Co-op / Condo Embezzlement: Latest Scams, Timeless Lessons
J uly 9, 2010 — For ever spectacular story of co-op or condo board members stealthily stealing from their building — who can forget the case of Andrew Kissel, who embezzled $3.9 million while treasurer of 200 East 74th Street in Manhattan from 1995 to 2002 and was later found murdered? — there are plenty of tales of much more everyday theft. They're not confined to New York City luxury high-rises by any means. And around the country, "ingenious" embezzlers are finding new ways and variations on old ways to try to defraud their co-ops and their condo associations. Here are a recent few.
• Topping the charts is the case of now-former treasurer who apparently didn't even try to set up dummy companies, forge documents or otherwise cover his tracks. Did he just think no one would notice? Not quite.
Edward M. Richards, 55, of the 19-unit, self-managed Hillcrest Village condo complex in East Bridgewater, Mass., allegedly didn't pay landscaping, paving and garbage-carting companies some $102,000, according to charges handed down early this month. That's it. That was the alleged scheme: Just don't pay and keep the money yourself. Yeah, that'll work.
And for quite a while, it appears, it apparently did. How? Well, Richards was the only person handling money for the condo association — never a good idea. And according to published reports, the perpetrator wasn't necessarily thinking no one would notice — Hillcrest trustees simply avoided confronting anyone about missed payments and outstanding balances.
Lesson: Require double signatures on expenses over a certain amount, reconcile your invoices and disbursements every month and don't be shy about confronting another board member with your suspicions. Diplomatically, of course, but assertively.
• A woman from fabled Kitty Hawk, N.C., who was property manager of a homeowner's association in nearby Corolla, wasn't flying so high on July 6 when she was sentenced to 35 months in federal prison for embezzling $861,819.42 from December 2003 through 2008.
Alisha Bittle, 45, who'd pleaded guilty in April after being indicted the month before, handled all the finances for the of Buck Island Homeowner's Association. Her duties included collecting homeowner dues, compiling financial reports and ordering things like lawn and pool supplies, according to a press release from the local U.S. Attorney's office.
How did she manage to steal nearly a million dollars over the course of some four years? Ridiculously easily: She issued checks to herself or to businesses for personal expenses, used the business credit card for personal purchases and took money directly from the business account for personal use. Another criminal mastermind.
Lesson: Read your bank statements more than once every four years. And, as in the case above, don't put all your financial dealings into a single person's hands.
• Habitat wrote about this previously, but it's worth a quick mention: The former treasurer of a nine-building Westchester County co-op complex was arrested this past April and charged with embezzling over $181,000 between December 2007 and April 2008. Co-op treasurer Mary Mancuso, 52, allegedly stole the money from the Vernon Woods Apartments in Mount Vernon, N.Y. Her case has yet to be tried. It took over a year for the co-op board to investigate the missing funds — prompting some residents to accuse the board of collusion or mismanagement.
Lesson: Don't collude or mismanage. And if you haven't done those things and it simply takes months for an embezzlement pattern to emerge, don't wait a year to do something about it.
• North Wildwood, N.J., was a little wilder than usual in March, when a condo association president's fortunes went south. Anne Marie Kelly, 52, who headed the board of The Lodge Condominiums, made a plea deal in which she admitted guilty to third-degree theft for writing checks from the association's bank account for personal use.
She blamed poor bookkeeping on her part, and not theft, for the $51,500 removed from January 2006 through June 2007. That's a lot of bad bookkeeping.
Lesson: Use a bookkeeper. They're usually called "the board treasurer." Just don't hand him or her the only keys to the vault, as see our previous stories above.
• And, finally, we have a actual Law & Order kind of case. On April 4, 2008, Queens D.A. Richard A. Brown charged 40-year-old Indira Lall-Walinski — a bookkeeper ironically — with embezzling nearly a half-million dollars from the two condominium associations she worked for: $462,705.70 from the Elmhurst Gardens and $11,805.29 from Queens Boulevard Towers. The managing agent discovered the missing after Lall-Walinski left her position in June 2007.
According to Brown, the bookkeeper wired money from the condos' operating accounts to her personal bank accounts. She also photocopied checks, made the real checks out to herself and made the photocopies out to the condos' contractors. Listen for the chimes: BOM-BOM.
Lesson: Don't presume that a professional is any less prone to temptation than an unpaid board member. And don't watch too much TV.
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