A Tale of Deceit and Theft In a Condo…Part 1 of a 3 part series

Written by Mitchell Drimmer on . Posted in Uncategorized

Gonif Condo Association is a pretty nice place to live. It has 150 residential units and sits right on the oceanfront in Florida with some lovely amenities (pool, club room, front desk service and more). In Gonif Condominium lived three friends, Tim an engineer who was the President of the board, Joe who was an accountant and Rita a licensed Real Estate Sales associate. The board had only three members so when two of them resigned Tim (the board president) appointed Joe and Rita to serve on the board of directors with him. This did not bode well for the condo.

Gonif Condo Association had 3 units that were apparently abandoned and 10 units that were seriously delinquent. They also had a relatively competent management company that ran the condo and the manager was on site three times a week. About two years ago the board decided to have their attorney foreclose and take title to the delinquent units so that they could rent them out and recover the shortfall of money from the delinquent owners. By the time Rita and Joe joined the board the association had title to the ten units but none of them were rented out and the three abandoned units were sitting there accumulating mold.

The first thing that the newly constituted board of directors did was to fire the management company and take the association “self-managed.” The logic was that the board of directors could do everything that the management company was doing and save a ton of money so that they could keep the maintenance fees low at $300.00 per month. At a properly noticed board of directors meeting that only was attended by two members of the association Tim, Joe and Rita unanimously voted to fire the management company and effectively took control over the entire association.

After the legally noticed meeting the new board then met in Rita’s apartment and over a couple of bottles of Merlot devised a plan that would unjustly enrich themselves at the cost of the condominium and it’s members. After all they were in charge, would be doing all the work and deserved to be compensated a few dollars for their efforts.

Tim, Joe and Rita opened up their own company with a new bank account, and Rita being a real estate sales associate, promptly listed the ten units that the building had foreclosed upon for rent. The new company was called Gonif Rentals and the ten apartments were rented out promptly at a slightly below market rental price of $1,200.00 per month. That was $12,000.00 per month that was being paid to and deposited into the bank account of Gonif Rentals (all for the benefit of Tim, Joe and Rita only…Not a cent to Gonif Condominium Association. Business was so good that Tim, Joe and Rita drilled the locks, entered the abandoned units, invested some of their ill-gotten gains into rehabbing the three abandoned units and rented them out too. Next thing you know Gonif Rentals is now taking in $15,600.00 a month and being such good citizens they are even paying the association all of the maintenance fees ($300.00 per month per unit) for a cool profit of $11,700.00 per month or $140,400.00 per year. Nice work if you can get it.

How many laws have been broken here and what were they? What went wrong and how could have this been prevented. Please give me your comments, and in my next installment of “ A Tale Of Deceit And Theft ” lets see how this series of wrongdoings could have been prevented , detected and addressed by the good paying owners in the condo.

Mitchell Drimmer

Mitch Drimmer and SNAP Collections by Association Financial Services have become synonymous with collections success for community associations. SNAP Collections by AFS has grown to be a national company offering its services nationally. Mitch is a licensed community association manager, real estate broker, and has three collection certifications from various industry organizations. Mitch is on the advisory board of Florida Community Association Professionals (FCAP), a content provider for the FCAP educational program, and frequently writes articles for various publications dealing with issues in community associations.