Chapter 2 of this 2014 book offers a few examples of theft and why it can be easy.
Further complicating the scenario is homeowner apathy. Too many owners are blissfully oblivious that they are being robbed. Couple apathetic owners – absentee owners, “snowbirds,” busy first-time owners growing their jobs or families, honcho executives with no spare time – with lack of government accountability and oversight, and you have a recipe for financial disaster where losses eventually trickle down not only to the affected owners, but lenders and insurance companies as well. (page 33)
In most states, absolutely anyone can become a property manager or association officer. There is no licensing, fingerprinting, education, or even bonding required. There are no federal, state, or municipal requirements for a background check or even a credit check for the individuals given thousand of dollars to control. Most apartment landlords screen tenants more thoroughly. (page 35)
Be especially wary of board directors who have the capacity to issue themselves checks. These situations beg for abuse. (page 39)
By law, owners are entitled to see all bank transactions concerning their association. Sadly, too many owners only glance at their association’s minutes and budgets and never request copies of actual bank statements. As a result, gross negligence, misappropriation of funds, and theft may go unnoticed for years – even decades. (page 44)
There are no state or federal agencies that watch over the people that handle the billions of dollars of association monies – no auditors to deter fraud, no examiners to ensure compliance with regulations, no comptrollers to issue reprimands, no pilferage foremen or currency inspectors. (page 45)
If the fraud or misconduct involves a board member acting unethically, there is a strong likelihood the member will not be covered by the association’s directors and officers policy. (page 50)
Going to court against your homeowners association is equivalent to suing yourself. Amazingly, the aggrieved homeowner is simultaneously paying for both the prosecution and the defense at the same time. It’s a no-win situation. The association always has the upper hand in terms of cost. They have the money – your money – and they have the big-fun high=powered lawyers that recoil from representing the minority of small unit owners. Further, the attorney gets paid whether he or she wins or loses a case, so it’s not uncommon for an association attorney to take on a patently frivolous or clearly unwinnable case in order to rack up substantial fees. (page 50)