Spring residents sue homeowners association
over misuse of funds

Article Courtesy of NEWS 24, Houston
January 19, 2004
By Patsy Chavez

With each signature, homeowners in the Birnamwood-Fairfax subdivision are one step closer to removing the people they once trusted to take care of their neighborhood.

That's because the board members that oversee this quiet, suburban neighborhood may have been doing everything but maintaining this area.

Residents say they may have used homeowners’ dues for their own personal gain.

"The daughter of the president got personal loans from the board. She also had personal advances from the board, over $3,000 probably close to $6,000. Basically, this is what it's all about, misappropriation of funds,” Don Orahood says.

At an emergency meeting, residents say it took two years to collect the evidence against the board members.

But when residents finally learned all the facts, they filed suit alleging conflict of interest, misappropriation of funds and conspiracy for personal gain.

“Well, as of November, that was the last meeting I went, they had $4,000 and previous to that, they had a CD of $31,000. They had money market accounts and they also had some reserves and they're all gone," Orahood says.

Michael Beggs is a primary plaintiff in the suit.

He says the subdivision houses about 1,069 homes with each homeowner paying $250 a year in maintenance fees.

And, he wants all the homeowners to what's happened to their money.

"The attention came to myself, who was a board member at the time. I saw some monies not being used properly. The debits and credits were not balancing out properly. I wanted a second opinion and I notified Don Orahood, who years back was a board member, to look at these books and see exactly what was going on," Beggs says.

"He handed me the books that he was given each month that they were OKing and validating. Every month, they'd vote for these books and they didn't balance," Orahood says.

The 21 plaintiffs listed in the suit against the Birnamwood Fairfax board of directors and its homeowners association say the only real improvement they've seen in the last two years to the area is a park -- a park that should've cost about ten percent of their yearly homeowners’ fees.

"My understanding is they didn't have enough money to pay all that at one time. Apparently, they are paying it in payments in the excess of $27,000,” Beggs says. 

Members of the board were invited to attend the emergency meeting and explain the charges outlined in the lawsuit, only two attended but did not comment on the allegations.

In the meantime, homeowners say they won't be so quick to trust their neighbors with their money.

Homeowners of Birnamwood-Fairfax need 250 signatures to remove the current board. 

Concerned residents are encouraged to attend the next board of directors meeting which is scheduled for Tuesday, Jan. 27 at 7:00 p.m.