Ohio condo, homeowner associations easy targets for theft, embezzlement

CLEVELAND - Condo, townhome and neighborhood homeowner associations are easy targets for embezzlement and theft.

An exclusive 5 On Your Side investigation has uncovered case after case of community associations being ripped off by those trusted to safeguard funds used for maintenance and upkeep.

Sixty million Americans across the country live in more than 300,000 community associations. At least nine states have enacted laws to regulate those who operate associations that handle $41 billion every year.

But not Ohio.

Our exclusive 5 On Your Side investigation found not a single law on the books regulating who can become an association or property manager.

What's even more alarming to Travers Voight is that none are required to undergo even a single, yearly audit. Voight's Parma community association raised questions about how its finances were being protected. After a criminal investigation, the association's treasurer was indicted for theft.

"They were just befuddled at the amount of money," said Voight.

In another case, a community association in Stow filed a lawsuit alleging that at least 12 checks totaling $100,000 were written without authorization. Aurora Management acted as the association's management company, along with dozens of other community associations.

The company is now closed and calls were not returned as the civil case continues in Summit County.

Susan Carpenter was a community association member whose funds were managed by Aurora Management. She said she saw a "red flag" when the company failed to fully answer all her questions.

"That's just a recipe for disaster having somebody like that in charge of your own money. We were very afraid," said Carpenter.

She fortunately pulled her association's funds out before Aurora Management was sued.

But these are not isolated incidents. Our investigation found case after case of greed and theft across Ohio.

One property manager was convicted of stealing $44,000, another pleaded guilty to forgery after residents complained she embezzled $30,000. And in 2007, federal prosecutors tried the largest embezzlement case in history involving an Ohio community association.

Kathleen DeSalvo was vice president of Mult Vest -- a management company that handled the funds for 50 community associations in Northeast Ohio.

Prosecutors alleged she stole $3.4 million and DeSalvo pleaded guilty to mail fraud charges.

So how can it be so easy? Our investigation found absolutely anyone can become a property manager or association officer in Ohio. No license, fingerprints, training, education, bonding or even a yearly audit is required.

David Kaman is one of Ohio's leading attorneys specializing in protecting associations and its members.

He recommends associations be insured for their funds so they are protected against theft, and encourages members voluntarily pay for yearly audits.

"If anyone is thinking of stealing the association's funds, but they know that a review or audit is being done on a regular basis -- they're going to think twice about it."