Fraud Alert Spotting & Stopping Financial Mismanagement

Given recent headlines, cooperative and condominium associations could be forgiven for thinking they need to put an armed guard and razor wire around the petty cash box. A wave of fraud appears to be hitting properties from New York to Florida and beyond.

In New York last December, a Rockland County treasurer pleaded guilty to taking more than $130,000 from an association and a managing agent last August was ordered to pay more than $628,201 to a Manhattan co-op he allegedly defrauded. A bookkeeper in Maine recently was charged with stealing $30,000 from two different condo associations. In Connecticut, a former business manager—whom police allege had a gambling problem—pleaded not guilty to stealing $226,000 from a condo association in Ledyard, home of an Indian casino. In March, a New Jersey condo association president pleaded guilty to embezzling more than $50,000 from her association, and another business manager in Florida allegedly stole more than $856,000 from five area homeowners associations.

Perhaps the largest case of fraud reported in recent months is that of a New York managing agent, who allegedly siphoned off $1.3 million in property taxes from six co-ops.

The vast majority of all of the folks managing the day-to-day operations of a co-op or condo are honest and dedicated to their tasks. But, as in any line of work, you’ll have a few bad apples who aren’t and who have little compunction about ripping off their building and community. And with the current recession grinding on, and people in all situations finding themselves in financial trouble, some may be more tempted to do wrong. So how do you keep your own building safe? What are some of the hallmarks of fraud, and how can you put a stop to it if it's unearthed in your community?

Crimes of Opportunity

If you’re a board member, there are a number of common types of fraud to be on the lookout for.

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4 Comments

  • Our tennants assoc. Has been fighting this exact problem for years. We have recently hired our own lawyer as the corp. lawyer say he reps. the bod of dirs. only. Yet he will do business against the shareholders at the paid Ex.DIR.phone call. By passing all committees and checks. and balances. The tennants are truly exasperated.
  • I suspect that there are some embesselment going on in my condo association. The CPA admitted errors in his 2013 year end review.
  • The owners of our association has put there son as Manager and he does not do what needs to be done and I wonder how to handle this problem. There are only three free standing home and two duplex units. Our association is very small and it all could be handled with the proper manager. What can we do to get this done?
  • I've been a board member for 5 years.. I got elected as treasurer and we had a board president that's been president for several years doing all the boards duties and got reelected again. I was assuming to recover all records from him that has to do with the treasury. He has slowly given me some records because he comes back from work at times really late in the evening... now 5 years later I still don't get all the records from him and he has been doing my job as treasurer and after I told him to stop doing my job at a board meeting he got up and wanted to fight me. So I started to do a forensic audit of our books and found plenty of inappropriate transactions all the way back to 11 years. And as recently as the last four months of 2020 he has written close to $36,000 dollars made out to cash.. I need to know who I can report this problem too