Homeowners left hanging after $276,000 stolen from condo association
By Manolo Morales
15 November  2016,

Kukui Plaza homeowners in downtown Honolulu are out more than a quarter million dollars.

Their condo association says the money was stolen from a bank account, and the bank says it’s not obligated to reimburse the homeowners.

The theft was done electronically

The president of the association sent a letter to homeowners saying $276,000 were stolen from an American Savings Bank account. The theft was done electronically and the money was transferred to mainland business accounts.

Homeowners were floored.

“I was really shocked, because we’re so trusting. We don’t normally go to the association meetings, so I was really shocked that such a thing could take place,” said homeowner Linda Takai.

the bank will not reimburse the association

The letter adds that because it was a business account and not a personal account, different standards apply and the bank will not reimburse the association.

So what do condo owners need to know, and how can associations protect their bank accounts?

KHON2 learned that business accounts do not have the same level of protection as personal accounts. Edward Pei, head of the Hawaii Bankers Association, says banks give more protection to personal accounts because it’s required by consumer protection laws.

“Businesses on the other hand are assumed to have a little more savvy and so there aren’t the same protection capabilities afforded to business accounts,” Pei explained. He says that applies to all business accounts, whether it’s a mom-and-pop shop or a large corporation.

adding certain safeguards

But, Pei says, homeowners associations and business owners can protect their money by adding certain safeguards.

For example: check your account regularly, have the bank send an alert for transactions exceeding a certain amount, and ask the bank for additional security options. That can help avoid the uneasiness many Kukui Plaza homeowners are now experiencing.

“I’m going to ask if we’re going to have to contribute a little extra this year, or if our maintenance fee will go up next year because of this loss,” said Takai.

We went to the office of the management company to address their concerns. The general manager said the association has enough money to pay its bills so it won’t be asking the homeowners to pay any additional fees.

He adds that the association is still working with the bank and its insurance company to try and recover the money. The bank has also added security measures to the homeowners association’s other accounts.

KHON2 reached out to the association president, the vice-president, and to American Savings Bank. They did not respond.

We also checked with Honolulu Police and will let you know if there’s an update on the investigation.


Condo owners hold meeting with board over association theft
By Web Staff
16 November 2016

We’re learning more about a theft of more than a quarter-of-a-million dollars from a condominium association.

A meeting was held Wednesday night between Kukui Plaza homeowners and association board members.

Homeowners tell us the board actually discovered the theft of $276,000 back in May and immediately reported it to police, though homeowners were only notified days ago.

The board said the theft was made in three transfers, but would not disclose where the money went because of the ongoing investigation.

As KHON2 reported Tuesday, the account is a business account, and the bank will not reimburse the money.

In the meantime, homeowners were told new measures have been taken to prevent future theft.


More details on $276,000 condo association theft, plus how to protect your account
By Manolo Morales
16 November 2016

A bank account was cleaned out of $276,000, and no one found out until it was too late.

We wanted to find out more about how something like this happens, and now we’re getting answers.

The association told homeowners that the money was transferred electronically from a Kukui Plaza Condo Association’s account at American Savings Bank. However it does not want to reveal too many details as to how it happened, because the incident is still under investigation.

During a board meeting Wednesday night, homeowners were told that the money was stolen in May. It was done in three separate transfers.

So why did it take six months to notify the homeowners? The building’s general manager told us the company wanted the investigation to run its course and gather as much information as possible before releasing the information.

The general manager says the association is still trying to figure out ways to get the money back from the bank. Either way, he says homeowners will not be charged a special assessment because of the theft.

A cybersecurity expert from the American Bankers Association says all it takes is one false click on your computer and you can easily become a victim of theft.

thieves prey on business accounts regularly

Doug Johnson, senior vice president, payments and cybersecurity policy, says thieves prey on business accounts regularly by sending an email enticing the victim to click on a link.

“It may be a business email saying to click here for an invoice for instance, or something that would not be unusual for the company to receive,” Johnson said.

Once you click on to that link, malicious software can take over the computer and is able to access the password and login to the bank account.

“The employee tries to get in the bank website. They got a screen that says ‘system down, please try again later,’ and what is happening in the background is now the criminals have access to the account,” said Johnson.

KHON2 asked Johnson what precautions businesses should take. He recommends:

Having dual authorization for all transactions, which means two people need to sign off each time money is moved from the account;

Having a computer that’s strictly for banking and no emails;

Keeping the anti-virus software updated; and

Monitoring the accounts daily and checking for anything unusual.

A real estate attorney says it’s good to have some notification when a transaction reaches a certain amount.

“Oftentimes there are amounts or limits that somebody can sign for yes without getting some special approval from the board or committee,” said Bart Howk from the firm Bays Lung Rose and Holma.

KHON2 also reached out to American Savings Bank to see what’s being done to try to recover the money. We’ve called and emailed for the past three days and there’s been no response.

In the meantime, homeowners were told new measures have been taken to prevent future theft.

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