Community Embezzlement Case Studies – Illinois
In our series of blog posts titled: “Association Greed – Board Members, Managers & Missing Money” we highlight wrongdoing by community association managers and board members. In this installment: Community Embezzlement Case Studies – Illinois, we go over the facts of the crime and how you can prevent it at your community.
The following cases are examples of what can happen when a condo board chooses the wrong management firm or when it does not have a specialist condo bookkeeper help with the financial management which can result in one of its own officers abusing his or her responsibilities.
HOA Board Membership Provides Opportunity for $150,000 Crime
A system of checks and balances is essential in assuring that members of a board of directors of a homeowners association do not abuse their responsibilities in overseeing the financial operations of their communities.
When law authorities were told that $150,000 was missing in 2014 from a New Lenox condominium association’s bank account, their first task was to interview the board members.
What followed in the investigation into the theft from the Windermere West Homeowner’s Association was a criminal complaint filed against Robert L. Dorosz, former President of the Windermere West III Condominium Association.
Will County records show that Dorosz, who was indicted by a grand jury in May of 2014, started embezzling funds in January 2007 from the association, which was founded in September, 1990.
Though Dorosz at the time said his home address was 1015 Southgate Road in Windermere West, he was homeless when he was arrested, according Will County jail records. [The New Lenox Patch provided information for this blog item].
How to prevent at your community: The easiest way to prevent this is if the entire board received bank statements. They would have seen their balances were going down. Another helpful tool is to get a bank reconciliation report that reconciles your bank accounts to the rest of your financial statements. If this report shows a discrepancy then you know you have an issue to investigate.
Waterloo Homeowners’ Association (HOA) Missing More Than $73,000
The theft of more than $73,000 between 2010 and 2016 from a homeowners association in Waterloo left its residents reeling.
Working with the management board of the Station West Homeowners Association, local police arrested Emily Brand, of 20 Station West in February on a Monroe County arrest warrant.
The money was part of the monthly dues paid by association members for upkeep of the complex, built in 1985.
Brand, who was a board member of the association, got unauthorized control of $73,492.81 in association funds from March 2010 and December 2016, according to Monroe County court records.
She was charged with felony intent (control/intent) and waived a preliminary hearing in March. The case was continued to the next jury docket call later in September 2018. [The Republic-Times of Monroe County provided information for this blog item].
How to prevent at your community: Again if the entire board received bank statements with their financial reports – hopefully monthly – they could have spotted any fraudulent withdrawals. Even better is to work with a bank that provides the ability for the entire board to view bank accounts online. This feature allows boards to see all and run bank statements for prior periods.
Chicago-Area Community Manager Charged with Theft of $50,000
Homeowners’ association board members do more than approve the installation of a new roof or repair of a sidewalk. They also are responsible for the periodic overview of their management company’s staff activities.
When members of a Park Ridge condominium association realized that $50,000 was missing from the organization’s bank account this year, they contacted Park Ridge police, who conducted an investigation and soon found a suspect.
They arrested Andrew S., property manager of the Hidden Court condominium complex, on May 25 while he was at the Cook County Courthouse in Skokie. The embezzlement from the complex, located at the 1000 Block of North Northwest Highway, occurred over 18 months, ending on Nov. 30, 2017, according to police.
Andrew was the operator of a full-service real estate management company that he founded in 2013, according to a listing he placed on Yelp. Clients include community associations and real estate investment trusts.
Andrew a Buffalo Grove resident, was charged with theft, said police. [The Journals & Topics, serving the northwest Chicago suburbs, and the Community Associations Network, provided information for this blog item].
How to prevent at your community: Once again the simplest way to prevent fraud is to get a copy of the bank statements with your monthly financial report package. Another tool is to get a comparative income and expense report that shows any variances from your budget. A variance is a good conversation starter. At your board meeting ask why this expense is greater than what was budgeted and then dig deeper.
As always, the best way to learn these lessons is from another board’s mistakes. We hope these three case studies motivate you to take the outlined preventative steps to save your association money and a lot of grief.
