Article Courtesy of Florida
Realtors
By Michael Braun
Published March 30, 2022
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Out of 90 HOA bank accounts involved in alleged property-management fraud,
23 were previously closed, and 67 had balances ranging from $180K to zero.
NAPLES – Nearly two dozen bank accounts belonging to Collier and Lee community
associations suing their property manager for fraud have been closed, which
means the manager emptied those accounts, the associations’ lawyer said.
Wells Fargo Bank filed the account balances in a court-ordered document last
week showing funds as of March 14 in 67 accounts.
But the records list 90 accounts, and Wells Fargo confirmed in the documents
that 23 accounts are closed. Of the 67 accounts that remain open, balances range
from zero to $180,000; some communities have multiple accounts. One of the open
accounts is earmarked for the property management company itself, American
Property Management Services; that account contains $51,532.77.
The 35 condominium and homeowner community associations in January sued
Naples-based APMS claiming the company and its owners committed fraud with
community-owned funds.
The suit claims APMS hijacked bank accounts used to hold community operating and
reserve funds in what the associations’ attorney has described as a
multimillion-dollar embezzlement scheme. APMS has denied the allegations,
claiming in court filings that the associations were aware and approved of its
actions.
The complaint claims APMS and/or co-owner Orlando Miserandino Ortiz placed funds
in an account at Wells Fargo that only he could access, preventing the
associations from making an accounting of their funds or accessing the money,
unlawfully took sole control of the Wells Fargo accounts and wrongfully or
unlawfully transferred association funds for its own use.
According to the lawsuit, Ortiz directed association officials to sign signature
cards for the bank accounts but never submitted them to the bank, effectively
preventing association officials from obtaining information on their accounts.
The communities are also trying to get further information about the accounts
including banking statements, which they have not been able to see.
“They will not release the bank statements to the associations without a
protective order to keep them confidential,” said attorney Jason Mikes, who is
representing the 35 communities. “Problem is that associations are like
quasi-governmental entities that by law must be transparent and provide the
right to inspect and copy all records to members. Therefore, they cannot keep
anything secret or confidential. I’m not sure why Wells Fargo wants secrecy.”
Even if association representatives get a look at accounts statements, they
still can’t access funds because they were never listed as signatories and a
temporary restraining order froze the accounts under the lawsuit.
One condo association account at nearly zero
The Royal Bay Villas Condo Association is missing about $600,000 from its
operating fund, association president Laura Rigsby said in an interview. The
reserve account was drained down to basically nothing, she said.
“I’m working on calculations now. We need our real bank statements desperately.”
Rigsby said that once the Wells Fargo link activates, Royal Bay will be able to
see what was taken. In the meantime, all they’ve had to go on is information
provided by APMS.
“We believe any of the statements he provided are fraudulent. But we don’t know
that yet,” she said.
Access to the communities’ bank statements is critical, Rigsby said, so the
communities can be compensated through their fiduciary insurance.
“Right now we’re kind of stuck to prove loss. We have to have those statements,”
she said. “We’re in a holding pattern. We opened a claim (with the insurance
company). They require a lot of information. We’re getting there.”
Rigsby said Royal Bay has kept in communication with residents at its 92 units
about APMS.
“We have our own community website and we encourage everyone to sign up for
communication,” she said.
The account balance information released Thursday by Wells Fargo showed Royal
Bay Villas had slightly more than $89,000 in the community’s operating account
and a few pennies more than $105 in its reserve account.
The 23 “closed accounts were emptied by American Property Management Services,”
said Mikes, the associations’ attorney. “Clients are calculating and sending in
the losses now.”
Some communities have had to resort to opening lines of credit with other local
banks or to levy special assessments to pay vendors such as lawn maintenance and
pool companies.
“We just invoked a special assessment,” Rigsby said. “We have to pay the bills.”
Wells Fargo confirmed that the bank will provide a link for community
representatives. An official said the bank was following Collier County Court
rulings.
“We are in the process of complying with the court order, which we need in order
to provide the information that the plaintiffs are seeking,” said Gabriel H.
Boehmer, senior vice president for Wells Fargo Commercial Banking
Communications.
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