HOAleader.com - Tip of the Week - February 10, 2012
Published: Wed, 02/08/12
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Employees Using HOA Plastic? 5 Tips Help You Thwart Theft
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This week's tip will help you outsmart unscrupulous employees
lured to your HOA's hefty bank accounts.
First, a depressing reminder of the danger. A Durham, N.C., HOA
now has a "bare-bones" 2012 budget after discovering $150,000-
$200,000 in theft by an employee, according to a November 2011
report in The Herald Sun. The theft from the 1,000-home Parkwood
Homeowners Association occurred mostly through the use of HOA
debit cards linked to the HOA's checking account. The alleged
thief made cash withdrawals at ATMs and used owners' money for
online gambling and to bankroll Las Vegas and Miami junkets.
To manage the shortfall, the association has had to cut much of
its lawn care and other maintenance; it's also applied for a
short-term, $30,000 loan to help it resume normal maintenance
operations, Michael Brooks, the HOA's president, told The
Herald Sun.
"Over our 12 years of experience in managing some 300
associations, we've had a couple of instances in which employees
have taken advantage of debit and credit cards and stolen money
from the HOA," says Chris Yergensen, senior vice president and
corporate counsel of RMI Management LLC, a Las Vegas-based
company that manages about 300 condo association and HOAs. "It's
very dangerous, especially in Nevada where there are so many
casinos and payday loan companies." That's why Yergensen advises
his HOA clients against the use of credit and debit cards. "Credit
and debit cards are good for everyday purchases, like gas," he
explains. "But nowadays you can develop credit with third-parties
like gas stations."
Lisa A. Magill, a shareholder and association attorney at Becker
& Poliakoff PA in Fort Lauderdale, Fla., is on the same page. "I
don't prefer debit cards," she says. "I know clients want the
ease and convenience of having a card available to avoid dealing
with petty cash. But I recommend limiting use of cards to a
store card--not an American Express or Visa card--but a Home
Depot or OfficeMax card, wherever the association needs the
credit. Or maybe you have an account at a particular gas station."
If your HOA decides it must take the risk of issuing
plastic to employees, learn 5 Tips to Limit HOA
Credit and Debit Card Risks in our new article:
http://www.hoaleader.com/members/680.cfm
Best regards,
Matt Humphrey
President
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