Article
Courtesy of The Miami Herald
By Christyne D. Santisteban
Published March 21, 2024
Alleged thefts at community associations during the last
couple of years in Miami-Dade, Southwest Florida and other
parts of the state have shined a spotlight on fraud in
condominium associations and HOAs. New laws to add teeth to
the criminal and civil penalties for association fraud were
unanimously approved by both chambers of the Florida
Legislature and now await the Governor’s signature, and
these reforms would help associations that are victimized.
A Miami Herald article published on Feb. 22 provided yet
more evidence of the nature of this problem in South
Florida. It chronicled how the former president of the
Westwind Lakes Garden Homes Condominium Association in
Kendall, together with her daughter and the daughter’s
boyfriend, had been arrested on charges of stealing tens of
thousands of dollars over the course of several years from
the association.
According to the article, association president Idoris
Pedroso (who was a member of its board of directors from
2015 through December 2023), together with her daughter,
Yasnely Pedroso, and her daughter’s boyfriend, Yoel Tapanes
Fernandez, have been arrested on charges of grand theft and
organized fraud for an as-yet-undetermined sum that is
estimated to be less than $150,000. The arrest report
alleges the trio conducted systematic and ongoing efforts to
defraud the association and obtain its funds using false
pretenses.
The report states Idoris Pedroso, acting under her authority
as the association president, had hired her daughter to
serve as an assistant, even though the younger Pedroso had
been fired by the community’s prior board of directors for
destroying records and other discrepancies.
In 2020 and 2021, investigators allege, more than $42,000 in
checks from the association were issued to Fernandez. The
association requires at least two board members to sign its
checks, yet three of these checks had only Idoris Pedroso’s
signature.
“During the investigation, a witness came forward and told
police that Yasnely asked him to fabricate an invoice to
justify the sums of money in Fernandez’s account,” reads the
article by the Herald’s Grethel Aguila. “. . . The current
HOA board, according to investigators, also couldn’t find
any records, contracts or invoices on file related to any
work allegedly performed by Tapanes Fernandez.”
The article also notes that the association’s records reveal
dramatically inflated vendor invoices and alleged payments.
For example, in 2019, they state a vendor was paid $320 per
bumper to paint the parking bumpers, which should have been
approximately $3,800 for all 388 bumpers (less than $10 per
bumper).
Because association boards of directors control the purse
strings of the communities they govern, they have been
targets for unscrupulous fraudsters practically since the
inception of the association model. The schemes often begin
with illegal maneuvers to fix elections in order to secure
board seats, so owners should make sure to vote in all
elections and submit their own ballots to help prevent the
possibility of forged submissions. Owners should also attend
the election meeting and determine whether their ballot was
disallowed due to another submission.
Fraud prevention should begin by implementing effective
safeguards to bar any individual or company from gaining
full control over a community’s finances. This entails
requiring multiple signors to issue checks,
withdraw/transfer funds or make changes to bank accounts,
vendor contracts and insurance policies; having multiple
recipients review each account statement monthly;
prohibiting debit cards in the name of the association; and
conducting independent audits of all financial records by
certified experts on a regular basis. Associations should
also maintain adequate insurance coverage against losses due
to criminal malfeasance.
Those who suspect theft and fraud should consult with highly
experienced association legal counsel in order to determine
their next steps. Court-appointed receivers, election
recalls and injunctions precluding boards from awarding
contracts are among the measures that can be pursued, and
criminal investigations by law enforcement are also a
possibility.
Wary owners should quietly secure records and information
that may merit investigation and share it with the
association’s attorney or their own legal counsel, all while
avoiding any actions that could alert the suspected
perpetrator(s). Experienced attorneys can then determine
whether to notify insurers, contact the Florida Department
of Business and Professional Regulation that oversees
association boards and property managers, file civil actions
for damages and injunctive relief, and/or inform law
enforcement. Such actions may be in order prior to divulging
any findings and investigations in an open board meeting.
With so many community associations in South Florida and
across the state experiencing severe financial challenges,
losses due to theft and fraud can take an enormous toll with
bitter repercussions for communities and their owners.
Association directors, property managers, attorneys,
bankers, insurers, accountant/bookkeepers and contractors
all need to maintain effective safeguards and vigilance, and
Gov. Ron DeSantis should approve the new reforms to help
bolster the state’s laws against association fraud, theft
and conflicts of interest.
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