The former treasurer of a condominium association located in the Capitol Hill neighborhood of Seattle was recently charged with felony theft after he allegedly stole more than $80,000 in common funds. The former treasurer apparently wrote dozens of checks to himself using the association’s account. He then fled to California. Local prosecutors are now attempting to bring him back to Washington to stand trial.
The last year has seen a marked increase in news stories and industry concern about theft committed by association board members. A recent national conference of community association lawyers included a very well-attended seminar called “Keep Fraud’s Ugly Head Out of Your Community Association”. The current Community Associations Network newsletter includes five different stories about embezzlement of association funds. This threat is real and should be taken seriously.
There are many ways to prevent fraud or minimize the impact of fraud if it ever arises. First, associations should obtain annual audits of their finances by an independent third party. Second, associations should require two board members to sign association checks. Third, associations should ask their banks to provide statements to a board member that is not involved in maintaining its financial records. Fourth, requests for reimbursement by board members should be scrutinized to ensure that they are legitimate. Finally, associations should consider obtaining fidelity bonds to insulate them from embezzlement that slips through the cracks.
The last year has seen a marked increase in news stories and industry concern about theft committed by association board members. A recent national conference of community association lawyers included a very well-attended seminar called “Keep Fraud’s Ugly Head Out of Your Community Association”. The current Community Associations Network newsletter includes five different stories about embezzlement of association funds. This threat is real and should be taken seriously.
There are many ways to prevent fraud or minimize the impact of fraud if it ever arises. First, associations should obtain annual audits of their finances by an independent third party. Second, associations should require two board members to sign association checks. Third, associations should ask their banks to provide statements to a board member that is not involved in maintaining its financial records. Fourth, requests for reimbursement by board members should be scrutinized to ensure that they are legitimate. Finally, associations should consider obtaining fidelity bonds to insulate them from embezzlement that slips through the cracks.
