Apathy leads to Racketeering, Money Laundering and Grand Theft

March 2024

Hundreds of residents unable to vote because of a bomb threat.  Accusations of ballot-tampering and bribery.  These were some of the problems confronting the largest homeowners association (HOA) in Florida.  Owners were harassed with threats of foreclosure and code violation fines.  Despite this, directors were re-elected after certifying its own results.  Soon after, a secret budget meeting was held after which the board implemented a 300 to 400 percent increase in monthly maintenance fees.

If you think this can’t happen in your community, think again!  Apathy among condo owners is the greatest threat to condominium communities.  Too many unconcerned about how their community is being managed and how funds are being utilized opens the door for dishonest condo directors and condo boards.  Problems escalate when nobody is watching the decision makers.

Apathy among condo owners is the greatest threat to condominium communities

Problems escalate when nobody is watching the decision makers

Apathy is a contagion that grows in condominium communities.  It begins with owners comfortable with having someone else manage their home.  They fail to read and understand documents.  Then they fail to show up at meetings.  In short, there is little to no oversight over those elected to manage the community and finances.

Once elected and without owners paying attention, directors find it “convenient” to look the other way when one director has a conflict of interest.  They fail to provide details of expenditures or useful financial information to owners.  They may choose to, and see no negative consequence of, ignoring laws or governing documents.  After all, if nobody is watching over them, why not ignore something to save time or effort!

Board members “do their best” but things constantly go wrong and systems don’t get repaired.  No financial oversight means money is unavailable for necessary expenditures or is improperly used.  Nobody wants to be accusatory even when something doesn’t pass the smell test.

These are all signs of apathy.  When owners or directors look the other way on minor infractions, this leads to increased boldness.  Individuals interested in lining their own pockets get elected as directors and find it easy to obtain financial benefits from serving.  They may justify this as reasonable in return for their efforts.  As time passes, their boldness grows as do financial losses to the community.

Less than a year later, two board members and two former board members of this 18,000-resident community were charged with stealing $2 million from the HOA.  At least $3.4 million in missing funds are unaccounted for.

This has been a seven-year battle that began with four people fighting the board and breaking through the apathy to show owners they were being exploited and taken advantage of.  Owners then coalesced and took action in 2022 after their chaotic election.  Owners suspected fees were being stolen by the board after they stopped holding public meetings and ignored by-laws.  Justice for the Hammocks, the group of residents, complained to the state agency that oversees HOAs and the state attorney’s fraud investigators.  They held a recall election but two-thirds of the ballots were thrown out by the board.

Hammocks Community Association was placed under the supervision of a receiver who undertook an investigation which uncovered major fraud and theft by a board that failed to hold a public meeting in four years.  The annual budget had increased from $4 million to $13 million without any explanation for how the money was being spent.  Despite these higher expenditures, amenities were deteriorating.

Investigators uncovered a fraud whereby board members used HOA cheques and credit cards from 55 bank accounts to pay for work by shell companies or vendors that never occurred.  Money was funneled back to the board for their personal use.

More than 200 cheques were written to a company run by the former HOA president and treasurer’s husband.  Both were charged with racketeering, money laundering and grand theft.  Allegedly, the money was used to renovate their house, buy a truck and build a home in Colombia.

This was not the first time the former HOA president had been charged.  In April 2021, she was charged with stealing $60,000 US from 2016 to 2018.  Funds were used to pay a private detective to spy on rivals in the community.

The board was known locally as the “Gallego Mafia.”  About $825,000 in HOA fees were used to pay for Gallego’s defense lawyers.

Nothing protects a condominium community where there is apathy.  No laws or protections are enforced where owners are unaware of problems or unwilling to take action.  The best protection for any community is to understand their governing documents including the Condo Act, and to be prepared to take action when they are not adhered to.