Phoenix HOA managers accused of taking $1.3M from homeowners associations
Catherine Reagor and Jessica Boehm
03 October 2017

Federal prosecutors are accusing the owners of Phoenix-based Eagle Property Management of taking almost $1.3 million from several Valley homeowners associations.

Harlow White, his wife, Nancy, their daughters Rachel Ellerbrock and Kelsey Powell, and Powell's husband, Michael Powell, are being indicted on money-laundering and conspiracy charges.

The government accuses the group of using funds from HOAs it managed to pay personal American Express bills, mortgages, insurance premiums and federal tax bills, according to indictments filed in U.S. District Court in Phoenix.

Eagle Property managed 40 HOAs including the upscale Scottsdale communities Edge at Grayhawk, Skye Top at Troon and Mission de los Arroyos. Two of those HOAs also sued Eagle Property.

Money was illegally taken by the defendants from HOA accounts between January 2010 and May 2014, according to the U.S. Attorney’s Office in Arizona.

The Powells and Ellerbrock, who faced fines of up to $250,000, five years in prison and restitution, agreed to plead guilty. A judge must still rule on their pleas.

The Whites couldn’t be reached but Harlow White’s attorney, Tim Collier, said he and the couple just received the indictment filings and are looking at the legitimacy of the case.

The Whites aren’t in custody, and their initial court appearance is scheduled for Oct. 11, said Brian Watson, special agent for the Phoenix Internal Revenue Service Criminal Investigation office.

The Edge at Grayhawk Condominium Association, a high-end condo complex in north Scottsdale, alleged in a lawsuit filed in June 2014 that Eagle Property Management embezzled $3.4 million from the association between 2010 and 2014.

According to court documents, the association’s board of directors asked Kelsey Powell, then-president of the management company, to provide financial records and bank statements for their review. Powell refused.

The association then hired a Certified Public Accountant who discovered the funds in the association’s bank account did not match bank statements maintained by Powell. The CPA determined the company committed fraud and embezzlement, according to court documents.

A judge awarded the association more than $530,000 in April 2015.

The Mission de Los Arroyos Condominium HOA, also in north Scottsdale, hired a forensic accountant in 2014 who discovered “numerous suspicious deposits in transit, fictitious outstanding transfers and suspicious withdrawal activity in the Plaintiff’s operating and reserve accounts,” according to a lawsuit filed by the association.

An audit determined Eagle Property Management stole at least $73,880 from the association, according to court documents.

A judge awarded Mission de Los Arroyos about $75,000.

Eagle Property Management filed for bankruptcy in June 2014 and closed a few months later, according to the indictment.

Ivan Mathew, Ellerbrock’s attorney, had no comment. Attorneys for the Powells didn’t return calls.

Arizona, along with many other states, does not regulate property managers or most other elements of HOAs.

Unlike real-estate agents, CPAs and attorneys, property managers – who often handle the finances for HOAs – do not have to qualify for a license or even register with the state.

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