How to Protect Your Association from Embezzlement

The former treasurer of a condominium association located in the Capitol Hill neighborhood of Seattle was recently charged with felony theft after he allegedly stole more than $80,000 in common funds. The former treasurer apparently wrote dozens of checks to himself using the association’s account. He then fled to California. Local prosecutors are now attempting to bring him back to Washington to stand trial.

The last year has seen a marked increase in news stories and industry concern about theft committed by association board members. A recent national conference of community association lawyers included a very well-attended seminar called “Keep Fraud’s Ugly Head Out of Your Community Association”. The current Community Associations Network newsletter includes five different stories about embezzlement of association funds. This threat is real and should be taken seriously.

There are many ways to prevent fraud or minimize the impact of fraud if it ever arises. First, associations should obtain annual audits of their finances by an independent third party. Second, associations should require two board members to sign association checks. Third, associations should ask their banks to provide statements to a board member that is not involved in maintaining its financial records. Fourth, requests for reimbursement by board members should be scrutinized to ensure that they are legitimate. Finally, associations should consider obtaining fidelity bonds to insulate them from embezzlement that slips through the cracks.

Census Calls for Cautious Cooperation

Congress is spending $2.5 million this year to advertise the U.S. Census during the Super Bowl. This could result in substantial net savings if the ads (which may reach 45% of all U.S. adults) cause more people to mail back their census forms. Each percentage point increase in the mail response rate prevents an additional $85 million from being spent to find and count those people.

Households are required by law to respond to the Census Bureau’s requests for information, and community associations could face penalties if they unreasonably impede Census work. However, associations and owners should be aware that unscrupulous persons in their area may attempt to falsely pose as Census workers. The Better Business Bureau offers the following useful tips to prevent Census-related fraud:

• If a U.S. Census worker knocks on your door, they will have a badge, a hand-held device, a Census Bureau canvas bag, and a confidentiality notice. Ask to see their identification and their badge before answering their questions.

• Census workers are currently only knocking on doors to verify address information. Do not give your Social Security number, credit card number, or bank account number to anyone, even if they claim they need it for the U.S. Census. While the Census Bureau might ask for basic financial information, such as a salary range, it will not ask for Social Security, bank account, or credit card numbers, nor will employees solicit donations.

• Eventually, Census workers may contact you by telephone, mail, or in person at home. However, they will not contact you by e-mail, so be on the look out for e-mail scams impersonating the Census. Never click on a link or open any attachments in an e-mail that are supposedly from the U.S. Census Bureau.