Board of Directors Misappropriating Assoc Funds
Our HOA Board of Directors has been caught using Assoc funds for their personal use and willfully deceiving owners by including in the official board meeting minutes motions to approve the reimbursements of the misappropriated funds to specific board members by falsifying the reason and/or not including any reason for the reimbursement from assoc funds. while reviewing the board’s meeting minutes, I found these reimbursements very questionable and I sent a written request to the board president and the management co., per the CCR’s and AZ statute, requesting copies of the assoc source documents (receipts) for the specific reimbursements. Initially, I was told that it was bad timing because they were changing management co. I responded that they were required to provide the copies within 10 days. I was then informed that I would have them within the 10 days. After multiple emails to them requesting the status of the copies, I was repeatedly informed by the management co that the documents cannot be located. The last response I was given was that my email would be forwarded to the board of directors. It’s been 6 mos and I have not ever received a written response from the board of directors, nor have I received the copies of the requested source documents. During the open session at the annual member meeting in Jan, I asked the board again why I have not received the copies of the requested documents and what was the reason for the disbursements. A board member verbally replied that the expenses were for a dinner that the board paid for themselves because they were volunteers and worked hard and they deserved to use assoc funds for a dinner for themselves. This is a complete violation of the CCR’s and AZ state statute. In addition, they knew they were violating the rules & regs and chose to cover it up by providing false information in the board meeting minutes.
And, prior to this annual meeting, a different board member verbally told some owners after a board meeting that the assoc funds were used to send flowers to the community manager because her mother died. The entire board is in violation of misappropriating assoc funds and deceiving the assoc owners. What can I or all the owners do in this case? How do we get the board to resign or force them out? Thank you!
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Denise,
The association violated the law by now providing the requested records within 10 days. Additionally, your articles of incorporation will have a provision that states that association funds cannot be used to the benefit of any individual member. Both the dinners and flowers violated that governing document. I would suspect that your CC&R’s and bylaws also have provisions that ban such actions. Get the facts and any records or receipts that the association provides along with the minutes of the meeting where the expenditures were authorized. If you want to hold the association board accountable to the law and the governing documents, then you can file a petition to the Dept of Real Estate claiming the violation of the state records request laws and the violation of the governing documents.
I would first bring the issue up before the board in an open meeting and inform the board they that they can either resign or you will file the petition for the clear violation of Arizona Law and the governing documents and to pay your filing fees and any fines the administrative law judge choses to assess them. This has to be at an open meeting that you invite as many homeowners as possible, that you know too, so that the community knows what the board has done. While it sounds innocent it is embezzlement and misappropriation of association funds which could result in criminal charges against the board members individually.
If you do not want to pursue the petition to ADRE then your only recourse is to circulate a petition for a special meeting of the members for the purpose of recalling the entire board. You will need the signatures of 25% of the eligible votes in the community for that special meeting.
Dennis
Thank you!