $2.4 million in reserves. |
|
Cypress
Strand Condominium Association President Charlie Lowe has filed a
complaint with the state against the association's former property
management company.
|
Sutton, whose company manages about 170
associations in Manatee and Sarasota counties, however, said it has been his
company's cornerstone to follow federal guidelines and demonstrate high
standards and ethics.
"We have never been a subject of any licensing complaint at any time,"
Sutton said, noting the PCM has been in business for more than a decade.
"This is a first for us. We're very confident and comfortable we have
complied with all the state and local laws and conducted ourselves
appropriately."
BACKGROUND
Lowe joined the Cypress Strand Board of Directors in April 2010, and in
September, the board voted to invest about $200,000 in reserves in two
certificate of deposits with Morgan Stanley Smith Barney.
With three board members seeking to improve efficiency, the board in November
2010 voted to re-bid all its contracts, including its contract with PCM. In
total, the new contracts saved the association more than $35,000 annually.
Former Cypress Strand President Bill West resigned from his post around that
time, and Lowe stepped into his new role.
In the spring, an auditor's report completed by Sarasota CPA Tom Menchinger
found something unusual in the association's financial statements -- forms
indicating that PCM may be using the association's line of credit, using the CDs
as collateral. The documents also indicated, the two Cypress Strand CDs were
added to 36 other association reserve accounts, which Morgan Stanley titled
"Reserved Client Consolidation." The consolidation of these CDs was
under the control of PCM and had a value of more than $2.4 million.
Menchiner said he found "irregularities during the audit but declined
further comment.
Sutton said PCM always acted under the direction of Cypress Strand's board of
directors and the board always was in control of their assets.
"The Smith Barney product was approved at a board meeting," Sutton
said. "At no time did we do anything out of the norm. They approved
everything."
Sutton said PCM has had a longstanding line of credit, and he did not know how
the CPA interpreted financial data.
"We used the line of credit appropriately and legally, and at no time were
their funds lost or in jeopardy," Sutton said.
In a response submitted to the state, Sutton's attorney Marielle Westerman wrote
Cypress Strand's application to the Smith Barney product showed the association
intended for Cypress Strand to transfer money into the product and that the
entity did not choose to opt out of participating in the line of credit.
In the DPBR's investigative report, investigator Gene Kelley wrote that in a
telephone interview, Westerman further explained the Smith Barney product
allowed all product participants, including PCM, to use a line of credit up to
30% of the value of the product and many associations, like PCM, borrowed money.
All associations, including PCM, repaid the money, as well.
Sutton also noted that PCM shut down the participation in the program for all
its participating associations and closed a line of credit when it began
receiving complaints about it in the fall.
ON EDGE
If the DBPR's legal counsel finds evidence Sutton improperly used
Cypress Strand's assets, penalties would be imposed, because the department is
an administrative agency that can take action against professional licenses,
Frady said.
"The attorney will review the information from the investigation in the
file to determine if there is evidence to support violation of Florida
Statutes," Frady said. "If there is probable cause, discipline against
the CAM's license such as fines, suspension or revocation could occur."
Frady could not estimate when the department's Office of General Council would
render a decision.
|
