— Three of the eight board members from The Harbours Condominiums
Association were named in a state lawsuit for allegedly breaching their
fiduciary duty and committing fraud.
The Indiana Attorney General’s Office filed the complaint in Clark County Circuit Court No. 2 against board members Kevin Zipperle, Mary Lou Trautwein-Lamkin and Sharon Chandler, according to a press release from the office. Frank Prell is also named in the lawsuit as a former owner of multiple condominium units at The Harbours, which is located at 1 River Point Plaza.
“Today’s lawsuit is the first of its kind under a new state law allowing the Attorney General’s Office to regulate homeowner associations,” said Gabrielle Owens, director of the Homeowner Protection Unit and Licensing Enforcement Unit of the Indiana Attorney General’s Office. “Board members have a fiduciary duty to serve in the interest of those they represent. Our office is committed to protecting homeowners and will continue to bring actions against violators who misuse their positions for personal gain.”
A state law passed in 2011 allows the Attorney General’s Office to regulate homeowners associations similar to other nonprofit organizations. The office has the authority to bring actions against a homeowner association’s board of directors and in some cases, against association board members.
The Harbours property was built in 1991 and converted to condominiums in 2000. In April 2004, control was turned over to a nine-person board of directors, which is elected by the homeowners. One of the board seats is currently vacant.
The Harbours Condominium Association represents 184 residential units and operates with a budget totaling nearly $900,000 in revenues and operating expenses of more than $701,000, according to the homeowners association 2012 draft budget. Rates for homeowners total $3.73 per square foot annually, which means the majority of homeowners pay between $307 and $420 per month to the association.
In October 2011, homeowners filed complaints with the Indiana Attorney General’s Office alleging more than 20 offenses by the board, including everything from voter fraud to racketeering.
According to a previous report in the News and Tribune, prior to the first board election, the developer appointed an initial transition committee that included Community Director Cindy Richards and board members Zipperle and Chandler. There is continued animosity as some believe they were granted too much power as that association’s bylaws allowed for homeowners to designate a proxy to vote for them, and that person does not have to be a resident.
Jeffersonville Attorney Larry Wilder, who has represented several individuals sued by the board, said “my clients that have been sued and harassed by the board members named in this suit are ecstatic that it appears justice has opened its eyes to the shenanigans that have been going on at the board level for years.”
WHAT THEY’RE ASKING FOR
The lawsuit seeks restitution on behalf of The Harbours Condominium Association Inc. and the removal of Zipperle, Trautwein-Lamkin and Chandler from their positions as board members. The management of The Harbours was transferred from the developer to the association in 2004, and Zipperle, Trautwein-Lamkin and Chandler were members of the initial transition committee and have been board members since, according to the release.
According to the lawsuit, Zipperle serving in multiple positions over a number of years, “used his position on the board on an ongoing basis to deceive the association and its members for his own personal benefit and to benefit his friends and/or business associates which was detrimental to those to whom he had a fiduciary duty.”
Zipperle, Trautwein-Lamkin and Chandler, the board treasurer at the time, are accused of paying former community director and manager of the association, Cindy Richards, without documenting or verifying time spent on the job. According to the lawsuit, Richards had only accrued four weeks of vacation time but was paid her regular salary for 10 weeks without working full-time, according to the release.
Prell allegedly bought two separate condominiums in April 2005 and combined the units into one larger unit without a building permit, association approval or permission from the holder of both his mortgages. According to the complaint, Prell illegally attempted to sell the units as one property, but was later foreclosed upon.
Zipperle purchased one of the units through a short sale and later, Prell and/or Zipperle allegedly constructed a substandard wall to separate the units once again. The new wall ran through the middle of the shared kitchen sink and was erected without building permits or association approval. Trautwein-Lamkin and Zipperle later purchased the second unit, but falsely claimed they were going to use the property as their primary residence in order to obtain preferential treatment in the bidding process, according to the release.
Zipperle is also accused of instructing office staff to neglect or ignore requests made from association members he considered “malcontents.” According to Zipperle’s campaign letter for the association board from October 2011, “The activities of a handful of hard-core malcontents in our community continue to occupy our time and cost us valuable resources.”
A judge will determine what amount of restitution is due to the association from any actions that resulted in loss of dues and income to the association. According to the state’s lawsuit, the defendants should be barred from using the association’s funds for their legal defenses.
Messages left with board members named in the suit were not returned as of press time.