Category Archives: embezzle

A Mini-Love Canal in a Pennsylvania HOA

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guest blog by Andy Ostrowski (former PA Congressional Candidate)

The Wilson School District was going to purchase a tract of land adjacent to the Hidden Valley condominium. They are both part of the same parcel in the “Lincoln Park” area of West Lawn, Spring Township, Berks County, Pennsylvania. Ironically, you cannot even find the Hidden Valley Condominiums at 1334 West Wyomissing Boulevard address on google maps – it is hidden, indeed. Google map it.

The School District did not go through on the purchase because battery waste was found on the property. The owner of that property, Al Barg, who was also once a President of the Hidden Valley Condominium Owners’ Association, and an owner of several units at Hidden Valley, then sold the property to Weiner Development, which, it is my understanding, is affiliated with Pinnacle Development. In the mid-2000s, Pinnacle constructed Penn’s Crossing on the property, which is a low income retirement apartment building containing 52 units.

The land upon which both are built has been referred to by one Environmental Protection Agency representative as “The Love Canal,” except for the amount of waste involved, which became the subject of national attention when the presence of toxic waste on that site was revealed in the 1970s, after having been concealed for decades. Accordingly, at least the 26 unit owners at the Hidden Valley Condominium, and the 52-plus residents at Penn’s Crossing may be living on contaminated land.

There were two fires at Hidden Valley, one in 1999 and one in 2011, both of which are believed to be electrical in origin. The one in 1999 affected 6 to 8 units. The 2011 fire resulted in the death of one of the residents, after over 80% of his body was burned. Although the Pennsylvania State Police are supposed to have exclusive jurisdiction in the investigation of fires resulting in injuries and death, the Township of Spring Fire Marshall did a report labeling the cause of the fire as “undetermined.” There was allegedly a statement made by the man who died, and a photograph of the burnt inside of an electrical box that were not mentioned in the report.

During my campaign, I began to be contacted by many people from across the country who are residents of Homeowner’s Associations (HOAs), with all manner of horror stories about their experiences. I see these as being core civil rights issues – affecting the very essence of people’s lives – the right to live and raise families in safe, secure, peaceable homes. I wrote a couple pieces about my view of these constitutional issues, i.e., the usurpation of basic government functions, by these private entities, who rely on their money for access and control of legislative initiatives, and their access to the courts, and posted them on my campaign site.

I met a woman who bought a unit at Hidden Valley when she was 26 years old – in 1999. She worked on my campaign. Hers was one of the units affected by the 1999 fire – the bottom, left unit of the building, for those who have seen the photos on http://hiddenvalleyhiddentruths.webs.com/. I learned much more about the situation, and the fifteen years of litigation in which this homeowner had been involved. I will cover more of that story down the road, but the bottom line is that, despite the clear, unequivocal proof of the deplorable conditions of that building, and the failure of the HVCOA and Township of Spring to do and/or enforce the proper repairs, nothing was done. Instead, the litigation turned into a years-long assault on the character and person of the homeowner.

I note that this particular homeowner has shown a character, resolve, and moral fiber that is possessed by only the rarest of breeds of people in this world. She realized what she had come upon, and the number of people who were at risk because of what she learned, and she has fought, against all odds, on the principles involved in this situation – all over a $40,000, 800 square foot condo. As you learn more about this, and as I continue to reveal more of the truths that have been, and continue to be, hidden, ask yourselves “would I have done what this homeowner did? Do I have that strength?”

After relying on lawyers, and getting mistreated by them, for years, the homeowner lost her trial in the Berks County Court. How? Why? This will be another facet of the story along the lines of what I have discussed for the past few years about problems in the courts. More to be revealed. I note that the EPA representative did tell her it was “political,” and he, along with almost all others along the way, told her to “just sell the unit,” i.e., don’t disclose these known hazardous conditions, and put others in harm’s way, and try to move on with your life, and live in peace. She was actually told to get out of the state, or even the country (why would he suggest Belize?).

Not just this, but she was told to “just get out,” “they want you to have a fire and burn the fuck up,” and many frightening, intriguing things along these lines, like turning over a stack of documents containing information about environmental contamination, insurance fraud, and sundry other misconduct, and warning her that “once I turn over these documents, there is no backing out. You must go all the way now, and I will be killed if they find out.” There are two dead former HVCOA Board members. This one, and the one who burned in the 2011 fire, who also was allegedly about to blow the whistle on the HVCOA. More to be revealed.

After she lost her court case in 2009, and had her lawyer mishandle her appeals, and commit egregious malpractice (or deliberate malfeasance), she did not go away. She continued to fight. She continued on her own, with just a few trusted friends along the way, to gather evidence, talk to witnesses, and fight the fight that her heart and conscience motivated her to fight. It was a truly remarkable effort by a truly remarkable person. Again, more to be revealed.

After years of relying on lawyers, not finding anyone who would go down to this property, having her proof cut off at trial, having her personal work product stolen by her own attorneys, being denied any access to justice, and being followed, defamed, harassed, and abused all along, she did finally find a highly-credentialed structural engineer to do a report on the property.

That report was finalized on February 5, 2015. That report confirms everything this homeowner has said all along. That report talks about severe moisture infiltration, subsurface conditions, fire hazards, an entire electrical system in need of evaluation, needed environmental testing, suspicious missing documentation for the Department of Labor and Industry, changed documents, the battery acid meeting minutes, a reference by our EPA friend to this place as a “contaminated condo,” and the fact that “major demolition” is needed to even do any type of full and proper investigation.

On Monday, February 23, 2015, I attended a Spring Township Board of Supervisors meeting with Stephen Runyeon, a friend, and loyal supporter, of the homeowner (more to be revealed). Stephen presented the report and some other information to the Board of Supervisors who, at least in the past, had ample and abundant knowledge of the problems at the Hidden Valley. Stephen did so in a very professional and appropriate manner, supporting the homeowner’s contentions all along. (A Board member communicated that the HVCOA got their lawyer through the Township – more to be revealed). He made a passionate appeal that the Board of Supervisors perform their public duties, and enforce appropriate action to have these issues properly addressed, and to protect the residents of Spring Township who are in harm’s way.

I got up after Stephen, and talked directly about the people in harm’s way, and my motivations in taking an interest in this case, and the extent of the information about the contamination issues, and the HOA issues implicated by this situation, and the problems that occur when government functions are ceded to private, corrupt, money-driven entities. I also asked that this place be condemned, and that steps be taken immediately to address the safety and security of the people at Hidden Valley, at Penn’s Crossing, and in Lincoln Park, where two elementary schools were recently torn down for some vague reason, one specifically on an adjacent tract of land.

Upon advisement, the homeowner did not attend, citing the history of abuse and defamation, and the recent information she learned from her EPA contact after discussions with Township officials that “they” wanted a “pound of flesh” from her, that she would not get off “scot-free” (completely free from obligation, harm, or penalty), among continuing defamatory remarks.

Interestingly, and very sadly, she was also told by this EPA representative that she should just put Hondurans, or Mexicans, or some other people in her unit who would be used to those conditions, and would just be happy to have a roof over their head. Of course, this is unacceptable to this homeowner, as she has always been motivated by the protection of the many lives at risk at this “contaminated condo,” with its mold and fire hazards, and her demand has always been the same – the truth. The truth has been hidden for many years. It is now being revealed.

We need all of your continued assistance. We do not expect the Township to come in and do what they should do, and we are cautious about the other law enforcement authorities taking this case and running with it – read about the effort that was required at the Love Canal. We need this information proliferated. We need the people at Penn’s Crossing contacted. We need the Township contacted. We need to fill the meeting rooms, and use the phone lines of the Attorney General, the U.S. Attorney, the Township of Spring, and Governor of Pennsylvania, and anyone else we can think of to get some attention, and immediate action, on these issues. We need to show the power of the people, and the strength in numbers, and we need to make sure that there are no more hidden truths at Hidden Valley. We need to show that this is what is demanded by our Constitutional right to life, liberty, and the pursuit of happiness.

You may tell them that you got the information from Andy Ostrowski, and that I asked you to call.

Yet Another HOA Embezzling Case

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These stories come to us daily. Sometimes the loss is $28,000. Some are over a million dollars. Even when convicted there’s rarely any restitution from the embezzlers. And that means that every member of the Homeowners Association is going to be hit with a special assessment to cover the losses. Embezzling, kickbacks. And sometimes these crimes are so organized and so massive that they bankrupt entire neighborhoods.

Someday homeowners will wake up.

(link to another embezzlement in Tennessee)

 

Legislative fix for FL condo takeovers?

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guest blog by Deborah Goonan 

In 2007, Florida passed a law that has been dubbed “Eminent Domain for Condos.” The law allows for 80% of voting interests to approve a plan to terminate the condo association for the purposes of redevelopment, as long as no more than 10% of voting interests object to the plan.

At the time the law was passed, the stated intent was to make it easier for owners of hurricane damaged or functionally obsolete condos to sell their ailing building to investors who would then redevelop on valuable land.

However, in the 8 years since enactment of this law, real estate investors and developers have descended like vultures, preying upon distressed condominium associations. Taking advantage of FL statutes, investors have been buying unsold units in bulk, at pennies on the dollar, taking control of the association, amending the governing documents where necessary, and voting to terminate the association.

In most cases, their intent is to convert all of the units to rental apartments, at a time when record numbers of people are renting rather than buying condos. Investors have forced nearly 20,000 condo owners – many of them homestead owners – to accept termination proceeds equal to one-third to one-half of what they paid for their units at the height of the real estate market prior to 2007. Essentially, condo owners have been kicked to the curb, many with outstanding mortgage balances for homes they no longer own. Cash buyers lost most of their hard-earned life savings with nothing to show for it.

An op-ed written by two attorneys from Greenspoon Marder Law firm states that a proposed bill in Florida “could satisfy public outcry” over condo takeovers that have forced nearly 20,000 owners to sell their homes, many of them at a fraction of their purchase price.  (You might recall from my previous blogs on this topic that Steven Geller, the sponsor of the 2007 legislation amending FL condominium termination process, is now a shareholder at the same law firm.)

Condo owners adversely affected by Florida’s flawed legislation have pressured their state Representatives and Senators to take action. Florida Realtors, who have helped to draft HB 643, have also expressed deep concern. The current draft provides that bulk buyers must make  “third-party” owners whole at termination, by paying 110% of the condo owner’s purchase price or fair market value, whichever is higher.  In addition, all first mortgages must be satisfied, and a relocation allowance is payable to homestead owners.

Realtors hope that legislative change will renew confidence in the condo market. Between negative media coverage and word of mouth, buyers are reluctant to purchase real estate in Florida, particularly condominiums that have been featured in the media. Additionally, many condo owners are finding it difficult to sell their units, except to other bulk buyers hoping to snatch up units at a low price.

The current bill, (HB643), retains 80% vote of approval – as long as no more than 10% of voting interests reject a plan – for optional termination of condominium. That provision remains unchanged as sponsored by Geller and signed into law by Governor Christ in 2007.

As has always been the case, the governing documents can still provide a lower percentage of owner approval for termination.

Attorneys Mark F. Grant and Raul Valero claim in their article that unanimous consent of owners for a condominium termination is unrealistic and that a single holdout can extract too much money out of the termination settlement.

Grant and Valero go on to explain that in 2010 the FL Legislature passed the Distressed Condominium Act, a law set to expire on June 30, 2016. The Act reduces liability of condo-buying investor groups for construction defects and deficits in reserve funding allegedly caused by the original developer. The Optional Termination and Distressed Condominium statutes, when combined, created the golden opportunity for hostile condominium takeovers in Florida.

As currently written, HB 643 still does not address a key issue. Voting interests are allocated to the number of units owned or proportional share of condominium ownership, not to individual owners. The result is that we have real estate investor corporations outvoting homestead owners, terminating the condominium and forcing them to sell, even at a substantial loss.

As long as votes are allocated to the property vs. people, investors will find a way to exploit that loophole. Because FL statute sets no absolute minimum threshold for termination approval, a bulk-buyer-controlled Board that holds sufficient voting interests can simply amend the governing documents to reduce the approval threshold, thus making termination possible on their own terms.

The only ways to remedy that situation is to more equitably allocate voting interests among the people involved, rather than tying them to inanimate units. Bottom line: opportunistic investors should not be able to trample the rights of homestead property owners.

Grant and Valero characterize bulk buyers as some sort of saviors that have “rescued” failing condominium associations, the buyers later concluding that a de-conversion would make better financial sense.

Whether or not you believe that the condo takeover fiasco was carefully crafted or the result of unintended consequences now is the time to consider the rights and needs of condo owners that thought they were buying a home as opposed to a real estate investment property.

Tragically, even if a homeowner-friendly bill is passed, it will be too late to help tens of thousands who have already lost their homes, their life savings, and their credit.

(link to op-ed regarding Condo Termination legislative proposals)

(link to FL HB 643)

Insurance Nightmares: Of Interest To All Homeowners

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Feel free to send my web link to everyone you know. This story should go viral.

It’s hard to make long stories short, but I’ll try.

When my wife and I were out of state a number of years ago, a squirrel got into the house and did thousands of dollars worth of damage, chewing up the sofa, all the drapes, the carpets. I called State Farm and asked if I was covered. They said “no.” If an elk or a bear had gotten in your house you’d be covered because those are wild animals.

“Aren’t squirrels wild animals?”

“Nope, they’re rodents and there’s an exclusion in all home insurance policies for rodents.”

“What if a rabbit had gotten into the house?” I asked.

“They’re rodents and they’re excluded.” Wow, I thought I had them there because I knew that rabbits and hares aren’t rodents, they’re lagamorphs. Look it up. One way or another, I’m sure the insurance company would find a way to do its customary screw job.

I started studying the exclusions and discovered another few I didn’t know. (Yes, sometimes I’m deadly stupid). But flood damage is another tricky one. If a raindrop touches the ground before it enters your house it’s considered a flood and insurance companies have tricky ways to exclude flood damage. That also means if the corroded water line to your house breaks, the water hits the ground first, so you’re not covered. If the raindrop hits your house before coming inside, then the coverage is good.

BTW, so called Smart Meters are being installed in millions of homes across the country. They’ve exploded or melted, caused thousands of house fires in the U.S. and Canada and…you might have guessed it… Smart Meters aren’t UL listed, therefore insurance policies automatically exclude any fire damage that comes from a non-UL listed device. Smart meters have also blown out entire kitchens full of appliances. Again, no coverage.

While we’re speaking of damage and insurance companies, let me refer you to another interesting story that broke last week. I won’t try to prejudice you with my thoughts…. I’ll just send you to the link.

(insurance issues in Hurricane Sandy)

 

Great Proposed HOA Bill In Colorado

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Guest blog by Stan Hrincevich

SB 15-177 concerns proposed construction defects litigation in Colorado. No Bill is perfect and in the world of HOA homeowners’ rights we seize the moment for any reform especially when it reins in the influence of HOA lawyers, property managers, and abusive Boards. This Bill would require HOA homeowners to approve the use of HOA funds in litigation.

Homeowners would have to be apprised of any intended litigation, informed on the substance and estimated costs, the consequences of unsuccessful litigation such as special assessments, and how the lawsuit is to be financed. A majority vote would be required to use HOA funds. HOAs can still bring legal action for construction defects and individuals can still pursue legal action using their own funds.

The Community Associations Institute (CAI) and HOA lawyers hate this Bill as it reins in their mostly open and easy access to HOA funds for litigation by requiring homeowners to first approve of such action. This can save large amounts of money for homeowners and safeguard reserve funds that can now be used for lawsuits. The CAI’s latest and weak argument on this Bill contends a Board would require a homeowner to vote for legal counsel on everyday, routine matters but no such verbiage is in the Bill and this is called desperation. See the article below for more information.

Please take a few minutes to write your legislator asking them to support SB 15-177. If the content of the Bill changes to lose our support we will let you know. Your email does help and helps home owners. Get involved!

CAI Threatened If Homeowners Are Empowered

(article from HOAforum.org)

The Community Associations Institute (CAI), long incorrectly identified as a homeowner-centric organization in the press and by State legislators, is again attacking the idea of HOA homeowners’ rights. The CAI represents the interests of property managers and HOA lawyers and not homeowners. This time they are objecting to a provision in proposed Colorado SB 15-177 (construction defects) that requires HOA homeowners to approve the use of HOA funds in litigation. Why the opposition? The CAI and HOA lawyers view the HOA as a profit center and easy money. Empowering homeowners on how their funds are used considered disruptive and meddling.

Too often HOA lawyers raid HOA bank accounts for legal fees and costly legal cases that should never have been litigated. That leaves homeowners with depleted reserve funds, special assessments to pay legal costs, and/or increases in HOA dues to replenish reserve funds. HOA Boards can currently enter into litigation without apprising homeowners of their intent, the cost and consequences of litigation or how they intend to finance legal fees. Boards can incur unlimited legal expenses and even take out debt instruments to pay legal fees. Home owners in too many cases only know of the financial consequences after the case has been litigated and they are stuck with the bill. This Bill simply reins in the authority of an HOA Board (that is highly influenced by HOA lawyers and property managers) in making decisions on litigation that can have significant if not catastrophic financial impact.

SB 15-177 would not preclude legal action but require a majority of home owners to approve litigation. This would mitigate the number of law suits and the abusive practice of an HOA Board suing on behalf of a very few (as few as two) vs. the community at large. More cases would be handled in the less expensive legal venue of arbitration thus saving HOAs significant sums of money. Home owners could still pursue individual actions using their own funds.

The CAI is fabricating a tall tale in contending that any legal fees paid to an HOA lawyer related to routine advice and counsel would take a majority vote of home owners. This Bill doesn’t get involved in regulating or interfering with the operations and daily functions of the HOA. Legal counsel on enforcing covenants, controls, restrictions, and debt collection or other issues involving common and routine HOA issues would not require a majority vote of homeowners. It’s just not in this Bill. Payment of routine legal counsel doesn’t require a lawsuit today nor would it under this Bill. This Bill is directed at legal cases filed in a court of law that are specific, unique, non-recurring and financially impacting. The CAI is embarrassing itself by claiming that any payment to an HOA lawyer would have to be voted upon. Obviously, the CAI is desperate to kill this bill.

The winner in this Bill will be homeowners in HOA community associations, not the Community Association Institute. Homeowners will now have more control over how HOA assets are used. They will still retain the right to litigate construction defects. This Bill does not impair the ability of any HOA Board to govern but contributes to open governance.