Missing Money: A News 3 Homeowner's Association Investigation
May 19th, 2004
More than a million people in the Las Vegas valley live in homeowner's associations ... mini-governments who handle millions of dollars. But as News 3 Investigator Darcy Spears found, some associations' money is missing, and one man may be to blame. We've all heard horror stories of associations run amok, foreclosing on homes for petty fines and the like, but how often do you hear about an entire association, including the board, being victims?
Most every month under most every one of these roofs, homeowners cut their checks for dues to homeowner's associations. They're run by elected volunteers who are typically concerned with things like keeping pigeons out of pools, having block parties, and making sure trash cans aren't out for too long.
For the more complicated stuff, like managing money and running the community's business, HOA's often hire professional property managers. Senator Mike Schneider: "Homeowners pay their monthly dues and they expect everything to be handled for them, and they don't want to be involved in it and they just expect everything to be run on the up and up."
But things are not always run that way, as Aimee Pantea found when she joined the board of Mariposa, a community association involved in construction defect litigation. "There's so much money involved in these construction defect cases, that all this money tends to make people a little greedy."
When looking over association records, Aimee's contractor husband, Romy, first noticed this red flag. "He had signed a management contract that offered him a 2% fee for the construction defect reconstruction fund."
Sen. Schneider: "That's blatantly against the law in the State of Nevada." The contractor's board sent Wrath a violation letter, but the Panteas found more serious problems. "We discovered that there was approximately $100,000 in funds that were reported to the board on their financial statement from A & A Management that were not there.
Tom Wrath runs A & A Management. He currently manages Spanish Villas and Duncan Court HOA's. He's also been in charge of Paradise Springs, Casa Vegas, Starfire Condo, Cheyenne Park Villas, Fairway Villas and Mariposa. Mariposa had to hire Attorney Jay Hampton to get at their own records. "Mr. Wrath had refused to provide the records, refused to provide access to the records, he wasn't letting board members go take a look at financial records, and he wouldn't provide information about the association's money, like where it was."
"So they went to the bank to start finding out whether it was there and I think that day was a shock for all of us to find out that five certificates of deposit did not exist." The Panteas say Wrath made up fake financial statements to cover his embezzlement of Mariposa's funds. When they threatened to sue, most of the missing money magically reappeared. Attorney Jay Hampton: "He finally turned over close to $100,000, but interestingly, it came from a personal account. It was money that he had apparently taken out of the Association's bank account."
Under Nevada law, he's not allowed to do that, and he may still be breaking the law by keeping some of the money. His answer to Mariposa's legal complaint states, "many of the funds in question have been returned." What about the rest? The Panteas said they met with brick walls trying to get help. "We went to the Real Estate Division, Attorney General's Office, Police Department and nobody was helping."
Metro says their review of the records shows a crime was committed. Fraud detectives say Wrath did steal the money, but since he returned most ot it, the case would get little or no priority from the district attorney for prosecution. "I think that if you stole something and they catch you and you go, oh, here it is back, you still stole it and you still should pay for it."
Sen. Schneider: "It seems like, in this town, embezzlement is a bigger issue than we all had known in the past. And embezzlement cases seem to be treated very lightly unless it hits a great amount of money, one million dollars or more." So if Metro couldn't help, what about the Real Estate Division? That state agency is charged with overseeing homeowner's associations and property managers. And it's not like this is the first time they've heard allegations of missing money under Tom Wrath's management.
In part two of this story, Darcy takes a look at what the government knows about Wrath, and what they haven't done to protect the public.
More than a million people in the Las Vegas valley live in homeowner's associations ... mini-governments who handle millions of dollars. But as News 3 Investigator Darcy Spears found, some associations' money is missing, and one man may be to blame. We've all heard horror stories of associations run amok, foreclosing on homes for petty fines and the like, but how often do you hear about an entire association, including the board, being victims?
Most every month under most every one of these roofs, homeowners cut their checks for dues to homeowner's associations. They're run by elected volunteers who are typically concerned with things like keeping pigeons out of pools, having block parties, and making sure trash cans aren't out for too long.
For the more complicated stuff, like managing money and running the community's business, HOA's often hire professional property managers. Senator Mike Schneider: "Homeowners pay their monthly dues and they expect everything to be handled for them, and they don't want to be involved in it and they just expect everything to be run on the up and up."
But things are not always run that way, as Aimee Pantea found when she joined the board of Mariposa, a community association involved in construction defect litigation. "There's so much money involved in these construction defect cases, that all this money tends to make people a little greedy."
When looking over association records, Aimee's contractor husband, Romy, first noticed this red flag. "He had signed a management contract that offered him a 2% fee for the construction defect reconstruction fund."
Sen. Schneider: "That's blatantly against the law in the State of Nevada." The contractor's board sent Wrath a violation letter, but the Panteas found more serious problems. "We discovered that there was approximately $100,000 in funds that were reported to the board on their financial statement from A & A Management that were not there.
Tom Wrath runs A & A Management. He currently manages Spanish Villas and Duncan Court HOA's. He's also been in charge of Paradise Springs, Casa Vegas, Starfire Condo, Cheyenne Park Villas, Fairway Villas and Mariposa. Mariposa had to hire Attorney Jay Hampton to get at their own records. "Mr. Wrath had refused to provide the records, refused to provide access to the records, he wasn't letting board members go take a look at financial records, and he wouldn't provide information about the association's money, like where it was."
"So they went to the bank to start finding out whether it was there and I think that day was a shock for all of us to find out that five certificates of deposit did not exist." The Panteas say Wrath made up fake financial statements to cover his embezzlement of Mariposa's funds. When they threatened to sue, most of the missing money magically reappeared. Attorney Jay Hampton: "He finally turned over close to $100,000, but interestingly, it came from a personal account. It was money that he had apparently taken out of the Association's bank account."
Under Nevada law, he's not allowed to do that, and he may still be breaking the law by keeping some of the money. His answer to Mariposa's legal complaint states, "many of the funds in question have been returned." What about the rest? The Panteas said they met with brick walls trying to get help. "We went to the Real Estate Division, Attorney General's Office, Police Department and nobody was helping."
Metro says their review of the records shows a crime was committed. Fraud detectives say Wrath did steal the money, but since he returned most ot it, the case would get little or no priority from the district attorney for prosecution. "I think that if you stole something and they catch you and you go, oh, here it is back, you still stole it and you still should pay for it."
Sen. Schneider: "It seems like, in this town, embezzlement is a bigger issue than we all had known in the past. And embezzlement cases seem to be treated very lightly unless it hits a great amount of money, one million dollars or more." So if Metro couldn't help, what about the Real Estate Division? That state agency is charged with overseeing homeowner's associations and property managers. And it's not like this is the first time they've heard allegations of missing money under Tom Wrath's management.
In part two of this story, Darcy takes a look at what the government knows about Wrath, and what they haven't done to protect the public.
posted by Las Vegas at 1:00 PM
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