Indio police investigating $110K in ‘financial discrepancies’ at Sun City retirement community
The Desert Sun
25 October 2017

(Photo: Jay Calderon/The Desert Sun)

The Indio Police Department is investigating a tip from a massive Indio retirement community after its management company found "financial discrepancies" of $110,000 that they said were connected to a former employee.

Sun City Shadow Hills in Indio is a 3,450-home development for people ages 55 and over, known for its golf courses, fitness facilities and clubs. It has a volunteer board of directors that runs its homeowners association, a nonprofit organization that residents join when they buy property in the community. But the complex is operated day-to-day by Associa, a for-profit management company that oversees 9,000 properties in North America.

In August, Associa informed the Sun City complex's board of directors that an internal audit had turned up a "financial discrepancy" in accounting records. Theboard turned over the final report to Indio police earlier this month, according to an email the board sent to homeowners on Oct. 18.

"At this point, the criminal case is now in the hands of Indio Police and they will contact us if they need additional information," the email said. "It is the intention of both the HOA and Associa to prosecute all staff of Associa that participated in the fraud against Sun City Shadow Hills HOA."

Associa told the board that its audit called into question $110,000. It also said that it has terminated an employee in connection with the discrepancy.

Indio police confirmed that the case has been forwarded to its detective bureau, but declined to comment further on the ongoing investigation. The Desert Sun could not independently confirm that any fraud occurred.

Sun City Shadow Hills has more than 6,000 residents, according to marketing material, a population that rivals the nearby City of Indian Wells. Besides its thousands of Spanish-style houses, the development boasts two golf courses, an official monthly magazine, fitness facilities and resident clubs with spry names like Over the Hill Hikers and the Lively Liners, a line-dancing group.

Residents fund all of that infrastructure and activity with their HOA assessment, a monthly* charge of $255 per house that pencils out to a budget of $10.5 million. The job of managing those funds – as well as outings to the mall in Costa Mesa, Spanish classes and the complex’s cafes and restaurant – falls to Associa.

The company, through affiliate Desert Resort Management, also manages complexes like Sagewood condominiums in Palm Springs and the Outdoor Resort RV community in Indio.

In an email to The Desert Sun, Associa said it intends to cooperate with the investigation into Sun City Shadow Hills.

“Our staff discovered financial discrepancies caused by a former employee at the community,” said Andrew S. Fortin, an Associa spokesperson. “This matter was reported to the board of directors. We continue to cooperate with the board and the authorities in the investigation to help ensure this is prosecuted to the fullest extent of the law.”

Kim Fuller, president of Sun City Shadow Hills' board of directors, declined to comment when reached by phone last week.

Shady times at Sun City Shadow Hills
Sun City Shadow Hills has a history of resident unrest.

The developer Del Webb started construction on the 700 acres that would become Sun City Shadow Hills in 2003. The first houses opened the following year.

The community is the second of three Del Webb age-restricted projects in the desert, each pitched at "today’s active baby boomer." Before Sun City Shadow Hills, Del Webb developed Sun City Palm Desert. Earlier this fall, it broke ground on a 1,000-home development in Rancho Mirage. (Sun City Palm Desert is not managed by Associa.)

But Sun City Shadow Hills homeowners have been vocal about their grievances against Associa.

In a 2013 article, homeowners bemoaned onerous speeding tickets, a costly expansion of the Shadows Restaurant and what they see as a general lack of transparency on the part of Associa.

Today, residents swap information at scshneighbors.com or on Facebook, commenting on the financial audit and regular budget meetings.

"If homeowners are apathetic, and do not make their concerns known, then things can never be expected to change for the better, as it requires significant numbers to achieve change," wrote one homeowner, Robert L. Israel, in a Facebook post.

The view from 'The View'
Among the services provided to Sun City Shadow Hills residents is The View, a monthly magazine with a mix of commentaries about Associa staff members, write-ups about homeowners and public service announcements.

The November issue of the magazine profiles one resident's woodworking hobby. It reminds neighbors about the annual collections for Toys-for-Tots. It previews a performance of the play Steel Magnolias by the SCSH Performing Arts Club.

A glance at financial documents included in the magazine shows that Sun City Shadow Hills was $425,000 in the black for the first seven months of 2017, though its golf course and restaurants lost money – about $592,000 combined.

The View does not mention a series of emails, going back to August, in which Associa alerted the complex's homeowners to a “financial discrepancy” in its records.

On Aug. 23, the HOA board of directors sent a short email with a statement from Associa.
“Through the use of our internal accounting controls, we discovered a financial discrepancy in the books of Sun City Shadow Hills,” the email statement from Associa read. “We promptly notified the Board, terminated the employee and are working with the Board to ensure the Association is made whole financially and a full accounting is provided.”

Neither the Sun City Shadow Hills HOA nor Associa and its local affiliates have identified the name or names of employees involved.

“Any names that are rumored to be involved is pure speculation,” the board wrote in its Oct. 18 note. “At the advice of legal counsel, the Board cannot disclose the persons involved in the fraud but will keep the homeowners informed of all information when available for release to the public.”

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