Most Condo Fraud Never Reported

July 2018

Reporting of condo fraud can be time consuming, expensive and attract undesirable media exposure.

A more common reason for condo fraud not being reported is that it requires directors to acknowledge their failure in adequately managing assets of the corporation.

When embezzlement amounts to hundreds of thousands of dollars, this can only happen when someone is not paying attention.  They may have failed to implement basic checks that deter theft.  Warnings or suspicions of others that something was not quite right may have been ignored.

It can be simpler to not acknowledge problems that require effort to uncover and resolve.  Ignoring the existence of these problems is the easier path to follow.

The nicest of people can be in the best position to commit fraud.  These are the people trusted by condo directors and owners.  They develop friendships in the community.  Over time they become trusted with access to bank accounts or other corporate assets.  Nobody thinks to implement basic financial controls when such a trustworthy person is in control.  After all, nice people don’t commit fraud against friends.

When that trustworthy person is found to be untrustworthy nobody wants to have been responsible for allowing the situation to occur.

Virtually all forms of embezzlement in condo corporations can be prevented by instituting basic financial controls.  Don’t make it easy for anyone to steal funds.

When fraud occurs, condo directors bear direct responsibility for failing to put in checks that can deter embezzlement.