Defrauded HOAs See Bank Accounts – 23 Were Closed

Out of 90 HOA bank accounts involved in alleged property-management fraud, 23 were previously closed, and 67 had balances ranging from $180K to zero.

NAPLES, Fla. – Nearly two dozen bank accounts belonging to Collier and Lee community associations suing their property manager for fraud have been closed, which means the manager emptied those accounts, the associations’ lawyer said.

Wells Fargo Bank filed the account balances in a court-ordered document last week showing funds as of March 14 in 67 accounts.

But the records list 90 accounts, and Wells Fargo confirmed in the documents that 23 accounts are closed. Of the 67 accounts that remain open, balances range from zero to $180,000; some communities have multiple accounts. One of the open accounts is earmarked for the property management company itself, American Property Management Services; that account contains $51,532.77.

The 35 condominium and homeowner community associations in January sued Naples-based APMS claiming the company and its owners committed fraud with community-owned funds.

The suit claims APMS hijacked bank accounts used to hold community operating and reserve funds in what the associations’ attorney has described as a multimillion-dollar embezzlement scheme. APMS has denied the allegations, claiming in court filings that the associations were aware and approved of its actions.

The complaint claims APMS and/or co-owner Orlando Miserandino Ortiz placed funds in an account at Wells Fargo that only he could access, preventing the associations from making an accounting of their funds or accessing the money, unlawfully took sole control of the Wells Fargo accounts and wrongfully or unlawfully transferred association funds for its own use.

According to the lawsuit, Ortiz directed association officials to sign signature cards for the bank accounts but never submitted them to the bank, effectively preventing association officials from obtaining information on their accounts.

The communities are also trying to get further information about the accounts including banking statements, which they have not been able to see.

“They will not release the bank statements to the associations without a protective order to keep them confidential,” said attorney Jason Mikes, who is representing the 35 communities. “Problem is that associations are like quasi-governmental entities that by law must be transparent and provide the right to inspect and copy all records to members. Therefore, they cannot keep anything secret or confidential. I’m not sure why Wells Fargo wants secrecy.”

Even if association representatives get a look at accounts statements, they still can’t access funds because they were never listed as signatories and a temporary restraining order froze the accounts under the lawsuit.

One condo association account at nearly zero

The Royal Bay Villas Condo Association is missing about $600,000 from its operating fund, association president Laura Rigsby said in an interview. The reserve account was drained down to basically nothing, she said.

“I’m working on calculations now. We need our real bank statements desperately.”

Rigsby said that once the Wells Fargo link activates, Royal Bay will be able to see what was taken. In the meantime, all they’ve had to go on is information provided by APMS.

“We believe any of the statements he provided are fraudulent. But we don’t know that yet,” she said.

Access to the communities’ bank statements is critical, Rigsby said, so the communities can be compensated through their fiduciary insurance.

“Right now we’re kind of stuck to prove loss. We have to have those statements,” she said. “We’re in a holding pattern. We opened a claim (with the insurance company). They require a lot of information. We’re getting there.”

Rigsby said Royal Bay has kept in communication with residents at its 92 units about APMS.

“We have our own community website and we encourage everyone to sign up for communication,” she said.

The account balance information released Thursday by Wells Fargo showed Royal Bay Villas had slightly more than $89,000 in the community’s operating account and a few pennies more than $105 in its reserve account.

The 23 “closed accounts were emptied by American Property Management Services,” said Mikes, the associations’ attorney. “Clients are calculating and sending in the losses now.”

Some communities have had to resort to opening lines of credit with other local banks or to levy special assessments to pay vendors such as lawn maintenance and pool companies.

“We just invoked a special assessment,” Rigsby said. “We have to pay the bills.”

Wells Fargo confirmed that the bank will provide a link for community representatives. An official said the bank was following Collier County Court rulings.

“We are in the process of complying with the court order, which we need in order to provide the information that the plaintiffs are seeking,” said Gabriel H. Boehmer, senior vice president for Wells Fargo Commercial Banking Communications.

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