EXCLUSIVE: Saparn Realty Executive Charged with Grand Larceny

In the wake of this news, co-op and condo boards need to take several steps, according to Marcie Waterman Murray, a partner in the law firm Tane, Waterman & Wurtzel.

First, if your building is managed by Saparn, you should contact the company, check on your account and ask how this incident will affect your building. Even with a presumption of innocence, Waterman Murray says it probably makes sense to search for a new management company.

Second, call in an accountant to review your building's records. A preliminary forensic accounting report will probably cost around $5,000, says Mindy Eisenberg Stark, a certified fraud examiner at her namesake firm, while a complete report could cost between $5,000 and $30,000. Stark, who performs many forensic audits, notes the difference between today's arrest and previous rounds of management indictments. "The two previous rounds were off-the-books fraud." she says, "In the current climate it's money moving through bank accounts, and in most cases, could have been seen."

Thirdly, review your insurance coverage. Most co-ops and condos carry dishonesty coverage, and you need to check on the amounts covered. According to Murray, dishonesty coverage held only by a property management firm does not cover the principals of the firm, only their employees. So it's very important, she says, to take a look at the terms of your own building's policy. 

And finally, she reminds condo and co-op boards, you must be an overseer of your management company. Monthly management reports should contain original bank statements — not copies — and your board treasurer must be reviewing these for any signs of unusual activity. Additionally, she advises, at least two officers, the treasurer and the president, should be signatories to all bank and investment accounts.

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