HOAs in the Media: Scandals Affecting Community Associations in 2014

Posted by Andrea Drennen, CMCA on February 6, 2015

hoa-scandals-2014

We work hard to keep the TOPS CAM Blog a positive place where we can talk about issues affecting the community association management industry without resorting to the scandalous news about community associations that tends to make it into mass media.

But there is no mistaking the fact that when community associations make it into the news, it's almost always in a negative light. Studying these events can teach us how to make sure we don't repeat the events of the past, and help us learn how to do a better job of creating community instead of creating discord.

That is why, each year, we bring you a list of the scandals that rocked the community association management industry in the previous year. (Here is the list from 2013 and the list from 2012)

  1. While HOA fruad cases persist across the country, Vegas wins the title for biggest scam
    I've been following this case in Nevada for over a year now, and it's big enough and interesting enough that even Olivia Pope would be hard pressed to make this one go away. And yet, it went on under the noses of everyone, even the HOAs being scammed, for over 6 years! Here's what happened:

    Leon Benzer, a Las Vegas construction company owner saw a lot of money coming to other construction companies as a result of funds won from developers in lawsuits over construction defects. Wanting to get in on that action, he and his girlfriend, Nancy Quon (who was a construction defect attorney) cooked up an elaborate scheme.

    First, under a straw company, they obtained $2 million in loans, which they gave to other conspirators to fund the purchase of homes in 11 Nevada community associations. The new 'homeowners' then worked together to oust the existing board members and get themselves elected to the board of directors. The new boards would then hire Quon to sue for construction defects in the community. Once a settlement had been achieved, the boards would award a lucrative construction contract to Benzer's firm (Silver Linings Construction - guess the only lining was to his pocket) to 'fix' the nonexistent defects. The construction work was either not done at all, or very poorly done, and Benzer pocketed the bulk of the funds.

    The scheme ran from 2003 to 2009 when the FBI and Justice Department made criminal charges. Since then, even more crazy aspects of this scheme have been revealed, from mob ties to bribery, and even beating up relatives of those who wouldn't cooperate. Two of those involved have committed suicide, and 36 people have pled guilty, including Benzer.

    We'll have to wait until October for sentencing, but it looks like this massive case is finally coming to a close. (Maybe now would be a great time to recommend this case for the next season of Serial?)

  2. Fires plague Condo and Town-home Associations across America
    From wildfires to condo fires, nothing is quite as devastating. 2014 seemed to be the year of the fires, with hundreds of fires being reported in community associations across the country. (There were far too many to link. Check out the big list here.)  While the causes of many of these vary, some of the reasons are particularly scary, such as the serial arsonist who killed 2 in South Carolina, and the arsonist in California who set 5 fires in his condo complex because he was upset about being evicted.

    Perhaps the most disturbing was not one but two cases in which board presidents were targeted by disgruntled homeowners. In one case, the board president had spearheaded a recent crackdown on crime, and shortly thereafter, caught vandals on camera setting fire to her Georgia home. Things were no better farther north, where a Toronto board president was having a dispute with some homeowners over fees. His condo was fire bombed in the middle of the night while he and his wife were sleeping. Luckily, they are OK, but the condo, not so much.

    If fire is a concern for your association, perhaps you should take a page from some of these community associations who have been implementing new ways to combat fires, from installing sprinkler systems to planting fire retardant landscaping to the slightly less traditional goat herd fire prevention system.

  3. Thieves go old-skool with mail fraud
    Maybe you've heard the one about the major stores (Target, Home Depot, Neiman Marcus and more) experiencing massive credit card data thefts in 2014, but there were some low-tech thefts that were happening in community associations last year as well. A new breed of identity thieves are getting directly to homeowners' mail, and the homeowners may not even realize it. And identity theft wasn't the only reason thieves hit condo mailboxes - some of them used them to go Christmas shopping.

  4. Community Associations say no to short term rentals like Airbnb and VRBO
    Homeowners around the world are finding a new way to subsidize mortgage and insurance rates by renting out part or all of their home to vacationers around the world through sharing apps like  airbnb and Vacation Rentals by Owner. Unfortunately, these short term rentals are not as appealing to the community associations who govern the homes, as they can lead to a whole range of problems for the entire neighborhood. (not to mention a really big fine!)

  5. Comfort/therapy animals cause community associations to raise a big stink
    Condos and HOAs are running into more and more bad press these days for disputes over emotional support animals. Whether it be the standard man's best friend, ducks or a pig, homeowners are fighting tooth and claw for their beloved compainions. On the other side, you have the rest of the community, who voted to live in a pet-free zone, only to have forced exposure to animals. Maybe HOAs should take a page from this airline. (And hey, if you really do need a service animal, maybe a nudist community isn't the best choice to move to?)

Aside from making for a salacious gossip item, a scandal can bring into light an instance of wrong-doing or injustice, but it can also damage reputations of both the guilty and the innocent. Sometimes, the best thing we can do to avoid the negative attention is to simply be polite, and fair to all. And hire a good lawyer…just in case...

 

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