Residents question HOA accountability

AUSTIN (KXAN) - A dispute over what could be more than $1 million in unaccounted-for spending by an Austin homeowners association has sparked a police inquiry into possible fraud and theft, a KXAN investigation has confirmed.

The investigation originated after several dues-paying members of the Sunchase Condominiums Homeowners Association complained that they were being required to pay a "special assessment" of several hundred dollars on top of their monthly dues because the organization was out of money.

What they were not told is where their money went, how it was spent, and why the HOA needed more.
Sunchase residents interviewed told KXAN they have no idea where their money has gone. They said the property manager and HOA board have not had a complete financial audit performed since 2006 and have not provided homeowners with copies of statements from the multiple banks the HOA uses.

“They will not respond to us,” said Karen Neyland, a 31-year Sunchase homeowner.

The money, the background and an expert

There are 73 condominium units at Sunchase . Homeowners pay an average of $230 a month in HOA fees. That’s about $16,790 a month and about $201,480 a year, and because financial audits have not been performed over the past five years, homeowners say that’s more than $1 million worth of unaudited expenses.

“If a homeowner wants to see the financials and the bank statements they ought to be produced,” said Austin attorney Greg Cagle, an expert on HOA laws.

Cagle points to Chapter 82 of Texas' Uniform Condominium Act. The law states that an HOA shall keep detailed financial records and as a common expense obtain an annual financial audit. The law also states that all audits and financial records shall be available to unit owners.

“The law is that the unit owners have a right to inspect and make copies of the books and financial records of the association,” said Cagle.

But despite the fact that the property manager didn’t have the required audits performed, and despite the fact that complete bank records were not made available to all condo owners, the Sunchase board voted to give the property manager, Nancy Thompson, an $8,000 bonus.

Thompson received the $8,000. But KXAN spoke with four condo owners who said that Thompson told them the board president at the time told her to give him half of that money or she would be fired.

A raucous HOA board meeting

Neyland said the HOA board members have been uncooperative. She and other members invited the KXAN Investigations Team to a recent board meeting where the controversy came to a head

That former board president, John Gunn, told KXAN: “That never happened.”

When he addressed condo owners at that meeting KXAN was invited to attend, he was more forceful.

“Oh my God, (expletive) is hitting the fan!” said Gunn. “If you bothered to show up at a meeting you would actually maybe know what the hell is going on.”

Kate Benson, a Sunchase board member, later told KXAN any transaction between Gunn and Thompson was a private matter.

“That was an issue between Nancy and John,” said Benson, the only board member who agreed to be interviewed. She said that once the bonus was given to Thompson, it was no longer homeowners’ money, and therefore no longer anyone’s business.

A change in leadership

Benson also told KXAN she and the other board members at the time recommended that Gunn resign.

“Until this came up to the surface, and without admitting guilt or innocence, we said, ‘With that kind of thing hanging over your head it's a good idea that you not be on the board. Even if you're completely innocent,'” Benson told KXAN .

And again, Gunn insisted that he never demanded half of Thompson’s bonus.

He said he resigned from the board because he was tired of it.

The police get involved

KXAN is not the only group looking in to the Sunchase HOA. The Austin Police Department confirms it has an open investigation in to possible fraud or theft. A detective on the case says he won’t need the board’s approval to get anything.

“We’ll ask the grand jury to give us a subpoena to get whatever we might need,” said Austin Police Detective Dustin Lee.

Although no official audits were performed, Sunchase property manager Nancy Thompson did hand-out a “ledger” highlighting what she claims to be an accounting of the HOA’s expenses. The expense reimbursements that Thompson claimed for herself from 2007 to 2011 totaled $95,747.

Former board members said they were under the impression audits were being done. In an email from Thompson to former board member Susan Sinclair on Aug. 24, 2011, Thompson clearly states the “2008 and 2009 audits are being done.”

“I really wish I knew exactly what was going on,” Sinclair said . “We may never know.”

“Well something’s going on,” says Phyllis Watts, another former Sunchase board member. “And I hope to find out what it is.”

An effort at openness

Benson said the board now plans to have audits done and to open up the HOA's financial records for the homeowners. She