Q: If a HOA president is spending the HOA's money with no permission and using it for personal expenses, is it illegal?
I have already had an attorney confirm for me that the state laws and the HOA's declaration both require them to get the permission and approval of the board members before they can ever spend any HOA money. They also have to provide information like the reciepts and copies of checks but they refuse to do any of these things. They say that any state laws and the HOA's declaration are just optional suggestions so they can do whatever they want. They are also buying gas for their cars and paying for other personal expenses with HOA money. Should I report this to law enforcement?
A:
Thank you for your question and really shocking set of facts. You have described the essence of embezzlement - the theft of money from an employer or business (or non-profit).
I suggest you put together an organized time line of what you know, with any financial records you can include, and file a complaint with your local police or sheriff's office, depending on whether your HOA is in a city or county. Or, the very least, these thefts of HOA funds should be brought to the attention of the HOA immediately, and action requested.
Good luck with this - unfortunately, this is far from the first time I have heard of this. I once helped someone where the manager embezzled $11,000. And two managers ago, the manager of my own WA HOA used her business credit card to buy $12,000 in gifts for staff - perhaps a nice thought, but she had no authority to do this. When she was was fired, she tried to keep her HOA laptop until she was threatened with a police report.
Going forward, it's important to do a deep background check on any and all employees the HOA hires, and to limit the amount of money that can be spent using HOA funds, and guidelines should be clearly written into any employee's contract into how/what/why an employee can spend money. (Background checks should be completed on all Board members, too). There should be rules about two Board members signing checks over a certain amount, such as $500.
I think your HOA Board is partly responsible in this instance - it sounds as though they didn't fulfill their fiduciary duties toward the HOA and its members.
It's conceivable that the HOA insurance will reimburse the HOA for the manager's thefts, but highly unlikely.
Good luck, and, again, so sorry to hear about this!
Merry
keypeninsulalaw.com
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