Article Courtesy of The
Real Deal
By Lidia Dinkova
Published March 2, 2024
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The Hammocks still is at a crossroads over the future leadership of the
homeowners association, including over the extent of power the receiver should
retain.
At a two-plus-hour court hearing on Thursday, homeowners aired their grievances
against HOA receiver David Gersten, mostly over the fees Gersten and his team
have charged to the HOA. Residents who support Gersten countered that the
opposition is rooted in outside attorneys seeking to get the receiver out of the
way and scoop up contracts with the HOA.
Miami-Dade Circuit Judge Beatrice Butchko didn’t issue an official order on
Gersten’s transition plan at the hearing. But her comments in court hinted that
she shares the receiver’s view that if he is discharged too soon, the HOA could
devolve back into mismanagement and fraud.
The Hammocks, a 3,800-acre community in West Kendall that’s home to roughly
18,000 residents, is one of Florida’s biggest HOAs. In November 2022, four
ex-board members and a fifth person were arrested on charges they ran a massive
fraud scheme that diverted assessments to their own pockets. Gersten, appointed
as receiver by the court after the arrests, and his team of attorneys and
forensic accountants have been overseeing Hammocks affairs.
“The way I view this association is akin to an entity with a disease. A
horrible, horrible disease. It had a cancer,” Butchko said. “And it’s in
remission. And it can have a relapse. I’d like the wheels to be moving in a
positive direction under the monitorship of the receiver.”
In Gersten’s power transition plan, he proposes that he remain as receiver only
to resolve lawsuits and insurance claims he has filed on behalf of the HOA. For
all other affairs, he would remain as court-appointed monitor, starting from
June at least through year-end. Separately, Butchko already has approved Gersten
to remain as election monitor until the court “is satisfied that the
association’s elections are fully protected and do not require outside
oversight,” according to court records.
A major sticking point has been the receiver’s charges to the HOA. So far,
Butchko has approved more than $2.5 million in payments to the receiver and his
team, and is yet to decide on a request for another $638,876, which would bring
the total to $3.2 million.
“At least 70 percent or 80 percent of the people we have been talking [to] have
been sharing their concerns about the legal expenses,” Hammocks homeowner Carlos
Villalobos said at the hearing, adding that Gersten’s attorney team has been
charging for administrative work. “We were charged $300 for a screenshot of a
map taken from Google. … The Hammocks has sold cars to [used car dealerships]
Carvana and CarMax. There are pages and pages of charges to sell those cars.”
“In a perfect world, could a paralegal have done that? Yeah, but I would not
have felt comfortable. I don’t know about the map,” Butchko said, though she
reiterated her confidence in Gersten and his team. “I just trust the judgment of
these people.”
Melanie Damian, an attorney representing Gersten, had been mum about the
opposition in the past, but laid out the receiver’s position at the hearing.
When the receiver was first appointed, he and his team had to fire about 50 HOA
employees and all vendors because they “couldn’t trust” that they weren’t
involved in the alleged fraud, Damian said. Before new staff and vendors were
hired, the receiver and his attorneys had to handle administrative tasks
themselves, including selling excess HOA property such as cars, in a push to
recoup as much money as they could for the Hammocks.
“I physically went to sell the cars, and it took way longer than I expected. I
spent hours on a Saturday,” she said.
Damian also defended the rest of the receiver’s charges: For perspective, the
Hammocks spent $2.6 million for attorneys in 11 months in 2022 during the rule
of the criminally charged board, meaning money was allegedly siphoned out of HOA
accounts during that time, she said. Out of the $3.2 million the receiver and
his team have charged the HOA, $372,000 was for forensic accountants that had to
untangle the web of fund transfers by some former board members across over 50
bank accounts and credit cards. Another $60,000 was for the receiver to set up a
hotline for residents.
Gersten and his attorneys also charged $500,000 to pursue a criminal liability
insurance claim, and to sue former HOA attorneys and vendors, such as security
guards and accountants, over allegations they were in cahoots with the
criminally charged board members, Damian said. That litigation has led to
settlements recouping nearly $3.9 million for the Hammocks.
Now that the forensic accountants’ work is finished, and Gersten has hired a
property manager and other contractors for the HOA, the receivership’s charges
to the Hammocks should drop, Damian said.
Homeowner Don Kearns, a current Hammocks advisory board member, called on the
judge to approve Gersten’s transition plan.
“Much of the so-called controversy I believe is fueled by a lawyer who I believe
is in constant contact with dissenting board members, because I was approached
early on [by an outside attorney] asking to dissolve the receivership,” he said.
“The oath I took was to support [residents] and not the ambition of a lawyer.
The vast majority of homeowners are happy with the progress.”
Other homeowners have echoed Kearns’ comment that attorneys not involved with
the receivership are approaching residents and offering to do Gersten’s work for
less.
“We are not crooks,” homeowner Villalobos said at the hearing. “You can rest
assured this is a completely different group.”
The receiver’s opponents’ other gripes have been with mismanagement of the
property, arguing that landscaping, sidewalks, pools and common areas remain in
disrepair. Damian said the receiver has hired, and still is hiring, contractors
to repair the property.
Butchko did take one suggestion a homeowner made at the hearing: to retain an
additional election monitor who would work with Gersten and possibly continue to
oversee electrons once Gersten is discharged. Still, she added, that would be
another cost for the HOA.
“That external agency can monitor elections in the future,” homeowner Todd
Botner said.
Though the Hammocks now has a board, elected in April, it hasn’t had full
autonomy as HOA boards do, but has been working in an advisory capacity to the
receiver. The HOA will hold its next board election on Feb. 29.
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