Bernie Madoff and how NRED risks being like the SEC

What’s up with the Ombudsman?

Several people have told me that their NRED complaints of GM election interference were summarily rejected without satisfactory investigation or explanation. They feel the rejections were unfair as the complaints were rejected for reasons unrelated to the substance of the issue raised.

For example, they reported that NRED did not independently verify the accuracy of the allegation that two pages of valid petition signatures were not counted  which caused Bob Burch to be wrongly left off the recall ballot. I was told that NRED’s rationale for the rejection was the unrelated reason that the Ombudsman had validated the vote counting process for the other three directors who were on the ballot. 

Limitations of enforcement agencies

We have to educate the NRED investigators on the specifics of the violations alleged in SCA owners’ complaints so investigators can understand the complaints within the context of needed homeowner protections.

We must not get overly discouraged even if it appears there is “zero enforcement” rather than “zero tolerance”. As we’ve seen nationally with response to sexual harassment complaints, that can change in a heartbeat.

NRED has all the problems faced by other enforcement agencies, like you’ll see below were exhibited by the SEC, – an inability to see the forest for the trees. Even if there is no corruption in NRED, they have  limited authority, limited funding, and have to balance competing interests between monied stakeholders (attorneys, management companies, debt collectors, etc.) and the people who are supposed to be served (homeowners). NRED’s problems are compounded in Nevada by historic complicity in HOA corruption by attorneys and judges and the fear people have to speak up and be whistleblowers.

But, just as Rana Goodman helped to expose how guardianship abuses depended on complicity between attorneys and judges and unscrupulous public guardians, we have to shine a light on what is happening at SCA because Board/GM misconduct too requires lack of transparency and complicity by legal authorities to be sustained.


Why I am publishing my complaints in full

While I haven’t seen the other owner  complaints or the rejection notices they received, this action by NRED raises a red flag for me. So far, I have received no word from NRED about the status of my complaints, but I am not willing to leave NRED’s investigative thoroughness to chance.

In light of this disappointing development, I am going to emphasize the way I use this website to expose evidence substantiating my claims. I am doing this primarily so the allegations and supporting evidence are in a usable format to assist the investigators. I believe that will reduce the chance that my complaints will be dismissed without a full investigation and a fair hearing. 

As far as the chance of influencing the beliefs of the readers of this blog, I have low expectations. I don’t believe people who think I deserved what happened to me will easily change their minds, and when you read below about cognitive dissonance, I think you’ll see why. 

What happened to me sets a bad precedent for ALL Nevada HOAs.

Kicking me off the Board was based on false and defamatory accusations and was simply a continuation of their retaliation against me for speaking out.

Such flagrant disregard of homeowners’ right to vote and choose who represents them on the Board absolutely cannot be tolerated or ignored.

Throughout my days on the Board, I was harassed, defamed and retaliated against for my having:

  • recommended that the attorney be terminated,
  • warned them about the theft and fraud of SCA’s former agents,
  • requested information about excessive management compensation and for
  • complained about violations of NRS and SCA governing documents, particularly in the areas of GM/CAM threatening frivolous litigation, abuse of privilege, misuse of attorney, concealing information and recall election interference.


If my removal from the Board is upheld, it will set the unhealthy precedent in Nevada that ANY majority of ANY Nevada HOA Board can remove any HOA Board member whose views they don’t like simply by falsely accusing her and then deeming her position vacant.
  • Good-bye, due process.
  • Good-bye, owner control of Nevada HOA.
  • Hello, unjust enrichment by attorneys and other HOA agents.
  • Hello, corruption.


Bernie Madoff’s Ponzi scheme

The Securities and Exchange Commission (SEC) let Bernie Madoff’s fake hedge fund grow to over $50 billion over decades despite repeated credible complaints.

Let’s hope NRED is more responsive than the SEC was to warnings and does not allow SCA Board, GM and attorney to act unlawfully in ways which allow SCA agents to be unjustly enriched or which allow a majority of a HOA Board to act unfairly for personal political advantage.

Remember Bernie Madoff?

Probably everyone does. Bernie was the former chairman of the NASDAC securities exchange. He had an impeccable reputation that allowed him to operate a hedge fund that grew over decades to $50 billion by 2008. Although it was a just a low-tech Ponzi scheme, it was successful as an affinity scam among wealthy Jewish communities, Madoff remained untouched by the regulatory Securities Exchange Commission (SEC) for decades.

But you probably haven’t heard of Harry Markopolos, the financial analyst who figured out Bernie Madoff’s fraudulent hedge fund at least a decade before Bernie turned himself in. Marcopolis submitted at least five formal written complaints to the SEC which the enforcement agency failed to investigate.

SEC’s enforcement failure cost victims $50 Billion

Had SEC done its job in 2000 when Markopolos told them Madoff  was a fraud, less than $7 Billion would have been lost, and many fewer people would have been victimized. SEC still didn’t listen in 2001 when the fund had doubled. SEC still didn’t listen in 2005 when Markopolos documented 29 red flags on the then-$25 Billion fund. In 2008 as the global economy was in meltdown, and the Madoff fund had ballooned to $50 Billion or more, Bernie turned himself in to spare his family, never having been investigated, much less found guilty, by the SEC.

Markopolos’ book is aptly entitled, “Nobody Would Listen: A True Financial Thriller” as the true story of how the regulatory agency SEC was over-lawyered and using lawyers in areas outside their expertise. SEC, therefore, did not have adequately trained investigators who knew diddly squat about financial markets.

The SEC failed to act repeatedly on Markopolos’ extremely precise directions on what sources to check or what single phone call to make and what question to ask to verify the accuracy of Markopolos’ analysis. 

Why didn’t SEC investigate thoroughly? Congressman Gary Ackerman grilled SEC attorneys after Bernie turned himself in to find out why SEC blew off credible complaints for a decade in this interesting CNN clip of the Madoff Congressional hearings.

Ackerman Scolds SEC for Not Stopping Bernie Madoff Scheme Despite Being Warned for 10 yrs

What were they thinking?

  • Maybe lawyers were the wrong people were doing the job.
  • Maybe it’s was the financial conflicts of interest regulators had with the industry they were regulating.
  • Maybe the theory of cognitive dissonance explains why nobody could believe that Bernie Madoff was anything other than he appeared to be.
  • Maybe Madoff’s reputation was so stellar and everybody was making money, no one wanted to question how he alone could get such stellar returns year after year.
  • But, whatever the reason, SEC investigators couldn’t see what was right in front of their face.
How does all this about Bernie Madoff and the SEC relate to SCA owner complaints being given short shrift by NRED?

Remember SEC’s failures and expect to find similar problems with NRED investigations.

Remember the SEC’s failure to listen to Harry Markopolos for a decade cost victims $50 Billion, and the SEC attorney still tried to weasel out of it, claiming “executive branch privilege“.

Remember nobody believed Bernie Madoff was running a scam. If you find yourself not believing what I tell you is happening at SCA is true, it might be simply because it is unimaginable, or it might be because it creates a lot of cognitive dissonance to think I might be right.

Remember that, while there are limits on what we can expect enforcement agencies to accomplish, a lot can change if a critical mass of people speak up.

We’ve just seen nationally how the pendulum swings when a tipping point is reached. The way sexual harassment complaints are now addressed has gone from zero enforcement to zero tolerance seemingly overnight.

A critical mass of SCA homeowners must insist that at SCA, there will be zero tolerance of misconduct by SCA Board members or SCA Agents, and zero tolerance of their harassment of, or retaliation against, whistleblowers.


3 thoughts on “Bernie Madoff and how NRED risks being like the SEC”

  1. After working for the federal Office of Thrift Supervision from 1986-1994, I witnessed first hand how those who were responsible for regulating the savings & loan industry did not actually do this. This led to the $500 billion savings and loan bailout of the 1980’s.

    Much of the problem lies in the way government employees view their job. The little guys without much ambition, will just do the minimum so they will be able to bob along, year after year, getting both cost of living increases and another year of experience pay increase. ie. keep your head down and just go along with the program. The most senior managers often view their position as a stepping stone to much higher paying senior management jobs in the industry — after they get a few years experience with the industry’s regulator.

    If the little guys are aggressive in their job, they stand out and are held up to higher scrutiny and subjected a more intense job review as the senior managers don’t want to burn their bridges with the industry by aggressive enforcement of the laws and regulations.

    Having a career in real estate construction and development, I was subjected to the ups and downs of the economy affecting homebuilding and the jobs therein. I was expecting another economic downturn in the mid-1980’s and wanted to be fully employed so I took the job in 1986 expecting to stay only a few years. Therefore, I was very aggressive (and also very good) in finding losses in the loan portfolio of every savings and loan association I was sent to.

    My work was subjected to intense scrutiny by the senior management of the association, as my recommended losses would lead to capital write-offs and if severe enough, the closure of the association. For the first few years, this went well as it allowed the Office of Thrift supervision appear to be a strong regulator. When I started in 1986, there were about 4,500 associations in the US. By 1994, there were less than 1,900, all the others were closed.

    The ‘crisis’ was deemed over and aggressive enforcement was no longer needed, so I left. This lax enforcement eventually led to the closure of the Office of Thrift Supervision.

    1. I tend to blame the higher-ups for diminishing effective oversight that led to the risky and unethical behavior that caused the S&L crisis. Lawmakers loosened regulations. The “Keating 5” essentially took bribes. At least some bank executives went to jail over the S&L debacle in the 1990s which is more than happened to the Wall Street characters who took down the world economy over synthetic derivatives of mortgage backed securities in 2008. It’s important to look at these failures to learn why SCA MUST develop better owner oversight and a transparent system of checks and balances to help homeowners protect ourselves from unscrupulous individuals or stupid mistakes by the Board and management. We simply can’t sit back and think the regulators are going to save us.

  2. Now if you take Frank’s example and compare it to NRED it is very similar. NRED is meant to be for the protection of the homeowner, problem is that CAI is professed to be the same, however it is headed up by HOA attorney’s and management companies who have a huge financial “dog in the fight.” For this reason, over the years they have developed a powerful lobby within the Nevada legislature and a network within the many HOAs to control voting on bills up for passage each session. They have also developed many “friendly first name basis relationships” within NRED.

    Along comes Mr. or Mrs homeowner that needs help from the ombudsman and staff and who has the power of persuasion to get help and attention, the lawyers or the single homeowner that is one of thousands who are charged $5 per rooftop?

    I have sat in on the sessions at NRED and heard so many homeowners complain that their complaints sit for a year, two, sometimes three with no action or are dismissed for no good reason. There are many, many “bully boards” and yet maybe one out of dozens get a slap on the wrist….. When you go to the legislature it used to be “oh no, not another HOA bill”.. The ONLY WAY to make changes is to get petitions going in MASS and lots of people to speak at the next session. large numbers work believe me, but a few voices will do nothing.

Leave a Reply

Your email address will not be published. Required fields are marked *