What Steps Should You Take If You Suspect Fraudulent Activity Within The HOA Board?

An HOA board is normally run by volunteers who are homeowners in the association.  In most cases, these volunteers are not experts in financial or management matters.  As such, one or more board members might take advantage of their position to embezzle funds or manipulate matters that are of personal interest to them.  Use the following advice as a guide if you suspect fraudulent activity is taking place in the homeowners association.

 

The most common form of fraud committed by dishonest board members is embezzlement.  Typically, they take funds that belong to the association or acquire HOA property using deceptive tactics.  To help them steal from the association without getting caught, they may lie about financial matters or exaggerate the figures when recording transactions.  Others usually make up fake records of transactions or delete existing entries for their benefit.

Rigging the elections is another way fraud is committed in HOA’s.  Some board members might band together to rig the election results so that a person who was unlikely to win will gain a particular seat.  Then, they use this position to embezzle funds or utilize it in some way to benefit from the HOA.

 

If you suspect that a board member is taking part in deceitful activities, gather as much evidence as you can such as audio recordings and incriminating documents.  Also, ask for financial statements, tax returns, budgets, audits, vendor approvals, and other documents that would confirm any wrongdoing.  Once you have adequate evidence, use the HOA website to call a special meeting and discuss your claims before the homeowners.

In case no corrective measures are taken, contact an attorney to talk about what action you should take against the board.  To prevent board members from committing fraud, consider hiring a professional to handle sensitive matters like auditing and recording financial statements.  Through the HOA website, ensure all homeowners are educated on financial matters as it benefits them and the association.