Here’s a quick follow-up on the story of theft from condominiums managed by Certified Management.

A tipster pointed me back to a story by Lynn Nakagawa in Pacific Business News last month (“Bankers want clarification from Mutual of Omaha“).

The story describes a complaint by the Hawaii Bankers Association that Certified Hawaii and Hawaii First, both property management firms owned by the Texas-based Associa, were depositing funds of Hawaii condominium and community associations in Mutual of Omaha Bank, which has a Honolulu office but no local bank branch.

Specifically, the bankers group claims that the Nebraska-based bank may be violating a Hawaii state law that requires funds collected by an association to be deposited in a financial institution located in the state.

I didn’t find an update, so I checked in with the Hawaii Bankers Association.

Gary Fujitani, executive director, said the state’s top bank regulator had determined Mutual of Omaha did not meet the requirements of Hawaii law for the handling of condominium association deposits. Fujitani said the matter is now pending before the Real Estate Commission, which has jurisdiction over condos.

At issue is Section 514B-149(c) HRS:

(c) (1) All funds collected by an association, or by a managing agent for any association, shall be:

(A) Deposited in a financial institution, including a federal or community credit union, located in the State, pursuant to a resolution adopted by the board, and whose deposits are insured by an agency of the United States government;

(B) Held by a corporation authorized to do business under article 8 of chapter 412;

(C) Held by the United States Treasury;

(D) Purchased in the name of and held for the benefit of the association through a securities broker that is registered with the Securities and Exchange Commission, that has an office in the State, and the accounts of which are held by member firms of the New York Stock Exchange or National Association of Securities Dealers and insured by the Securities Insurance Protection Corporation; or

(E) Placed through a federally insured financial institution located in the State for investment in certificates of deposit issued through the Certificate of Deposit Account Registry Service in federally insured financial institutions located in the United States.

Hawaii First, the state’s third largest property management firm, moved its accounts to Mutual of Omaha at the beginning of 2010, according to a company newsletter. At the time, the company said it expected “a significant saving in banking costs.”

Hawaii First was then acquired by Associa in 2011.

Clients of Certified Management, also owned by Associa, were told the “the new banking relationship between Certified Hawaii and Mutual of Omaha Bank” would begin in January 2012.

I don’t know whether any associated costs, such as reprinting and mailing the year’s monthly payment coupons, will be passed on to apartment owners if the Real Estate Commission agrees that the deal with Mutual of Omaha doesn’t comply with state law. Those costs could add up quickly.

I heard another complaint from someone reacting to Associa/Certified’s full page ads, which stressed the company’s commitment to Hawaii and to the Aloha Spirit. This person said Associa’s takeover of the state’s second and third-ranked property management companies (Certified and Hawaii First) was followed by local job cuts as back-office functions were consolidated with those of the mainland parent company.