What can condo, homeowner associations do to prevent possible fraud activities?

Michael Braun, Naples Daily News
·2 min read

With potentially millions of dollars at risk, Collier and Lee counties community associations have a very vested interest in monitoring their property management companies.

At least 30 condo associations in Collier County are deep into forensic audits after news that their management company, American Property Management Services of Naples, is facing a $100,000 civil suit claiming fraud, breach of contract and embezzlement.

Many believe the fraud is spread far beyond one association, which was left with $10 in an account.

Collier County: Community files suit, claims fraud, embezzlement by property management company

Related: Response awaited from Collier property management company alleged in multi-community fraud

An attorney for some of the Collier County condo and homeowner associations offered suggestions on how communities can protect themselves.

Naples attorney Jason Hamilton Mikes suggests:

  • Buy insurance in sufficient amounts to cover all funds that the association has in its various accounts: operating, reserve and investment. Types of insurance would include crimes, cybercrime, employee theft, and directors and officers liability insurance. Ask your insurance agent what other coverage might be available.

  • It's ok to trust your management company and the vendors they refer to you, but be sure to have direct relationships with those vendors. Have frequent direct contact with your bankers, accountants, lawyers, insurance agents, and others.

  • If your association pursues legal action, stay in direct contact with your lawyer. If the association pursues insurance claims, make sure you are in direct contact with your agent and the claim representative, and/or adjuster.

  • Verify who is authorized to have access to association information, documentation, and accounts. Ask that multiple signors be required to withdraw or transfer money, or make changes to accounts, agreements, or policies.

  • Frequently (once a week at least) check the association’s accounts to ensure all of the money is where it should be and that there are no suspicious debits or credits.

  • Don’t allow one person to have online access to bank accounts with the ability to withdraw funds or make transfers.

  • Don’t allow debit or credit cards in the name of the association.

  • Don’t allow too many years to pass without having your association’s financial records audited by an independent certified public accountaint.

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This article originally appeared on Naples Daily News: Things condominium and homeowner associations can do to thwart fraud