October 2024
In one of the largest scams perpetrated against a single community, ex-board members have been accused of stealing $2 million. Charges include racketeering, grand theft and money laundering.
Hammocks is a Home Ownership Association (HOA) in Florida, encompassing over 6,500 single-family houses, apartments and townhouses, and over 18,000 residents. Like a condominium corporation, Hammocks is governed by a board made up of elected directors.
Residents at the Hammocks had complained for years of mismanagement by association leaders and opaque financial statements. In 2022, after a police investigation, four ex-board members and the spouse of a former president were arrested for theft of $2 million dollars. More arrests are anticipated.
Problems began in 2015 when new directors were elected to replace those who were disliked. One of these new directors siphoned money from association funds through five companies pretending to be service providers and vendors, owned by a spouse. Payments to these companies were made by cheques signed by the former president and other ex-board members who have been charged by police. Some companies provided legitimate services at first before receiving payments for no work. Cheques were cashed and some payments sent to the former association president. Some funds were wired to a bank account in Colombia.
As with condominium corporations, legal action begins with homeowners deciding to take action instead of allowing individuals to retain power to pursue or continue fraud. Few are willing to take this step even when problems have become obvious. Homeowners usually get discouraged and are unwilling to spend money for a forensic audit to obtain proof and to litigate. Condominium corporations, like HOAs, can pay lawyers to protect them against accusations using condo fees rather than their personal funds. According to an affidavit, the association has spent more than $250,000 US to fund just some of the legal costs against those who have been charged by police.
The former board retaliated against residents who spoke out. Some were prohibited from using amenities and sent overdue notices for payments that were made on time. During an attempt to replace directors, a bomb threat was cited to close elections without any proof. Financial audits were discontinued starting in 2018. The association recently imposed a 400 percent increase in fees.
Condominium owners failing to monitor the financial situation of their corporation and hold their elected directors accountable for improper or questionable actions are at risk of mismanagement and fraud. The cost of not dealing with problems in their infancy only increases over time.
