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Management companies & fraud
“I only took money from the ones I could get away with.”
—Karen Colie, owner Marshland Communities

“Throughout the time we dealt with Mr. Halsey he lied, stole assets of the Estate, was contemptuous of the Receiver and its responsibilities to the court and creditors, the property owners, and once the magnitude of the situation became apparent stated, 'we are not smart enough to figure out how he did it.”
—Court appointed receiver in a note to the judge

When there is so much easy money to be made, some management company owners stick their fingers into the cookie jar.

David Kobbeman, HOA embezzler, sentenced to 48 months in prison

Scottsdale HOA sues property management company

Watertown Woman Facing Embezzlement Charges

Looting homeowners associations in Simi Valley, Calabasas

Update: Woman who stole from Calabasas HOA sentenced

Condo management company owner, employee arrested

Man admits stealing $2.5M from homeowner associations

Former employee accuses Alpine Valley Services of embezzlement

Property management company to pay restitution   Part 1

City condos may receive refund after outside managers plea bargain  Part 2

Management company owner sentenced to federal prison for stealing

Condo owners: Penalty for company too light   Part 3

A.P. Gold Realty charged with fraud scheme in Chicago           Part 1

A.P. Gold charged with stealing $150,000 from one association   Part 2

Former condo manager awaits sentencing in skimming case        Part 3

Former owner of Oregon management companies sentenced to prison

Ramona California property manager charged with wire fraud

Accountant charged in $100K homeowners association theft

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David Kobbeman, HOA embezzler, sentenced to 48 months in prison
by Jeff Manning   Oregon
jmanning@oregonian.com
28 May 2014

Amy Boyle vividly remembers the morning her stint as president of the Arbor Terrace Homeowners Association went from messy to nightmarish.

Construction crews had moved onto the 160-home Sherwood development to fix certain structural problems, a project funded in part by proceeds from a construction defect lawsuit the HOA had filed

Just as the repairs were getting underway, Boyle got a panicked call from a fellow HOA board member. The $480,000 from the lawsuit settlement had disappeared. The association's bank account was empty.

He embezzled more than $1.1 million

Boyle recounted the fear, guilt and anxiety she felt in those days during the Wednesday sentencing of David Kobbeman, the former HOA management company executive who admitted he embezzled more than $1.1 million from Portland-area HOAs.

U.S. District Court Judge Michael Simon sentenced Kobbeman to four years in prison.

Federal prosecutor Michelle Kerin said Kobbeman, 34, conducted a sophisticated campaign to grab his clients' money and hide his tracks. More than 700 times, he transferred one HOA's money to another or to his own pocket. Kobbeman admitted taking more than $110,000 for his personal use.

The Oregonian broke the news in June 2012 of Northwest Empire Community Management's financial irregularities and the resulting crisis at many of its homeowner association clients. At the time, company officials fingered Kobbeman as the insider who embezzled client money.

Kobbeman pled guilty to one count of wire fraud in July 2013.

An increasing number of Northwest residents now count themselves members of HOAs, which collect dues from residents to manage and maintain association's commonly held property. It's a complicated, often delicate job and the volunteer HOA board usually hires a professional management firm to handle the details.

Northwest Empire was one of the Portland region's HOA managers. Kobbeman was its chief financial officer. Kerin said Tuesday Kobbeman had been moving, commingling and taking his clients' money and hiding it by doctoring their bank statements.

“He lied to my face”

When Arbor Terrace's money disappeared, Boyle and other HOA members demanded a meeting with Kobbeman. "He lied to my face," Boyle said. "I was scared. The board was afraid we could be held personally liable."

Insurance ultimately covered most of Arbor Terrace's loss. But the association was still out about $150,000, according to court testimony.

Neill Fishman is treasurer of the HOA at the Decature Bridgewater Vista condominiums in Portland, which lost $72,000. "I personally feel shame," Fishman said. "I have let my neighbors down. I voted to hire Northwest Empire, I saw the financial documents prepared by Northwest Empire and I believed them. It's shameful Bridge Water's money has never been recovered."

To that end, Judge Simon said he intends to order Kobbeman to pay restitution to the victims. The exact amount won't be set until later a July hearing.

Associations are generally ceding less control over their money to their manager

The Northwest Empire controversy has influenced how local homeowners' associations interact with their management companies. Rich Vial, a Lake Oswego attorney who specializes in HOA issues, said associations are generally ceding less control over their money to their manager.

"The management companies have wised up," Vial said. "Virtually all of them are having someone at the HOA signing checks or authorizing payments. There are a lot more controls in place."


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Scottsdale HOA sues property management company
KPHO Broadcasting Corporation, Phoenix, AZ
14 August 2014
By Jason Barry

Some North Scottsdale homeowners are angry and they want answers.

Their property management company is accused of embezzling more than $3.4 million.

The Edge at Grayhawk Condominium Association has filed a lawsuit in Maricopa County Superior Court against Eagle Property Management.

"It's a real shame for what they've done to us,"

The lawsuit claims that Eagle Property Management committed fraud and embezzled millions of dollars in HOA money.

"It's a real shame for what they've done to us," said resident Zale Taylor.

According to the lawsuit,  Eagle Property Management president Kelsey Powell, had been making unauthorized transfers of HOA funds into her company's own bank accounts, dating back to 2010.

It wasn't until HOA board members got suspicious and hired a CPA to do an audit, that financial discrepancies were discovered, the lawsuit states.

Homeowner Saundra Verri told CBS5 that it's hard to believe that the roughly $300 a month in HOA dues they've been paying, may have been stolen, instead of used to improve their community.

"It's just so upsetting that you believe in these people, and you trust them, and this is what you find out," said Verri. "It betrays your trust. She had a fiduciary duty, and we relied on her, and her company."

CBS5 went to Eagle Property Management's Phoenix Office to get some answers, but the place was locked up.

The company and its president are now under investigation by the Scottsdale Police Department.

Readers' Comments
Dave Russell ·  Top Commenter · University of Denver
If this HOA would have invested around $1,800 a year for a Certified Public Accountant, to do a yearly audit, it could have saved them 3.4 million dollars.

Instead of passing responsible HOA legislation this year, penalizing HOAs for not doing audits, we got SB 1482. Senator Gail Griffin & Rep. Michelle Ugenti decided it was more important to "protect landlords" and dissolve crime free programs in HOA's. SB 1482 also allows property management company's to represent in court (play lawyer) and bill back the "fees" to their HOA clients. In essence, the management companies can now engage in the unauthorized practice of law.

Arizona passes countless HOA laws each year, none of which actually protects the homeowners. Until the sellouts at the Arizona State Capital start listening to their constituents, we're going to see a lot more of this.

Neal Butler · Senior Auditor at Butler Hansen, P.C., CPA's
FYI - Arizona does have legislation that addresses the need for CIRA's to have an audit, review or compilation performed annually.

Unfortunately, it does not have any "teeth", as in, there are no penalties for not completing.

if there is any suspected embezzlement, fraud or misappropriation of funds there is no requirement for the CPA to report it to authorities.

Dave Russell ·  Top Commenter · University of Denver
Neal Butler The "need" is there however, the law has no consequences if the Association fails to comply. Further, if there is any suspected embezzlement, fraud or misappropriation of funds there is no requirement for the CPA to report it to authorities. Your right, it has "no teeth" and no penalty. Just like most HOA laws, they aren't worth the paper they are written on. Maybe the Arizona Society of CPAs can work this issue down at the Capital this year?

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Watertown Woman Facing Embezzlement Charges
Hartford Courant
David Moran
12 November 2015

Joanne Fournier

A 56-year-old local woman who owns a property management company is facing embezzlement charges after police said she forged contractors signatures on checks and deposited them into her own account.

Police said that Joanne Fournier, 56, of Watertown, turned herself in to police on Tuesday after being notified that there was a warrant for her arrest on charges of larceny, forgery and identity theft.

Fournier is alleged to have stolen more than $50,000 from a condominium association in Winsted between 2011 and 2014 by forging contractors signatures on checks and depositing them into her own account while she served as a property manager, police said.

Police said that Fournier forged more than 40 checks with the signatures of seven different contractors during that time period.

Fournier was released after posting a $35,000 bond and will appear in Waterbury Superior Court on the charges Nov. 24.

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Woman convicted of looting homeowners associations in Simi Valley, Calabasas
Ventura County Star
By: Mike Harris
24 February 2016

The owner of a now-defunct management company in Thousand Oaks has been convicted of systematically looting hundreds of thousands of dollars from two homeowners associations in Simi Valley and Calabasas.

Kristin Davis, 46, was found guilty this month by a Ventura County Superior Court jury of stealing from the Big Sky Homeowners Association in Simi Valley and the Oak Park Calabasas Homeowners Association, which her company managed.

At the conclusion of a two-month trial, the jury found her guilty of eight counts of felony grand theft, four counts of felony tax evasion, two counts of felony forgery and one count each of felony insurance fraud and failure to file state income taxes, Senior Deputy District Attorney Howard Wise said Wednesday.

The jury acquitted her of two other forgery counts and deadlocked on 10 other counts, said Wise, a member of the Fraud and Technology Assisted Crimes Unit.

Wise argued at trial that Davis, the former owner of the now-closed Paradigm Management Group, stole about $1.6 million from the two associations — about $1 million from Big Sky and about $600,000 from Oak Park Calabasas.

Davis is scheduled to be sentenced March 3. Wise will ask Judge Nancy Ayers to sentence Davis to state prison and order her to make restitution.

Davis' attorney, Jarrod Wilfert, declined to comment Wednesday.

Big Sky is a master-planned community of nearly 800 homes. Located at the elevated north end of Erringer Road and neighboring streets, it offers unobstructed, panoramic views of the mountains and hills that ring Simi Valley.

Paradigm became Big Sky's management company in 2008. The next year, the association discovered what appeared to be financial improprieties.

Davis and Melissa Hoff-Solomon-Ramsey, who was Paradigm's chief financial officer, were arrested in September 2013.

Hoff-Solomon-Ramsey pleaded guilty in the case last year, was sentenced to 180 days in jail and testified against Davis, Wise said.

Greg Moses, who owns GM Management, which succeeded Paradigm as Big Sky's management company, said the homeowners association has financially recovered from the fraud.

The association's insurer replaced the vast majority of the lost funds.

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Update
Woman who stole from Calabasas HOA sentenced
The Acorn
By Melissa Simon

12 years in state prison

A woman convicted of embezzling about $1.6 million from homeowners associations in Simi Valley and Calabasas has been sentenced to 12 years in state prison.

Kristin Davis, 46, of Solana Beach, Calif. was sentenced March 3 in Ventura County Superior Court.

On Feb. 1, a Ventura County jury found Davis guilty of eight counts of grand theft, four counts of tax evasion, two counts of forgery and one count each of insurance fraud and failure to file taxes, all felonies.

Howard Wise, a Ventura County senior deputy district attorney, argued during the trial that between 2008 and 2009 Davis stole approximately $1 million from the Big Sky Homeowners

Association in Simi Valley and about $600,000 from the Oak Park Calabasas HOA.

Davis must pay restitution to both HOA boards. The amount will be determined at a March 17 hearing, and Wise said he plans to ask for up to $3 million to cover all the crimes, including penalties and interest accrued.

From 2007 to 2009, Davis owned and operated Paradigm Association Management Group, a now-defunct Thousand Oaks-based HOA management company.

The Oak Park Calabasas HOA signed on with Paradigm in March 2008. During the contract period, Davis and Melissa Hoff-Solomon- Ramsey, a 39-year-old Agoura Hills resident and the company’s chief financial officer, wrote and signed checks from both the Simi and Calabasas HOAs to Paradigm, without the knowledge or approval of the boards, Wise said.

former employee tipped off the HOA

In October 2009, the senior deputy D.A. said, a former Paradigm employee tipped off the Simi Big Sky HOA to the thefts and the management company was fired that month. Police were notified and an investigation began.

Ventura County Sheriff’s Detective Russell King called Davis “extremely educated, calculating and manipulative” and said that she used those skills to conceal the embezzlements. “Davis used a number of schemes to commit fraud, such as false contracts . . . or charges,” King said. Davis and Hoff-Solomon-Ramsey were arrested in 2013.

“Davis blamed all the thefts on Hoff-Solomon-Ramsey, but the problem is that (the latter) didn’t become CFO until January 2009. And the thefts, particularly (some) unauthorized Internet transfers, were done starting in February 2008,” Wise said.

The deputy D.A. said Davis provided forged contracts to both HOA boards that authorized significantly higher monthly fees and made other changes that benefited Paradigm. The Big Sky forgeries came to light in October 2009, while the Oak Park Calabasas forgeries surfaced in February 2010.

same exact scheme

“The most important thing, I believe, was that I was able to show Davis did the same exact scheme to . . . two completely separate victims,” Wise said. “It made it clear that it wasn’t one set of victims’ fault. They weren’t asleep at the switch.

“We had a completely independent set of victims telling virtually the exact same story, including forged contracts being offered to them by Davis,” he said.

King said there’s never just “one smoking gun” with fraud cases like this.

Hoff-Solomon-Ramsey testified against Davis during the trial, saying she was told to sign off on the checks and didn’t believe anything unethical was happening because the former Paradigm owner had the boards’ consent, Wise said.

“I argued in my closing statements that Davis set up Hoff- Solomon-Ramsey to take the fall,” Wise said.

Hoff-Solomon-Ramsey pleaded guilty to felony grand theft in March 2015. She was sentenced in June to five years of felony probation and 180 days in jail. She did not receive a deal or a shorter sentence for testifying against her former boss, Wise said.

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Condo management company owner, employee arrested after funds disappear
Eye Witness News
Plainville Connecticut
08 December 2015

Condo management company owner, employee arrested after funds disappear

An investigation into missing condo funds has led to the arrest of two defunct property management company employees.

Police said they arrested 36-year-old Devin Hill, the former owner of D&H Management.

Investigators said they received complaints from several condo associations in Plainville and Bristol regarding missing funds from their bank accounts.

An investigation into the finances of 26 condominium associations found evidence that Hill performed 133 unlawful withdrawals, diverted 343 checks and wrote 105 checks to a fraudulent account.

In all, police said he and two co-conspirators took more than $275,527.

One of those co-conspirators was identified as 26-year-old Dereck Cutone. The second has not been identified.

Hill was arrested on Monday and charged with first-degree larceny, conspiracy commit first-degree larceny, conspiracy to commit second-degree larceny and first-degree larceny. He was released after posting a $150,000 bond.

He'll face a judge in Bristol on Dec. 21.

Cutone was also arrested on Monday and charged with second-degree conspiracy to commit larceny. He was released on a $5,000 non-surety bond and scheduled to make a court appearance on Dec. 21 in Bristol.

Joe Barbagallo said he gets ticked off every time he looks at the siding outside his home.

“It's a little bit of a hassle seeing that every day comparing it to the condos next door,” Barbagallo said.

When Barbagallo said he bought the home at Colonial Commons the condo association told him they would replace the siding and garage door immediately.  But that hasn't happened.

“We were told that there was no money to get it done basically because the guy embezzled all the savings that the condo complex had,” Barbagallo said.

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Man admits stealing $2.5 million from homeowner associations
Associated Press
04 May 2016

BALTIMORE (AP) - A man who prosecutors say financed a lifestyle of nightclubbing, NBA games, manicures and limousines by stealing $2.5 million from his clients has pleaded guilty to wire fraud.

The U.S. Attorney’s Office said in a news release that 39-year-old William Francis of Elkridge entered the plea Wednesday in federal court in Baltimore.

Prosecutors say Francis owned two companies which managed HOA reserve funds, which were typically held in savings or money market accounts.

According to his plea agreement, Francis defrauded at least 51 of his company’s HOA clients by taking reserve funds.

Prosecutors say Francis spent the money on Washington Wizards games; adult entertainment venues and nightclubs; dog grooming services; a nail salon, and a limousine service.

Francis faces a maximum of 20 years in prison at sentencing Sept. 13.

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Whistle blower: Management firm misused
HOA funds
Aspen Daily News Online
Madeleine Osberger

Former employee accuses Alpine Valley Services of embezzlement since 2012

A complaint filed with the state of Colorado’s real estate regulatory agency alleges that a local property management firm has, since 2012, misused funds intended for homeowners’ association payments in the upscale residential neighborhoods at the base of Aspen Highlands.

could total $500,000 or more

The funds in question could total $500,000 or more, said a witness to the complaint filed recently with the Colorado Department of Regulatory Agencies’ Division of Real Estate, alleging misrepresentations by Diamond Kip’s Inc., which does business as Aspen Valley Services.

“HOA owners are paying for their assessments to DKI first and then DKI is not returning the funds to the HOAs. In essence DKI is taking the owners’ assessment funds and not returning them to the HOAs,” says a complaint filed this month by Erin Hillman, a former employee with Alpine Valley Services, a property management firm based in Basalt.

Hillman’s last day with the company was Wednesday

Hillman’s last day with the company was Wednesday and she is now working elsewhere. She declined further comment.

A DORA official said Thursday that by law the agency cannot confirm or deny the existence of an open complaint. Information on the Division of Real Estate’s website says that once a complaint is filed, staff in the department determine whether or not to conduct an investigation, which once underway could take up to 12 months. After an investigation is competed, the division can “discipline [a real estate] license through a variety of sanctions.

“However, the consumer would need to pursue civil means to seek financial remedy or compensation,” says the state website.

Tim Riggins, principal of Aspen Valley Services, did not respond to phone calls or an email requesting comment on the filing, which was provided to the Aspen Daily News.

Brian Hart of Basalt, who is named as the witness in the DORA complaint, resigned from the company about one month ago, he said, and is now managing his own cleaning business. Hart had worked for Alpine Valley Services for 12 years, including for a time as its vice president.

Documents that Hillman is providing to the state show a trail of invoices dating back at least four years, Hart said Wednesday.

The complaint also reads: “Starting in 2012 there were multiple transfers from Thunderbowl Neighborhood Townhome Association, Maroon Neighborhood Townhome Association [and] Aspen Highlands Village Amenities Association into Diamond Kips Inc. operating account.”

The Ritz Carlton at the base of Highlands and the adjacent luxury townhomes are among those impacted clients.

The Aspen Highlands Village Amenities Association was formed by Hines, the village’s developer, more than 20 years when the base of Aspen Highlands was redeveloped, according to Dwayne Romero, who was involved in that initial project.

He said the amenities association was organized to provide its members access to the Ritz Carlton’s amenities through a fee structure.

Romero also said his company, the Romero Group, is not involved in management of any of the sub-associations named in the DORA complaint. He said those were under Aspen Valley Services’ purview.

The Romero Group does manage the master association and metro districts at Aspen Highlands, however. Romero said he had not heard about the complaint to the state prior to a reporter’s phone call.

a lack of invoices

Part of the complaint decries a lack of invoices produced to back up the account transfers.

“These transfers were made without the distinction of purpose or reason for funds being borrowed by Diamond Kip’s. As far as I know, none of these transfers were approved by the HOA board and some have not been paid back or had any invoices as back up for transfers,” according to Hillman’s filing.

Hart said those allegations are backed up by a lack of credit card statements and said one client alone could be out $231,000 for payments that were supposed to have made by Diamond Kip’s but were not.

He also said that when Hillman, who he called the company’s “financial director,” realized the growing scope of the misappropriations, through questionable or absent credit card receipts, she “just stopped looking” once they surpassed $500,000.

When Hart was asked why he and Hillman did not report their suspicions to the police, Hart said Hillman was advised by an attorney to report it first to the state agency.

In 2013, Diamond Kip’s Inc. was successfully sued by housekeepers who alleged unpaid overtime wages, according to a published report.

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Salem Property Manager Arraigned on Larceny and Conspiracy Charges
Salem Patch
By LINDA BOCK
Massachusetts
13 May 2015

Andrew Raynor and Matthew Dykeman with their attorney sitting between them.

Two executives in a Haverhill-based property management company were arraigned on Wednesday in Salem Superior Court on larceny and conspiracy charges following a joint investigation by the Essex District Attorney’s Office and the Haverhill Police Department.

Andrew Raynor, 37, of Dover, N.H. and Matthew Dykeman, 51, of Salem, Mass. were arraigned today on the indictments of larceny by a single scheme (over $250), conspiracy, and false entry in corporate books charges.

Additionally, Shawmut Property Management LLC, a company co-owned by Raynor and Dykeman, was charged with larceny by a single scheme (over $250).

Pleas of not guilty were entered on their behalf and they were released on personal recognizance.

Following reports from multiple former Shawmut employees alleging fraudulent activity at the company, the Haverhill Police Department and the Essex District Attorney’s Office launched an investigation in June of 2014. The investigation found that the owners of Shawmut allegedly systematically falsified invoices sent to dozens of the company’s clients without the knowledge of the condominium association boards or the laborers whose work was falsely inflated. Shawmut Property Management provides services to condominium associations in Massachusetts, New Hampshire and Maine.

Essex Assistant District Attorney Quentin Weld told the court that the defendants allegedly sent false invoices for work not performed to dozens of their client condominium boards, resulting in a total larceny of at least $100,000 dollars between January of 2012 and February 2014. The funds were allegedly paid directly into an account controlled exclusively by Raynor and Dykeman.

Raynor and Dykeman are scheduled to appear in Salem Superior Court on September 10, 2015 for Pre-Trial Conference. They are represented by Attorneys John Andrews and Arthur Kelly respectively and are presumed innocent until proven guilty

Shawmut Properties trial continued again
Eagle-Tribune
By Peter Francis
25 August 2016

SALEM, Mass. — Members of condo associations in the region will have to wait until late this year, at soonest, to see if two members of a Haverhill-based company are found guilty of stealing $100,000 from the associations.

The trial of the executives of a Haverhill-based property management company accused of stealing about $100,000 from several condo associations has been continued to the fall.

Andrew Raynor and Matthew Dykeman of Shawmut Properties, LLC. will appear in Salem Superior Court on Nov. 1 for the continuation of their trial on larceny charges.

The two are charged with stealing the money

The two are charged with stealing the money from condominium associations in Lawrence and Marblehead, as well as complexes in Bedford and Rochester, N.H., between Jan. 1, 2012, and Feb. 28, 2014, by sending false invoices for maintenance work which wasn't performed from Shawmut's offices at 200 Merrimack St. in Haverhill and 27 Charles St. in North Andover.

Dykeman, 52, of Salem, Mass., and Raynor, 38, of Dover, New Hampshire, were indicted by a grand jury on April 28, 2015, in Salem Superior Court on one count each of larceny. The two executives also each face one count of conspiracy and false entry in corporate books.

Carrie Kimball-Monahan, spokesperson for the Essex District Attorney's Office, said this is the third time the trial date has been rescheduled since the men's arraignment on May 13, 2015, when they pleaded not guilty.

"Which is not all that unusual,'' she said in an email Wednesday. "Sometimes it is because there isn’t a judge for the trial. When they schedule trials, they schedule more than they can actually do in case someone pleads or something else falls through – then there is another one ready to go."

Kimball-Monahan said attorneys for Dykeman and Raynor have also continued the trial, and that she does not believe there is a plea deal in the works.

reports from former Shawmut employees

The Haverhill Police Department and the Essex Country District Attorney's Office worked together on the case, and launched their investigation in June 2014 after receiving reports from former Shawmut employees alleging fraudulent activity by the company.

Much of the state's evidence was obtained during a raid of Shawmut's Haverhill offices in July 2014, from which authorities removed three computers and downloaded digital files onto external hard drives from Shawmut's computer server in the basement of the building.

"cash in/cash out" files

Also confiscated as evidence were boxes of "cash in/cash out" files, and files related to condominiums, payroll, personnel, and rentals, investigators said.

"The investigation found that the owners of Shawmut allegedly systematically falsified invoices sent to dozens of the company’s clients without the knowledge of the condominium association boards or the laborers whose work was falsely inflated," said Kimball Monahan after their arraignments.

According to reports filed by Haverhill police, three former employees were interviewed, all of whom said they were ordered by Dykeman and Raynor to add hours to job reporting forms submitted by maintenance technicians sent to make condominium repairs, sometimes inflating maintenance tech work hours by as much as 40 hours each week.

One former employee told authorities that the department manager and coordinator were also ordered to spread the hours out in a manner that would not be easily detected by condo associations and owners, according to the reports.

The reports said the coordinator told investigators that at times, individual condo owners would be billed for work, in what were referred to as "BTO's" or "bill to owner" jobs.

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Management company owner sentenced to federal prison for stealing from homeowner associations
The Baltimore Sun
By: Jessica Anderson
18 October 2016

William Kyndall Francis built his property management business from his basement, growing it to 100 employees before being caught stealing from clients.

42 months in federal prison

Francis, 39, was sentenced in U.S. District Court in Baltimore on Tuesday to 42 months in federal prison for wire fraud after taking money from at least 51 homeowner and condominium associations, which had hired his firm to provide financial and property services.

Francis, who owned Columbia-based Legacy Investment and Management, Inc. and Legacy Investment and Management, LLC, appeared in the courtroom in a dark suit and spoke at length, asking the judge for a lesser sentence for the sake of his two children. Francis also repeatedly expressed remorse to the victims who lost $2.5 million in funds intended for savings or money market accounts, and to cover their long term and unexpected capital expenses, authorities said.

Francis also apologized to his children, who were not present. He spoke about how he grew up without a father and did not want his children to have similar difficulties in childhood.

"I let them down, I've embarrassed them," he said.

Judge Ellen L. Hollander said she felt Francis' statements were moving and thoughtful, and went below sentencing recommendations by the U.S. Attorney's Office of between 51 and 63 months. But she noted the large amount of money involved, which she said warranted a longer sentence than requested by Francis' attorney, who asked for 24 months.

"I think this case, like so many I see, is very difficult," said Hollander, who described Francis as "a good person who did a very bad thing."

spent the stolen funds on personal and business expenses

Authorities said Francis spent the stolen funds on personal and business expenses, such as $7,000 for a dog grooming service, more than $2,000 to a nail salon, nearly $4,000 at adult entertainment clubs, and $2,000 on limousines.

He also spent another $40,000 for payroll for Legacy Inc. employees.

Assistant U.S. Attorney Kathleen O'Connell Gavin called Francis' actions a "calculated, long-running fraud scheme."

"He gained the trust of the people who were volunteer board members," who often lacked experience in property management, Gavin said.

Arthur Blume, a board member with the Whiskey Bottom South Condominium Association in Laurel, said his development lost $50,000 that could not be recouped through insurance. He said homeowners association fees had gone up to pay for infrastructure improvements, and that funds stolen by Francis could have helped offset those expenses.

The victims at his complex are "not a community of million-dollar condos," he said.

Francis also was ordered to pay $93,000 in restitution serve three years supervised probation following his sentence.

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Property management company to pay restitution
Eagle-Tribune
By Peter Francis
03 November 2016

SALEM, Mass. — Four condominium associations in New Hampshire and Massachusetts will be receiving restitution from Andrew Raynor, Matthew Dykeman, and their Haverhill-based management company, Shawmut Properties, LLC.

In Salem Superior Court Wednesday, Raynor and Dykeman pleaded no contest to charges of stealing over $100,000 from several condo associations over a two-year period. With their pleas, each received two years probation.

The pair — and the corporation itself — will also pay $20,000 each to be distributed between the condo developments, which were billed for repairs and services never performed from January 2012 through February 2014.

The bilked clients included Pine Hill and Oliver’s Pond in Lawrence and Marblehead, as well as River’s Glen and Springfield Estates in Bedford, N.H., and Rochester, N.H.

As a condition of their probation, Judge Thomas Drechsler ordered that Raynor and Dykeman be banned from working directly or indirectly as property managers in Massachusetts for the duration of their probation.

To plead no contest or to admit to the facts
At the start of the trial Tuesday, Assistant District Attorney Quentin Weld sought jail time for the felony charges leveled against Dykeman, 53, of Salem, Massachusetts, and Raynor, 40, of Dover, New Hampshire, while the attorneys for the defendants, Arthur Kelly and John Andrews, sought no contest pleas.

Drechsler, however, was under the impression Dykeman and Raynor intended to enter an Alford plea, a guilty plea entered when a defendant does not admit to a crime and asserts innocence, but admits the evidence against them would likely be enough for a conviction.

For the first hour of Wednesday’s preceedings, Weld and the judge debated the difference between a plea of “nolo contendere” or no contest, and an Alford plea, calling the former “unpalatable” and the latter “nebulous.”

“There is no good reason for its acceptance in this case,” said Weld of an Alford plea, adding the difference between nolo contedere and Alford is “not a well-defined area of the law.”

The judge chastised Weld for agreeing with the defense in a conference Tuesday to accept restitution of $40,000 between Raynor and Dykeman in exchange for a change of plea, only to back out of it Wednesday.

“It’s the court’s view that you did agree to $40,000 in exchange for a change of plea, to any plea,” said Drechsler. “I expect lawyers to mean what they say and say what they mean.”

Weld told the judge he “strenuously objects” to no contest pleas and that he would only accept a plea of guilty, and argued that if Raynor or Dykeman entered a no contest or Alford plea, they might be “insulated” from future civil lawsuits.

The judge and attorneys for the defendants strongly disagreed, and Drechsler asked whether Weld was looking to assist future plaintiffs in civil lawsuits against Raynor or Dykeman.

“It’s about taking responsibility,” Weld replied. “They deserve way more than what they’ve requested.

“The commonwealth is prepared to show they stole $100,000 and we’re prepared to seek that after conviction,” he continued.

Attorneys work it out
Kelly, Dykeman’s attorney, called Weld’s change of heart on the plea deal “disbelievable.”

“The commonwealth was well acquainted with all three of us asking this,” said Kelly of himself, Raynor’s attorney Andrews, and Thomas Gleason, the corporation’s attorney.

Kelly said the defendants brought $20,000 checks with which to pay the restitution to the state, and urged that the transcript of the conference Tuesday, which was held on sidebar, be “played for (Weld’s) boss”, alluding to Essex District Attorney Jonathan Blodgett.

During a short recesses Wednesday afternoon, Weld and the defense attorneys worked out another plea compromise to avoid prolonging the trial.

When they returned, Weld told the judge that, while he still recommended jail time, the state wouldn’t object to Raynor, Dykeman and the corporation paying $20,000 each in restitution, although he was still not in favor of Raynor and Dykeman pleading no contest to the felony charges.

Gleason told the judge Shawmut Properties would need 45 days to pay its share of the restitution, which Weld said would be split between 20 other victims aside from the four condo associations in Lawrence, Marblehead, Bedford, N.H., and Rochester, N.H., which would receive $10,000 each from Raynor and Dykeman’s restitution payments.

Victims express anger
When authoritities raided Shawmut’s office at 200 Merrimack St. in Haverhill, Weld said employees there said Raynor and Dykeman told them to add hours to handwritten timesheets which were then sent in monthly digital invoices to multiple condo associations for maintenance work which wasn’t performed between Jan. 1, 2012, and Feb. 28, 2014.

“On occasion, entire jobs were invented, when no work at all was done at all,” read Weld, adding that the average hourly rate for work performed was around $50, and that 20 hours were added per week to timesheets of laborers.

In addition, Weld read a statement from Adam Jacobs, a resident of Oliver’s Pond in Marblehead, who requested jail time for the defendants, and brought forward Joseph Trombley and Desiree Crowley, who were both members of the condo association at the Springfield Estates in Rochester, N.H., to share their experiences with Shawmut with the court.

Trombley and Crowley said the condo association was in dire financial straits when it contracted with Shawmut, and said they were preyed upon by the “willful deceit, manipulation, and intimidation” of the company, and Raynor specifically.

“A lot of condo associations don't have a lot of resources,” said Crowley, who no longer lives there. “We brought Andrew Raynor in on good faith.”

Trombley said suspicions grew when they noticed eight-hour charges for such tasks such as changing lightbulbs and picking up trash around the nine-unit complex. They eventually hired an outside handyman to try and take the maintenance responsibilities away from Shawmut.

Crowley said when one Springfield Estates resident put up a negative review of Shawmut Properties on the website Yelp, she said Raynor threatened to sue the condo association with its own money.

“It got to the point where we had to manage our own property, even though we were paying Shawmut,” she said. “The lack of trust was so much, and the fear of retaliation ... we knew things were being hidden in our records and we didn’t want that to get worse.”

“We fired Shawmut earlier than our contract expired in an effort to protect ourselves,” Crossley said, adding the money that was stolen from Springfield Estates and other associations prevented those complexes from making necessary improvements.

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City condos may receive refund after outside managers plea bargain
97.9 WHAV
05 November 2016

The Essex County District Attorney’s office is still trying to determine if a Haverhill condominium development will share in $20,000 in restitution from a Haverhill-based property management firm.

Shawmut Property Management pleaded guilty and its two representatives pleaded no contest. Andrew Raynor, 38, of Dover, N.H. and Matthew Dykeman, 52, of Salem, will serve probation for two years—during which time they will not be allowed to serve as managers of condominium associations in Massachusetts.

A prosecutor agreed to accept $60,000 in restitution in exchange for plea changes. Up to $40,000 is to be divided as follows: $10,000, Oliver’s Pond Condominium, Marblehead; $10,000, Pine Hill Condominium Association, Lawrence; $10,000, River Glen Condominiums, Bedford, N.H.; $10,000, Springfield Estates, Rochester, N.H.; and $20,000 shared between 20 other home associations, said Carrie Kimball-Monahan, spokesperson for District Attorney Jonathan Blodgett.

Hunters Run Condominium Association, near Westgate Plaza, Haverhill, is listed in Haverhill police reports as a possible victim. Individual condominium owners may also have been billed directly by the firm, Haverhill detectives said in a report.

Raynor and Dykeman were indicted last year on charges of larceny by a single scheme (over $250) and conspiracy and false entry in corporate books. Additionally, the company was charged with larceny by a single scheme (over $250).

Following reports from multiple former Shawmut employees alleging fraudulent activity at the company, the Haverhill Police Department and the Essex District Attorney’s Office launched an investigation during June, 2014. The investigation found owners of Shawmut allegedly systematically falsified invoices sent to dozens of the company’s clients without the knowledge of the condominium association boards or the laborers whose work was falsely inflated. Shawmut Property Management provides services to condominium associations in Massachusetts, New Hampshire and Maine.

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Condo owners: Penalty for company too light
Eagle-Tribune
By Peter Francis
13 November 2016

HAVERHILL — Two executives of a Haverhill-based property management company received probation earlier this month and were ordered to pay restitution to several condominium complexes they were accused of stealing money from.

The executives pleaded no contest to the thefts, which police said happened between 2012 and 2014.

the punishment does not fit the crimes

But now, condo association residents who said they were victims of the Shawmut Properties company said the punishment does not fit the crimes — billing condo associations for services never performed and having company workers add hours to time cards.

On Nov. 2, Salem Superior Court Judge Thomas Drechsler sentenced Shawmut executives Andrew Raynor of Dover, New Hampshire, and Matthew Dykeman of Salem, Massachusetts, to two years probation each. The judge also ordered the men and their company to each pay $20,000 in restitution.

Raynor and Dykeman were accused of stealing more than $100,000 from the condo associations, one of which is in Lawrence.

two year ban on working as property managers

As part of their probation, neither man will be allowed to work as a property manager in Massachusetts for the next two years.

In court earlier this month, Desiree Crossley and Joseph Trombley, former board members of the Springfield Estates Condominium Complex in Rochester, N.H., testified that Shawmut Properties preyed on their 36-home development.

After board members noticed eight-hour charges for work such as changing light bulbs and picking up trash around the complex, Crossley and Trombley said the board tried to hire an outside handyman to take maintenance of the units away from Shawmut. But those efforts were met with intimidation by Raynor, they said.

They said they eventually fired Shawmut.

Springfield Estates is one of four condo associations which will receive a share of $40,000 of the $60,000 in total restitution ordered by the judge. The other associations are the Pine Hill and Oliver's Pond Condominium Associations in Lawrence and Marblehead; and the River's Glen Condominium Association in Bedford, N.H.

banned only in Massachusetts

Days after the trial ended, Crossley said she thinks probation is reasonable. However, she said she is concerned about Raynor and Dykeman being barred from working as property managers only during their probation — and only in Massachusetts.

Crossley said she was disappointed that neither of the two men "took responsibility for their actions," opting instead to plead no contest to charges of larceny, conspiracy, and improper entry into corporate books.

"I don't believe they should ever be permitted to manage properties again, in any state," Crossley said, adding she would like to see the state pass laws protecting condo associations. "I do not believe it's fair that the communities will receive far less than was is believed to have been stolen."

In court, Raynor and Dykeman both appeared with their attorneys with $20,000 checks made out to the state for restitution as part of a proposed plea deal made the day before, which Crossley said surprised her.

"I wondered how many of our community members would have been able to do the same. My guess is few, if any at all," she said, adding Shawmut was a "large, wealthy company whose principals preyed on these people for their own gain."

In court on Nov. 2, Assistant District Attorney Quentin Weld, the prosecutor who handled the case and recommended jail time for Raynor and Dykeman, read a statement written by Adam Jacobs, a trustee at the Oliver’s Pond condo board when Shawmut managed the property.

Jacobs called Raynor and Dykeman the "epitome of corrupt businessmen" who preyed on condo boards and unit owners, and who bullied condo board members and treated them with disrespect after the condo agreement with Shawmut was signed.

During the time Shawmut was the property's manager, the company billed the condo association for services not rendered and inflated the billable hours on a "routine basis," Jacobs said.

Jacobs said Dykeman responded to inquiries in a "hostile, belligerent and menacing tone."

"They said they were in control and could do what they wanted, including spend the condo funds on services," Jacobs wrote, adding Dykeman raised the condo's management fees.

Jacobs said a water leak in one Oliver's Pond condo caused extensive damage to common areas in the building. Shawmut collected insurance proceeds for the damage, but refused to provide any accounting for how the money was used, depleting the condo's reserve funds to fix the water damage, according to Jacobs.

In the statement, Jacobs suggested Raynor and Dykeman should be put in jail, a full audit should be completed by an outside public accountant to determine how much they stole, and they should never be allowed to manage properties or handle third-party funds or bank accounts again.

"They operated a small business criminal enterprise for their personal benefit, and they need to be punished," Jacobs said.

Crossley agreed that Raynor and Dykeman should be forced to pay for a full audit of the books confiscated during a July 2014 police raid of Shawmut's Haverhill office and then return the full amount of money found to have been stolen. However, she said she is grateful to police and the judge for ensuring the condo associations got some of their money back.

The judge's decision, however, only eases some of their suffering, Crossley said, noting condo associations must satisfy many financial, safety and legal obligations with modest budgets. For many associations, that necessitates the hiring of property managers, Crossley said.

"Andrew Raynor knew we hired him to help us set and meet ambitious financial and property management goals, yet he willfully defrauded our community of the hard-earned funds needed to do so," Crossley said, adding there is a lesson to be learned from the Shawmut Properties saga.

volunteer boards must be so skeptical of the management teams

"It is imperative that condo association boards keep close tabs on their managers and all records," she said. "It is unfortunate that these volunteer boards must be so skeptical of the management teams they hire in good faith to look out for their best interests., but this case proves that is the reality."

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A.P. Gold Realty charged with $900K condo, HOA fraud scheme in Chicago
Independent American Communities
15 November 2016
By Deborah Goonan

Another condo association Management company owner has been charged with fraudulent theft of fees from at least nine condo associations in the Chicago area.

Alan P. Gold reportedly had signature authority on Edgewater Condo Association accounts, but allegedly misused that authority to overpay himself for management services and other services not rendered.

According to reports, thefts occurred between 2010-2014. AP Gold Realty and Management’s license was revoked in 2014.

According to the criminal complaint, AP Gold may have managed up to 600 units located in 50 different client associations.

Condo association fees were deposited into nine different bank accounts, of which seven were under the sole control of Alan P. Gold, as sole proprietors of his management business. Also according to the criminal complaint, up to nine victim condo associations (VCAs) allowed Gold access to both their operating and reserve accounts for their respective associations. VCA board members report not receiving copies of actual bank statements for years.

Gold was in the habit of providing after-the-fact “owner statements of account” to condo board members by U.S. Mail. For example, in one association, the complaint notes that 22 “owner statements” reported inflated bank account balances and omitted multiple withdrawals that were made from both the association’s operating and reserve accounts.

The discrepancies were discovered in 2014 by the Treasurer of one VCA, who compared the actual bank statements with owner statements that had been mailed to him by Gold.

Charges in this case include mail fraud. If convicted, Gold could serve up to 20 years in prison.

This case is another reminder that owners should never defer unsupervised control of finances and bank accounts to an association manager or any one individual. Furthermore, at least two board members must obtain signature authority over all association bank accounts, and all board members should be receiving original bank statements for monthly review.
—Deborah Goonan

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Man charged with stealing $150,000 from Edgewater Condo Association
CBS Chicago
15 November 2016

CHICAGO (CBS) — A property manager is facing federal charges for allegedly pocketing more than $150,000 in illegal fees from a condominium association in the North Side Edgewater neighborhood.

Alan P. Gold, 65, was arrested Nov. 9 and charged with one count of mail fraud, according to the U.S. attorney’s office.

Gold, owner and operator of A.P. Gold Realty & Management Inc., had authority over the condo association’s bank accounts, prosecutors said. He was supposed to draw a monthly $650 fee for management services such as collecting special assessments and paying utility providers.

Prosecutors said Gold over-billed the association by withdrawing multiple $650 checks in the same month and tapping into the association’s reserve fund to write “substantially higher” checks to himself. He is accused of stealing $154,271 from the association between 2010 and 2014.

He also tried to conceal the fraud by providing fraudulent monthly statements to the association that showed their account balances higher than they actually were, the U.S. attorney’s office said.

If convicted of the mail fraud charge, Gold could face a maximum sentence of up to 20 years in prison, according to prosecutors.

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Former condo manager awaits sentencing in skimming case
Crain's Chicago Business
By Dennis Rodkin
08 November 2017

A Chicago man who was accused of skimming more than $1 million from dozens of North Side condo associations has pleaded guilty to mail fraud and is to be sentenced in January.

Alan Gold, who managed A.P. Gold Realty & Management, pleaded guilty to a single charge of mail fraud in August in a case in which federal prosecutors said he misappropriated a total of $1.25 million from 44 homeowners associations he managed.

His sentencing, previously scheduled for the end of November, has been pushed back to Jan. 23, according to the U.S. Attorney's office.

Gold opened his firm in 2000, according to court records, and by 2016 his now-defunct website said the firm managed "well over 600 units in more than 50 buildings on Chicago's North Side." Between 2010 and September 2014, according to court records, Gold wrote unauthorized checks from each of 44 condo associations whose accounts he managed.

Gold's attorney, Anthony Hill of the Law Offices of Anthony Hill in Chicago, declines to comment. None of the condo associations are identified in the court records.

Sometimes the checks, written to the A.P. Gold firm, were duplicates of the monthly management fee the Gold firm was due. According to the FBI, in October 2013, Gold wrote three checks from one association's account in the amount of the $650 monthly fee that A.P. Gold charged, when only one check in that amount was authorized.

Other checks were written on the homeowners associations' reserve accounts. In one instance, according to the FBI, Gold's firm wrote three checks totaling $57,000 from an association's reserve account in one month.

According to a criminal complaint filed last year, the FBI reported that Gold's firm would then provide the associations with financial statements that did not show the excess withdrawals. In one instance, Gold's firm sent the homeowners association a financial statement showing the association had a bank balance of more than $36,800, when the bank statement for that account showed a balance of $6,739, according to the FBI's investigation.

One association received 22 consecutive monthly statements that showed inflated balances, according to the FBI. Gold's firm mailed the statements to associations, which resulted in the charge of mail fraud.

Sentencing guidelines call for 57 to 71 months in prison, according to Gold's plea agreement. The offense also carries a minimum fine of $250,000 and court-ordered restitution to the condo associations in an amount yet to be determined, according to the plea agreement. The court also will determine an amount of restitution to the victims, the agreement says.

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Former owner of Clackamas property management companies sentenced to nearly 3 years in prison
The Oregonian
By Maxine Bernstein
14 November 2016

A 37-year-old man who prosecutors say defrauded nearly 250 clients of his former property management companies out of $1.5 million was sentenced Monday to nearly three years in federal prison.

Cody Halsey, who had been living in Oregon City but now resides in Vancouver, had pleaded guilty in July to one count of wire fraud, after an FBI investigation found he had stolen money directly from the client trust accounts of his Clackamas-based property management companies, Cascade Community Management and Noah & Associates Community Management.

He also deposited rent payments into bank accounts he opened so he could embezzle the money instead of depositing the payments into the client trust accounts, and stole tenant security deposits, according to Assistant U.S. Attorney Seth Uram.

the only one who had complete control of the companies' computerized booking system

Halsey was the only one who had complete control of the companies' computerized booking system, which allowed him to falsify financial records, fabricate invoices to clients and sometimes charge clients' accounts twice for the same service, according to the prosecutor's sentencing memo.

The federal prosecutor recommended a sentence of two years and nine months, which reflected a downward departure from sentencing guidelines, partly because Halsey "came clean'' about the details of his illegal scheme and entered a guilty plea early in the case, according to court documents.

Halsey's defense lawyer David H. Angeli had urged the court to sentence his client to one year and one day, arguing that any longer sentence would not be necessary.

"Mr. Halsey's misdeeds have been widely publicized, ensuring that he will never again attain any meaningful social or professional standing,'' Angeli wrote in a sentencing memo on behalf of Halsey. "He has no criminal record and has complied meticulously with the conditions of his pretrial release.''

Halsey, who struggled through an abusive and neglectful childhood and adolescence and sought desperately to prove his worth, unfortunately did so by stealing money from his clients, Angeli said.

"He used that money to shower gifts on friends and strangers alike and to create a façade of wealth and success. He tried, in essence, to purchase the social acceptance and appearance of success that he so desired,'' Angeli's sentencing memo said.

U.S. District Judge Marco A. Hernandez sentenced Halsey to two years and nine months in prison. He also was ordered to pay $1.5 million in restitution.

Richard Rocci, of Rocci Properties LLC., told the court that Halsey was hired to manage 85 of his company's units. He said his company has to replace the money Halsey stole from their tenants' accounts, which has cut into employees' retirement benefits.

He called Halsey's two year and nine month prison sentence "far too short for what he did.''

The Oregon Real Estate Agency ousted Halsey in 2015 and put a receiver in charge of Cascade Community Management after it investigated whether he misused rents and deposits.

'we are not smart enough to figure out how he did it'

The court-appointed receiver for Halsey's businesses wrote this note to the court: "Throughout the time we dealt with Mr. Halsey he lied, stole assets of the Estate, was contemptuous of the Receiver and its responsibilities to the court and creditors, the property owners, and once the magnitude of the situation became apparent stated, 'we are not smart enough to figure out how he did it.' His actions before the appointment of the Receiver, which are the subject of the proceedings before you, and his actions while the receiver was in place, demonstrates his total lack of remorse for his actions or the pain and suffering caused to the property owners who entrusted him with their funds and properties.''


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Ramona Property Manager Charged with Wire Fraud               
Ramona Patch
By Kristina Houck
13 December 2016

RAMONA, CA – A Ramona property manager and his company were charged Monday with four counts of wire fraud in connection with a scheme to defraud a homeowners association of $247,000.


Robert Walsh, 37, allegedly made false claims that his firm, Cornerstone Management Professionals Inc., could properly submit bids to the homeowners group for construction projects and concealed lower bids to make it appear that he was the low bidder.

The indictment seeks forfeiture of $247,000 from the defendants and alleges that in March 2015 they sent an email seeking a change order from the HOA to cover the cost of asbestos removal.

According to prosecutors, the defendants then sent an email to the contractor working on the project, falsely stating that there was no asbestos present in order to get the contractor to conclude the demolition project without involving an asbestos abatement firm so the defendants could retain the entire value of the change order.

“The public health dangers of asbestos exposure are well known,” said Jay Green, special agent in charge of the EPA's criminal enforcement program in California. “Materials containing asbestos must be handled safely and legally.”

Walsh's next court date, a hearing for arraignment and status of counsel for the corporate defendant, is scheduled for Dec. 22.

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Property manager charged with defrauding HOA
www.condoassociation.com
02 January 2017

I was looking for some advice.

My friend's HOA was defrauded of about $250,000 by their property manager, among other things. He was indicted on multiple felonies a couple of weeks ago.

I am trying to find out what other properties he manages to make sure he has not done or is not doing the same to them.

I saw on his LinkedIn profile that he belongs to your group. Is there a database of what properties are managed by who? Any info would be appreciated.

His name is Robert Walsh and his company is Cornerstone Management Professionals Inc, based in San Diego.

Here is a link to the charges.

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Accountant charged in $100K homeowners association theft
The Atlanta Journal-Constitution
Steve Burns 
02 February 2017

A Bartow County accountant was arrested after he allegedly stole nearly $100,000 from a homeowners association, officials said.

Gregory James Heath, 43, of Cartersville, was charged with 60 counts of theft by taking, Bartow sheriff’s Sgt. Jonathan Rogers said Thursday.

Heath owns H & H Tax and Accounting, which the homeowners association hired for financial work, Rogers said.

The thefts occurred from July 2015 to August 2016, Rogers said. Heath was arrested Wednesday and is being held in lieu of $250,000 bond in the Bartow jail.

No other arrests are expected in connection with this case, Rogers said.


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