Establishing Credibility

Our Board of Directors was limited to taking $42,300 of HOA Operating Funds monthly for use by the Golf Courses.  For January 2025, the first month of this authorization, the Board removed $92,300, providing an extra $50,000 of HOA Operating Funds for the Golf Courses.

The President of the HOA admits he transferred $92,300 but justifies it, stating that the additional $50,000 came from the Special Assessment.  I find this difficult to believe primarily because he doesn’t identify which special assessment, there have been three (3), and examining the 2024 and January 2025 HOA Financial Statements, none of the three (3) Special Assessments had the extra funds available.

To support my contention that the additional $50,000 was taken from HOA Operating Funds, let’s examine all three (3) special assessments.

1. SPA 2024

SPA 2024 is dated October 2024 and was comprised of one payment of $175 from each lot owner.  This raised (2820 x 175) = $493,500

If we examine the LLC’s Financial Statements, we find that as of September 2024, YTD (year to date), $275,000 was transferred from the HOA to the LLC and is accounted for as Capital Contributions.

If we move forward to December 2024, the LLC recognizes receiving YTD $695,272 in Capital Contributions.  The balance has increased to $695,272 as of December 31, 2024.  If we subtract the two.  (695,272 – 275,000) = $420,272, we get how much the balance has increased between September and December 2024. The increase is how much was transferred.  $420,272 was transferred from the HOA to the LLC and recognized by the LLC as Capital Contributions.

This makes perfect sense.  The SPA 2024 was for $493,500, and from October through December 2024, $420,272 was transferred.  No problem.

Let’s move forward again to January 2025.  At the end of the month, the HOA Balance Sheet shows SPA 2024 had $55,253 in cash.  SPA 2024 also had $26,862 in Accounts Receivable.  Adding the two, we get $82,114.

We know that in the 4th Quarter of 2024, $420,272 was transferred, and now we calculate SPA 2024 has $82,114.05 in cash and receivables.   Adding the two together:

                Transferred to LLC, 4th Qtr 2024                          $420,272

                Cash on Hand, January 31, 2025                         82,114

                                                                                                 ------------

                Total SPA 2024 Assets                                             $502,386

Not only have we accounted for all the assets and transactions of SPA 2024, making a $50,000 contribution to the LLC impossible, but we have also uncovered an accounting error of (502,386 – 493,500) = $8,886. 

But haven’t we been assured that the Financials are correct? It is my opinion, we have not seen accurate and correct Financial Statements in over two years.

We have just established two facts:

1.      The $50,000 transferred in January did not come from SPA 2024.

2.      The HOA accounting, as has been reported many times, is unreliable.

2.  SPA 2023

Special Assessment 2023 was comprised of two tranches or “pieces”.  The first was $150 per lot owner due October 2023, totaling $423,000, and the second $75 due March 15, 2024, totaling $211,500.

The fourth quarter of 2023 was tumultuous with elections and the changing of the administration.  The new administration, needing additional funds to keep the golf courses operating, and after consulting with lawyers, in December 2023, started spending the March 2024 tranche.  It is unclear how much management spent, but it is my belief, at least $18,000 was spent on Tee-Snap and marketing. 

This makes $193,500 available from the second Tranche due March 2024.

Let's move forward again to September 2024.  The LLC has received YTD Capital Contributions of $275,000.  We know this. Given that only $193,500 was available to spend from SPA 2023, where did the (275,000 - 193,500) = $81,500 come from that the HOA transferred to the LLC?  SPA 2023 did not have the resources, so it must have come from HOA Operating.

So now we have uncovered what looks like further transgressions on the part of our Board.  It appears (50,000 + 81,500) = $131,500 has been illegally, without residents approval, transferred from HOA Operating to the LLC.  This money was taken without permission. 

We have now uncovered two additional facts:

1. The $50,000 did not come from SPA 2023

2. Other funds have been illegally transferred to the LLC

But we have one more Special Assessment, the SPA 2021.  Is this where the $131,500 came from?  No, definitely not, here's why.

SPA 2021 is overspent and does not have the resources to pay its debt obligations, let alone contribute to further funding of the LLC.

In January 2025, SPA 2021 generated only (1,053,873 – 1,025,823) = $28,050.  This is not good.  Debt service from Fustos, Thomson, and PNC Loans totals $33,072 monthly.

Therefore, we see continued shortfalls, with SPA 2021 having a January 2025 shortfall of (33,072 – 28,050) = $5,022.  Keep in mind this shortfall will continue to get worse, as SPA 2021 slowly extinguishes itself.

The SPA 2021 shortfall undoubtedly has to be funded from HOA Operating because there is no place else to fund it.

So we have a total of (131,500 + 5,022) = $136,522 that has, in my opinion, been improperly taken from residents by the HOA Board. It is my opinion that this is the tip of the iceberg.

I’m sure there is much more. What is very disturbing is there are no entries on the HOA Balance Sheet recognizing the transfers.  An account titled Advances to Golf Course LLC had not been updated for two years until December 2024 when $40,000 was added to the account.  In January 2025, nothing was added, even though the Board President admits he transferred $93,200.  Nothing was added in 2023 and eleven months of 2024, despite the LLC recognizing $275,000 of Capital Contributions.

Not only is the Board violating residents’ trust, but they are not documenting the transfers.  I guess that makes sense. Why leave evidence?  Why document your bad acts?

In my opinion, the primary question is: was the improper and illegal use of HOA Operating Funds sanctioned by each Board Member or was this the act of one individual? 

Residents need to get answers.  If this were the entire Board, each Board member needs to be held accountable and must return their share of the missing funds.  That would be (136,522/5) = $27,304.40.

If these were the actions of one individual, then that individual should be held accountable and must return the funds.

We can conclude, the Golf Courses are being supported by HOA money well beyond that which has been authorized. 

I believe we have proven that beyond a reasonable doubt, establishing our credibility.