I have another story in Civil Beat today, but it’s not about the case of Mike Miske and associates.
It’s about a condominium that was victimized by an embezzler, or several, eventually losing about $340,000.
Published by Civil Beat this morning: “This Waianae Condo Development Has Lost Hundreds Of Thousands Of Dollars To Embezzlement/Condo association officials won’t say who might have stolen the money, which appears to have disappeared over time and through phony invoices for work that was never performed.”
This condo, the Makaha Surfside, was lucky. Their managing agent, Hawaiian Properties, stepped up when evidence of the theft first surfaced earlier this year, confirmed the theft in their own investigation, and then partnered with the condo board to hire an independent forensic auditor to compile the gory details.
And then Hawaiian Properties took the further step of reimbursing the condo for its losses, as well as for its legal fees that were incurred during the investigation.
The story of the theft went public when the Maka Surfside board of directors sent a letter to all owners in the 454-unit complex outlining what has taken place, and a copy of that letter ended up in my email, courtesy of a former owner who received it from a friend who still owns a unit.
It’s news not only because one out of every three residential units in the state is a condominium apartment, but also because the loss in this instance seems to be the largest ever reported in Hawaii for a similar insider theft.
Of course, there’s no way to know whether that’s because no larger theft has ever occurred, or just that those who got away with larger amounts weren’t discovered and prosecuted. That’s got to be a source of worry for many other condo directors when they hear about a case like this. It must hit close to home for many.
I wrote about one similar case about a decade ago.
“What delayed news of theft by CEO of major property management firm?” March 27, 2012.
“Former CEO of condo management firm facing felony charges,” Dec 5, 2014
“Another fine example of a condo war,” September 28, 2017.
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Hmmm…I’m on an association board for a property that is managed by Hawaiian Properties. I would be very curious to know who the suspect vendors are as Hawaiian likes to stick with their regular vendors from property to property.
I imagine you will not be alone in seeking this info from Hawaiian Properties.
“. . . there’s no way to know whether that’s because no larger theft has ever occurred, or just that those who got away with larger amounts weren’t discovered and prosecuted.”
Unfortunately when these types of things happen, victims sometimes choose not to prosecute due to bad PR and concern for the organization’s reputation.
The ACFE does a biennial report on fraud, and they’ve found that billing and reimbursement schemes often last about two years. And the longer frauds last, the higher the amount of loss.
“. . . independent forensic auditor . . . .” Slight correction here — forensic investigators and forensic accountants do not typically do audits. I realize the public often sees them as one and the same, but the professional standards and guidelines are different.
I stand corrected. Thanks.
Hawaiian Properties did PayOut from goodness of heart? Please ….. many affiliated with condo boards and impacted owners know the heartlessness. Cheaper than going to court,, of course, is a big clue to possible depth of misappropriationa in HOA;s.. There is no way H’wn Properties could not have known the monies were going astray.
Management Company Complex has a deep and wide influence on developers, legislation, construction and repair, gvmnt agencies, legal and insurance businesses that leave “self-governing” housing owners extremely vulnerable to fraud.
I don’t agree. As far as I know, there’s no basis for saying the management company “could not have known….”
The would be saying that any company is immune from fraud. No way. That’s why companies compete with each other by developing systems that reduce risk. They don’t eliminate risk, they reduce it. Fraud is a perennial problem.
According to the letter, the forensic auditor made recommendations for establishing better procedures at the Makaha Surfside, and the board has implemented new procedures following that advice. It remains to be seen whether similar, more rigorous procedures were also adopted by Hawaiian Properties. My bet is that this is precisely what happened. But we’ll see, I guess.