What’s being human got to do with it?

We are all more irrational than we think

I don’t know if anybody clicked on the links to psychological studies in my last blog about the 2/13 Election Committee’s hostile reaction to my appeal of my unfairly being excluded from the 2018 election process. But let’s assume nobody did.

Anyway, here’s the point.  These important psychological studies contributed to our understanding of how people conform to roles or how people tend to obey authority figures even if they hurt innocent people. This research contains valuable lessons that we all need to learn– but these are particularly important lessons for those in SCA power positions — if we are ever going to heal our community divide.

Why am I talking about this?

My goal is to encourage people in our community to re-frame the way we approach conflict resolution. None of us can be trusted to be completely objective and completely rational 100% of the time so we need to have a fair and objective governance system that’s strong enough to make sure those in power don’t abuse it.

Those in power can’t be allowed to run roughshod over anyone more vulnerable for any reason. And the only way to guarantee that is to have a system that won’t let them get away with it.

We are wasting our limited time, money and emotional resources on attorneys who cannot fix what is wrong, and who are, in my view, a big part of the problem.

Study #1: The Milgram Experiment

The Milgram experiment (1961) was designed to test how readily people acquiesce to authority even when it is in conflict with personal conscience. The goal was try to understand why so many “good Germans” just went along with Hitler’s horrific actions.

Conclusion

“Ordinary people are likely to follow orders given by an authority figure, even to the extent of killing an innocent human being.  Obedience to authority is ingrained in us all from the way we are brought up.

People tend to obey orders from other people if they recognize their authority as morally right and/or legally based. “

This Milgram study concluded that people obey authority figures even if it hurts innocent people. This can easily be applied to what happens here in SCA, given that we are all humans.

How could we use this knowledge?

So, to me personally, giving more power or “authority” to a small group of people is not the answer. The answer is having a governance system that will control those who have the power to prevent them from abusing it.

And to have a system that requires the uniform application of the rules to everyone to ensure that ALL owners are protected from any form of abuse, regardless of who is in power.

Study #2: The Stanford Prison Experiment

Stanford Prison experiment (1971) demonstrated how quickly people adapt to their assigned roles. Students randomly assigned to be the guards began acting aggressive and authoritarian and rapidly began feeling justified in being abusive while those randomly assigned to being prisoners took on so much of the fear and agony of prisoners subjected to abuse that the experiments were stopped for ethical considerations.

Today’s Communication workshop and yesterday’s Board meeting yielded some examples of how people conform to their roles, respond to authority, and conform to norms that are placed upon them that I will discuss in a future blog.

Right now, I just want to recommend a book to anyone who would like to explore a little further how we as humans behave irrationally and how we need to have strong social norms and systems in place to protect us from ourselves and the limitations we have from just being human.

The (Honest) Truth about Dishonesty
How we lie to everyone – especially ourselves

How could this book help SCA leaders grow into their roles?

I think Dan Ariely’s entertaining and informative writings (and other research I will suggest later) could teach us concepts and skills that we could use to help ourselves and to resolve some of our SCA community’s deepest divides.

I love listening to this guy’s books while I’m hiking. He describes about experiments that test and analyze theories about the many ways:

  • we humans are a lot less rational than we think,
  • how we’ll do something completely irrational and then just make up a reason to justify it,
  • how we all have blind spots,
  • how much our expectations can influence what we see, feel, or can learn.

Polly Anna speaking here:

It might encourage those in power to be more open to handling conflict in a more constructive way that might prevent exacerbating problems until court is the only answer.

The price we all pay

Refusing to openly discuss and fairly resolve owners’ concerns “on the advice of counsel” creates a litigious environment in which only the attorneys profit.

The price ALL owners pay is much larger than just the attorney fees. We pay for it with our most valuable resources: peace of mind and sense of belonging and joie de vivre.

Election Committee was inhospitable, angry even. Nevertheless, I persisted

Today’s SCA Election Committee meeting was an important part of the SCA Board election process because it was the official start of the election process where candidates drew lots for their ballot position.
What could it hurt if I drew a lot until the proper authority rules on my eligibility to serve?

Instead of considering the rejection of my candidacy for the Board as final, why not just treat me like any other neighborhood volunteer  – at least until there was one iota of proof that I really was worthy of such vilification?

What happened went I went looking for justice?

I gave the Board and management notice that I was appealing the 2/9/18 Notice of Ineligibility that the Clarkson Law Group had whipped up on SCA owners’ dime to make sure that someone who had the support of at least 2,000 owners was blocked from even being a candidate.

In the prior notice, I asked for them not to use the attorney or security to threaten or humiliate me. They accommodated me only insofar as owners didn’t  pay for an outside agent to ensure that I was relegated to pariah status. But then, they knew full well, they didn’t need to bring in the heavy-weights, the Election Committee – dutifully, sternly, and totally predictably stepped up to take on the enforcer role.

The Officials act official, or was it officious?

Before the meeting, I went to the EC chair, Carol Steibel, and told her that I was appealing the attorney’s decision to deem me ineligible and that I wanted to draw for a ballot number so I could stay on equal footing in the election process until a determination on my eligibility was made by proper authority (NRED).

When I handed her my 2-page appeal, she tossed it aside testily, and said,

“I’ve already read that.”

“How could you have? I just wrote it this morning.” said I.

“Well, I read something else, then. The attorney said you can’t be a candidate, and we have to listen to the attorney.”

When I sat at the table, two members of the committee told me sternly to get away from the table. Only candidates could sit there.

Carol somberly started the meeting by saying that the meeting would not be recorded and that no one was allowed to record it as it was against the law.

The thing about this edict that totally chaps my hide is a major owner protection to allow recordings so, to be ornery I guess, I said I was going to record it. Their reaction was intense. Forrest Quinn joined in saying that he did not authorize recording him.

Bob Burch said he wanted my assurance that I wasn’t going to record it. I said I wasn’t recording it, and he announced to the crowd,

“We’ve had this trouble before”

further solidifying the ‘Us vs. Them Her’ dynamic permeating the room.

Carol very formally read a notice from the attorney about my situation. She would brook no argument. It was FINAL!

  • The Board deemed Nona Tobin’s Board position vacant by law making her ineligible to be on the Board.
  • Nona herself made the charges public.
  • No circumstances have changed that would make her eligible.
  • Clarkson law office was merely asked to inform Nona since the Board’s decision that  was ineligible has not changed.

My, my, my…what an awful person that Nona is! An existential threat.  Carol’s tone made it totally clear that questioning the veracity or authority of the attorney would be considered treason, the concept of “Innocent until proven guilty” totally shrouded by her blind spot.
P.S. None of the above statements from the attorney that Carol reported are true. I’ll be handing the documents over to NRED to prove it as soon as I can.

Carol was so busy genuflecting before Clarkson’s awesomeness that she might have forgotten for the teensyist second that as the Election Committee Chairperson, her primary job is to protect the integrity of the election process, to ensure the election is free from undue interference and to protect ANY owner from being disenfranchised.

Maybe a little training? I suggest training should come from NRED or any competent, independent professional, but absolutely not conducted by Adam Clarkson.

Gary Lee, Board candidate new to the scene, innocently asked for a better explanation why I was dumped, but Carol was adamant that she had said all that needed to be said on the subject, and that he was holding up the very, very important business of the committee.

Tobin appeal to being disqualified as a candidate

Quick note about # 4 above, it should read that in addition to the NRED form 850, I also submitted the disclosure form as edited by the attorneys even though it was not legally-mandated for me to do so.

Tobin Appeal Page 2

Ask Yourself:
Would my actions make sense if I were on the Board to make a profit?

What does my being on the Board have to do with what the court does about the house? The Board doesn’t have anything to say about it.

But, for the sake of argument, let’s say the Board could vote on something related to the outcome of the title fight. If my ulterior motive was to get the Board to vote to quiet title to me instead of the bank, wouldn’t I have tried a different approach?

If I were trying to get a Board vote on litigation I could profit from, wouldn’t I have been smarter to ingratiate myself and “go along to get along”.
  • Wouldn’t I have been foolish to risk the ire of the Board to protect the right of owners to legally sign petitions to call for a vote to remove directors from the Board?
  • Would I have pursued formal complaints to enforcement authorities saying that the attorney and the GM should be fired for causing the Board to act unlawfully?

Ask yourself:
Isn’t it more likely that the same over-compensated GM and attorney, after protecting compliant directors in power from a removal election, just created a convenient ruse to bypass owners’ votes and remove the thorn in their side and block me from coming back?

 

 

The house that took over a life

Six years ago today my fiance Bruce died, leaving me to deal with an underwater house that has consumed many of my waking hours to this day.

The story of this house, the source of so much aggravation, is the poster child for how homeowners and HOAs have been victimized by banks, debt collectors, managers and attorneys in the aftermath of the housing market crash a decade ago.

Long story short starts with the banks

  • Housing market crashed.
  • Bruce died at the bottom of the market.
  • He left a trust with one asset – an underwater house.
  • The banks would not refinance it nor approve any short sale.
First plot twist

In the vast majority of the legal battles over an HOA foreclosure, the homeowner is gone before the fight.  The homeowner doesn’t fight if the delinquent debtor was a deadbeat, debilitated by debt, or died.

I am not a deadbeat, or even the debtor, nor debilitated nor dead.

I am a fiduciary, fighting for the rights of Bruce’s trust.

Back to the bank….
  • After B of A botched several sales, I refused to keep paying maintenance costs, such as HOA assessments and utilities.
  • B of A took possession but would not take title and did not foreclose nor accept a deed in lieu offer from me.
  • Nationstar took over servicing from B of A, but Nationstar’s investor also refused to close any deal no matter how good the offer was.
Enter SCA agents to try to beat the bank
  • Story continues for a couple of years.with SCA agents starting and stopping, scheduling and then withdrawing a threatened  foreclosure for delinquent assessments
  • B of A tendered the super-priority portion of delinquent SCA assessments, but SCA’s agents (FSR and Red Rock Financial Services) refused to accept less than their version of full payment – very similar to the $55,000 Citibank settlement Rex reported out from the December 7 Board meeting.
  • After SCA’s agents cancelled the foreclosure sale multiple times, they sold it in 2014 to a Realtor for 18% of its value, $63,100 without ANY notice to me, my agent, or the bank. This Realtor worked in the Berkshire-Hathaway office where my listing agent worked.
Unbeknownst to the SCA Board, its agents were secretly working for themselves
  • SCA’s agents told the Ombudsman that the sale was cancelled, but then secretly held the sale anyway and did not EVER report to the Ombudsman that a foreclosure sale had occurred.
  • After the surprise sale in 2014, SCA agents credited SCA with only $2,700 of the $63,100 sale proceeds as payment in full, and SCA agents unlawfully kept the $60,400 balance.
  • FSR did not ever report in HOA records that the house was sold to the Realtor, or that the Realtor ever paid any assessment enhancement fees or new owner fees.
  • HOA records (created by FSR) are in direct conflict with recorded documents and show that a dentist took possession after the foreclosure, not the Realtor named on the foreclosure deed created by FSR.
  • There are two recorded title changes in the county records that do not exist in SCA’s records for which FSR has some explaining to do.

SCA is in, but can’t win

Three lawsuits to quiet title from 2015 to the present have thousands of pages of documents filed.

SCA is in the middle of this complex litigation even though there is nothing SCA can win and where there is nothing to lose but attorney fees.

Lawsuit 1

The dentist who currently has possession of Bruce’s house sued SCA and B of A for quiet title in 2015.

Records conflict about when the dentist took possession of Bruce’s house. It was either in 2014 after SCA agents foreclosed (which is what SCA records say), or he took possession in 2015 when he recorded a fraudulent quit claim deed (which is what County records say).

The court issued a judgment of default against B of A who did not respond to the summons. SCA was still in the lawsuit because the dentist inexplicably never served SCA a notice to appear.

Lawsuit 2

In 2016 Nationstar sued the Realtor who held the foreclosure deed, but then found out about lawsuit 1.

Nationstar took B of A’s place in the lawsuit. even though neither bank is owed any money from the mortgage.

Lawsuit 3

On behalf of Bruce’s trust, I sued all parties in 2017 to claim the title should be returned to Bruce’s trust because the foreclosure sale was conducted unlawfully in SCA’s name by SCA agents.

The dispute over the title to Bruce’s house is between me, the dentist, and the bank.

SCA has no financial interest in the title and was already paid in full for delinquent assessments in 2014.

Why is SCA being sued for its agents’misconduct?

SCA’s former agents foreclosed under SCA’s  statutory authority.

SCA is responsible for its agents, and the SCA Board is responsible for ensuring that its agents act lawfully.

SCA Board President Rex and SCA’s current agents refused to negotiate or do anything whatsoever to attempt resolution without litigation.

SCA could have gotten out of the litigation without cost by simply stating that the Board did not authorize SCA’ former agents to conduct the foreclosure sale unlawfully and affirming that no current or former Board member profited from the non-compliant sale.

How does this all relate to the big picture of protecting homeowners from being forced to pay for agents’ misconduct?

What happened to Bruce’s house has happened a thousand times in Nevada in the last decade.

After getting rid of FSR, SCA jumped from the frying pan into the fire and hired Alessi & Koenig in 2015 to be SCA’s debt collector attorneys without noticing that they had been sued in 500 of 800 HOA foreclosures they conducted between 2011-2015.

The situation worsened when Alessi & Koenig hid their assets from creditors, dissolved their corporation and morphed into HOA Lawyers Group. SCA continued to use HOA Lawyers Group after they were put on notice of the fraudulent scheme.

The downward spiral in how SCA handles debt collections continues to this day by contracting with the Clarkson Law Group despite their unethical practices designed to prevent these problems from being disclosed to the membership.

A 2017 UNLV/Association of Realtors study showed that HOA foreclosures have cost the real estate market $1 billion due to the approximately 700 cases they identified  Clark and Washoe Counties alone between 2013 and early 2016.

HOA Boards statewide have been duped (like SCA Board has been) into facilitating this major rip-off contrary to the financial interests of the associations and their members.

Next time:

The high price of protection
Analysis of the UNLV study estimating $1 billion property value loss due to HOA foreclosures in Clark and Washoe Counties alone.

Is SCA Board retaining lawful control of the budget?

Just saying that the Board acted “on the advice of counsel” doesn’t cut it

If the Board learned and followed these simple legal requirements, the GM and the attorney would be prevented from taking control of our budget and spending our money for something other than our benefit:

NRS 116.31151 (1)(a) requires the Board to prepare and distribute to owners a “budget for the daily operations of the association” which per CC&Rs 8.1(d) is deemed ratified “Unless 90% of all Owners reject the budget…”
The budget is distributed as required and is always ratified. No surprise. Hard to imagine 90% of all owners being mobilized to object to any budget the Board puts forward, but at least everybody knows what expenditures the Board has approved. 

NRS 116A.620 (1)(i) requires any management agreement to define spending limits for the GM.
Here’s the start of the slippery slope toward abdicationSCA Board and GM did not execute a management agreement nor have spending limits for the GM been defined. Pretty easy to rob Peter to pay Paul and then blame Peter for the missing money.

Per SCA bylaws 3.20, the SCA Board is prohibited from delegating policy control over the budget or, for that matter, deciding the amount of assessments, or deciding who can open bank accounts or sign checks or enforce the governing documents.
Here’s where SCA is really careening down that slippery slope. SCA is unprotected by not the Board not defining GM spending limits or service-level expectations in the legally-mandated terms of a management agreement.
Of course, without an agreement, the GM is not legally protected either. She is just an “at-will” employee, meaning she can be fired for any reason or no reason, just not a discriminatory reason. Her terms & conditions of employment are defined in the SCA Personnel Handbook and nowhere else.
But, don’t feel sorry for her. Not only does the Board coddle her, the SCA attorney has
 magically , albeit unethically, created “rights” for the GM that do not exist in black letter law and which are in direct conflict to the interests of the membership.

SCA bylaws 4.6 requires two Board members must sign all checks for any amount, and bylaws 3.25 requires that directors act on an informed basis while carrying out this duty, i.e., sign a check only if it is for something that has been approved in the budget.
Two Board members do sign all checks, but they may as well let the GM use a rubber stamp.

SCA Board Policy Manual 4.10 limits authority to request legal opinions to the Board as a whole or, in narrowly defined circumstances, to the President for the purpose of “…assessing the legal risks on actions under consideration…”. This provision specifically limits the GM’s authority to “…contact legal counsel regarding NRS 116 or other compliance issues…” not to act only “on the advice of counsel”. The SCA-Clarkson Law Group legal services agreement ONLY allows the attorney to provide legal opinions in response to specific Board requests. The attorney has NO decision-making authority over SCA policies.
Previous Boards had enough common sense to govern SCA without having to spend four times the budget to get the attorney to bless every action before it’s taken.
But then, Clarkson is a bully who has, using tactics bordering on elder abuse, and in clear violation of his professional standards of conduct, convinced the Board that it is a violation of their fiduciary duty to act without consulting him even in areas outside his firm’s practice specialty.
As a result, the President and the GM blithely use the attorney far in excess of what is legally permissible for self-serving purposes and in defiance of all common sense.

In conclusion…

The GM’s takeover of the SCA budget is happening on a grand scale because the attorney has blessed it (thereby being unjustly enriched), and the Board (who thereby gets to stay in power) self-righteously allows such foolishness as:

  • Spending an unbudgeted $85,000 for a CPA to do the Election Committee’s normal job to mess up the recall election was allowed by the GM solely “upon the advice of counsel”, but absent the inconvenience of legal Board action.
  • Six months spending for legal services was approved in the budget to cap at $45,000, but four times that amount, $185,000, was spent by the GM without any formal Board action to approve it and without conforming to the laws governing civil actions (NRS 116.31088), or sanctions for violations of governing documents (NRS 116.31085, CC&Rs 7.4) or limits on authority of the Board (NRS 116.3103, NRS 116.31036, NRS 116.31084) or owners rights (NRS 116.1104, NRS 116.31083, NRS 116.31175), or good faith  (NRS 116.1113, NRS 116.1112), and prohibition against harassment and retaliation (NRS 116.31183, NRS 116.31184).

I’m as amazed as you are at their gall.

Who benefits from spending SCA homeowners’ money?

Assessments levied against the unit owners’ property can only be used for the sole and exclusive benefit of the membership of the Association, e.g., maintenance of the common areas, actions to protect the property values of all our homes, preserving amenities and high quality lifestyle.

It is not ever acceptable for the Board, the GM or the attorney to put their personal, financial or political interests ahead of the interests of owners AKA “the common good“.

Therefore, allowing SCA management or agents to spend owners’ money for highly controversial and unbudgeted purposes that provide no benefit to SCA membership should not be tolerated.

Board decisions must always be evaluated against the standard of “Who benefits by it?
If the answer is anybody or anything other than “the common good“, don’t do it.

Here are some examples where no benefit accrued to “the common good“, but they did it anyway.

  • The SCA membership lost when the Board vindictively evicted the Foundation Assisting Seniors after the GM failed to mediate a mutually-acceptable solution to CSG’s problems, blamed the Foundation President, and made up a silly story to justify forcing members to pay more after damaging a valued community resource.
  • Paying $85,000 for a CPA to conduct the recall election in a manner designed to keep the current Board majority from being recalled for cause provided no benefit to the association. It was more than a waste of owners’ money to keep those Board members in power. It allowed the attorney and the GM to keep their over-compensated jobs, too.
  • Paying untold thousands of dollars to make repeated threats of frivolous litigation of defamation against a Board member and unlawful orders for her to  cease & desist making inquiries regarding GM compensation clearly wasted owners’ money. It’s easy to see how using the attorney this way was protecting the GM and her fat paycheck. But, it’s impossible to see how such extreme action was protecting the association.
  • There is no benefit to the association for the Board to unlawfully remove an elected Board member on the false charge that she is making a profit from her Board position. It is simply a power trip and a nasty way of showing 2,000 voters that their votes don’t matter.

The cautionary tale of the City of Bell

What we can learn from The City of Bell Scandal

The Bell scandal involved the misappropriation of public funds in Bell, California, United States over a period of several years in the first decade of the 21st century. In July 2010, the Los Angeles Times published an investigative article on possible malfeasance in the neighboring city of Maywood, revealing that the city officials of Bell received salaries that were reported as the highest in the nation.[1] Subsequent investigations found atypically high property tax rates, allegations of voter fraud in municipal elections and other irregularities which heightened the ensuing scandal.[2] These and other reports led to widespread criticism and a demand for city officials to resign.[3][4]

In the end, seven Bell city officials, including former mayor Oscar Hernandez, former city administrator Robert Rizzo, assistant city administrator Angela Spaccia, and four city council members were convicted on graft and corruption charges, and were given sentences ranging from probation to twelve years in prison.[5] – Wikipedia City of Bell Scandal

In order to pull this scam off, step one was to conduct a fraudulent election to become a charter city so controls on salaries imposed by the state would no longer apply. The voters were poor and 90% Latino which made them easy marks. The City Council gave themselves salaries and so they turned a blind eye when the Manager authorized excessive compensation to the Attorney, Police Chief  and other top managers Manager Rizzo’s salary during the final year of the scam was $1.5 million, five times what the L.A. country executive earned.  Rizzo was unapologetic for years, falsely claiming he could have made that amount in the private sector.

Could that happen at SCA? Or does SCA have adequate internal controls to prevent such corruption?

Let’s see, how would we know if adequate protections are in place?

The Board, GM and attorney claim that unit owners cannot access information needed to evaluate the adequacy of internal fraud prevention controls.  They put lipstick on this pig by claiming it is their fiduciary duty to keep confidential whatever they say is confidential – even if there are specific provisions in the law that prohibit SCA records being withheld by SCA agents from owners or individual members of the Board.

It is an abuse of privilege to demand that routine business correspondence/emails or training sessions must be treated as “confidential”. To prevent owners from knowing about these Board or GM actions that are supposed to be exclusively for the benefit of the owners violates both the spirit and the letter of the law.

It’s particularly troubling when the attorney gives the bizarre interpretation of SCA bylaws 6.4c to falsely claim that the attorney has the authority to restrict an individual Board member from inspecting ANY SCA records. While I was a Board member, I was ORDERED to stop asking questions about GM compensation and denied access to ANY SCA documents until they were partially released a month after I was kicked off the Board on false charges.

It doesn’t take a genius to figure out why concealing records from a Board member who is trying to ascertain the adequacy of fraud prevention controls looks a little suspicious.

Excessive secrecy is a giant red flag.

Owners have a right to know:

  • Does SCA pay extraordinarily high executive salaries without using a process that would justify them as a rebuttable assumption?
  • Have there been failed attempts to remove elected officials followed by allegations of election interference by the highly compensated GM?
  • Are board actions taken in secret without tolerating any owner involvement?
  • Do SCA agents make policy decisions which NRS and SCA bylaws prohibit the Board from delegating?
  • Has the system for owner oversight been decimated under Self-Management?

My conclusions

Prior Boards should be congratulated for the excellent start toward a good governance system that they accomplished by the creation of the Board Policy Manual. It’s tragic that the current Board President led the Board away from the simple task of following it.

As a result, SCA is now swinging without a net. We do not have a fair and open system. Owners must be involved to strengthen the system so the rules apply equally to us all and the rules protect us all equally. And we certainly don’t need an attorney to charge us $325/hr to tell us how to do it wrong.

It is a waste of time to keep bickering over whether the individuals on the Board are corrupt or not. It is enough to say that the Board is not exercising enough competent control over SCA’s agents to adequately protect owners from the negative consequences of their actions, intentional or not.

Make your vote count

We simply need to elect people who are willing to be trained to ensure that a governance system is established that is transparent, FAIR, and strong enough to protect owners no matter who is in charge. This process cannot simply be delegated to the GM for a “recommendation”.

But, even if it such delegation were appropriate, the GM has not demonstrated that she would have the necessary leadership or analytical skills to lead an inclusive, collaborative process to a satisfactory conclusion that meets the needs of the SCA membership.

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.

 

December 7 Board meeting wrap up: Part 1

It was my birthday and I had a golf clinic at 3:30, but I dragged myself there and listened to the audio of the part I missed. Spoiler alert – there is no recommendation on the restaurant and the Board does not blame itself for anything wrong: nothing wrong with the transition to self-management; FAS eviction was all Favil West’s fault, and the $85,000 spent so far on the recall was all the fault of the petitioners.

Owner Comments: $10K for medical equipment

Roger Cooper, SCA owner since 1999 commented on item 12g, the Community Service group’s recommendation for “Approval of an expenditure up to $10,000 to purchase durable medical equipment” (to replace what was previously provided by the Foundation Assisting Seniors (FAS).

Accurately assessing that this is a drop in the bucket of the cost of replacing what FAS was providing free, Roger said that this medical equipment request of $10,000 was just the beginning of a bottomless pit.

Emile Girard had a lot to say (loudly) about this item both at the first comment period and when the item came up on the agenda. Emile highly complimented the Board and the CSG for their good works while he stridently blamed Favil West for everything except the weather: Favil didn’t negotiate to stop FAS’ eviction, even sending out a postcard about service interruption was vindictive and revenge.

Emile apologized for his emotional rant, but Rex welcomed his attack on Favil in a way that was a far cry from Rex’ oft-stated policy to stop speakers from making personal comments about other owners. (Rex certainly stopped me cold when an innocuous comment of mine included a unit owner by name.) Emile is certainly entitled to his opinion, but the meeting chair is not entitled to allow personal attacks when he agrees with them and shut owners up if he doesn’t.

Rex even passed along an untrue rumor stating that FAS was moving out of the area, but I am informed by a FAS Board member that FAS has rented a space not too far from Von’s.

Construction Defect Litigation

Construction defect lawsuit on Liberty Center is in mediation. There was one session in November and there will be others until it goes to trial in 2019. (Rex’s comment that SCA has not changed any of our demands disturbed me a little bit as an odd choice of information tidbit to share with the members. It leaves the impression that he personally approaches mediation with a “my way or the highway” attitude which is the antithesis of the good faith needed to achieve a win-win solution.)

Surplus Funds

I don’t even want to get into the issue about surplus funds, but they changed the minimum acceptable equity level from $500,000 to $250,000 as recommended by the Finance Committee. It’s not my issue, but it might be of concern to owners on fixed incomes who would like the Board to refund the excess to owners or reducing the assessments going forward rather than collecting more than is needed for annual operating costs.

Recall Costs

CFO Jim Orlick reported that the costs for the recall through November approximate $85,000, and I would like to report that I consider that expenditure an egregious failure of the Board’s duty of care to the membership.

It is an beyond disingenuous for Rex, the GM and the attorney to pretend that these expenditures were made in the best interest of the membership. They ordered these unbudgeted payments in violation of NRS, SCA bylaws, the Board Policy Manual the SCA Election & Voting Manual and prevented the Election Committee from performing their chartered duties as volunteers. They should be held accountable for it.

Director Comment Period is awash in self-righteous indignation

Bob Burch spoke at length about his opinion of the recall which he said was because of the Foundation, the vendor issue with the Clubs, and poor communication on less visible issues. He said the recall was caused by a “perfect storm”. He offered a semi-apology to the Clubs for not informing them of the insurance and business license changes, which he then negated by saying that vendors should have business licenses and insurance is a real problem for HOAs. He did not seem to see the real issue as being the autocratic change of practices without prior notice or negotiation with those affected.

Bob’s main point about the FAS eviction was that it didn’t have to happen that way, but still, that it was all FAS’ fault because the Board had bent over backward to be fair. Other people see it quite differently. Please see Favil West’s response that I posted on my campaign website last March. Also, a resident’s answer to refute Bob’s claims published on the AnthemToday blog is worth reading to set the record straight.

Bob read some incendiary passages from  blogs, and tried to elicit sympathy from the audience about how beleaguered Board members are being subjected to such horrible, unwarranted abuse by malcontents.  

Bob echoed Rex’ concerns about how tragic all this abuse of Board members was because it meant that there wouldn’t be qualified people applying for the Board. This is failing to see how the Board is pushing good people away.

What they are really saying is that the petitions to recall four Board members constituted abuse. Such abuse would make qualified people not want to run. Maybe, but more importantly, Bob and his cohorts are doing everything they can to get people who don’t agree with them not to run. 

Totally backward. Qualified people don’t want to serve because of the way the Board treats Directors that don’t “go along to get along”. Who wants to serve on a Board where a majority can just kick a political rival off based on unproven allegations? 

I have spoken to three women who would be excellent on the Board, and they all said they wouldn’t run because they didn’t want to be treated the way I was treated.  

“It’s just not worth it. At my age, I don’t want to deal with it.”

“They are a bunch of ‘good ole boys’ who won’t listen to anyone with good ideas.”

“They’re just on a power trip.”

“I haven’t got thick enough skin to take it.”

Bob, you really need to stop whining about all the abuse that you and the other Directors take after what you and your buddies on the Board did to me.

You, the other male Board members and the attorney ambushed me and accused, berated and attacked me for an hour and a half in July 27 executive session and refused to have an open hearing I requested.

It’s that type of bullying of a person who is supposed to be an equal Director is what drives qualified owners away from wanting to serve on the Board.

But then, I guess you guys already figured that out.

 

 

December 7 Board meeting items of interest

The last SCA Board meeting of the year is tomorrow at 1:30 PM. I’d like to point out a few things that you might not notice immediately, but which are important to for owners to know the full story.

Click here for full agenda.          Click here for draft Board Book.

Financial Report for October

Two things mar an otherwise brilliant job of bean counting:

  1. How much are we paying for who to do what?     SCA is now an employer with 80 employees costing $3.5 million -over 40% of operating budget, there should be a clearer accounting of cost of staffing by budget objective. The Board cannot hold the GM properly accountable nor can the owners be protected from such failures as excessive management compensation or featherbedding, if the accounting obfuscates these facts. And, more importantly, the Board is not holding itself properly accountable to the owners by letting the GM hide what SCA employees (particularly managers) are being paid and what they are being paid for.
  2. Since Adam Clarkson became SCA Legal Counsel on May 1, there have been $185,010 expended for legal fees which was 411% 0f the $45,000 budgeted for legal fees over half a year. This is the same attorney
    • who told the Board the GM did not need its authorization to expend SCA funds for unbudgeted purposes.
    • who does SCA’s debt collection function in the least cost-effective and most draconian way available.
    • who, along with the GM, is responsible for additional unnecessary expenses of at least $73,000 for the recall election which were STRONGLY objected to by the proponents of the recall.
    • who is being paid $325/hour to cause or allow the Board to take unlawful actions against political opponents of the GM and certain members of the Board.

 

Election and Voting Manual Revisions

Reviewing policies on voting may be really boring, but it is important to protect homeowner control over who represents us on the Board. There has to be a sound, uniformly administered system in place to prevent ANY election interference from tampering with ballots, abuse of power, or even unfair communications.

The largest HOA board election rigging scandal in Southern Nevada involved primarily attorneys who were supposed to be neutral outsiders who stacked HOA Boards to channel construction defects litigation.  This Election and Voting Manual is intended to ensure that the SCA homeowners actually control who sits on the Board and that those Board members actually work SOLELY for the benefit of the homeowners.

Yet, it doesn’t matter what is in this or any other SCA policy manual if the Board doesn’t follow SCA’s own rules or if it allows the GM and/or the attorney to manipulate the process in favor or against certain owners.

Cherry-picking which laws to follow is a slippery slope

There are several areas where our election process is not in conformity with NRS or the SCA Bylaws. For example, SCA Board does not have a nominating committee as required by SCA bylaws 3.4a below. While there may be good reasons to not want to have such a committee, this is an example of how problematic it is to simply disregard a provision. The bylaws must be uniformly enforced and not simply disregarded. The narrow exception is when the bylaws explicitly conflict with a mandate in a Federal or state law.

Filling Board vacancies after a director is removed.

The final clause of SCA bylaws 3.6. requires a vote by the unit owner to fill a Board vacancy caused by a Board member being removed.

“Upon removal of a director, a successor shall be elected by the Owners entitled to elect the director so removed to fill the vacancy for the remainder of the term of such director.”

The proposed change to the Election Manual, below in green, apparently attempts to justify retroactively how Jim Coleman was appointed, but even the new provision doesn’t allow for an appointment to be made without any notice to owners, any candidate nominations, or the required vote of owners.

Note that there is nothing in either the existing nor the proposed versions of the Election Manual that gives the Board legal cover for what they actually did to remove me nor what they did to replace me nor what they might be contemplating to do in the next election (keep me off the ballot).

  • How they removed me from the Board by simply declaring my position vacant is not authorized in NRS 116, NRS 82, SCA governing documents or any existing or proposed Board policy.
  • By extension, that also means that there is no legal means by which the GM, the Board or the attorney could refuse to allow me to be a candidate for, or to serve on, the Board should I choose to run again.
  • Also, note that this manual includes the NRS provisions which the Board President and GM violated by using the Spirit to publish their one-sided argument regarding the recall without permitting equal time and access to the opposition. Complaints of these violations are currently being investigated by NRED.

These proposed changes don’t describe what the Board actually did nor do they conform to the bylaws. The Board is simply pretending they have the authority to act against laws and policies “upon the advice of Counsel”. We’ll see.

Complaints to the Election Committee are not fairly handled

The Election Committee complaint process is to informal and allows for problems at both ends of the spectrum. On one end of the spectrum, informal complaints may be submitted without evidence or substance which could just waste the committee’s time .

On the other end, there is substantial risk of unequal treatment occurring, or even being merely perceived, if there isn’t a good enough procedure defining accountability, investigation, documentation and notice requirements. It’s sloppy management, and it reduces the community’s trust of the election process. It also allows interference in the independence and neutrality of the Election Committee.

In the proposed draft, there is still no standard format for resolving complaints, no required documentation to be maintained in the official SCA record, and no notice of the disposition formally given to the complainant.

I recommend the process defined in the SCA CC&Rs and utilized by the Covenants Committee would be a good model for the Election Committee to employ to fairly investigate and document complaints regarding Board elections.


Board Communications Task Force

In June, I proposed a resolution to improve Board-owner communications , but couldn’t even get a second to the motion. Now, five months later, nothing has been done to increase transparency or meaningful utilization of owner expertise in governance.

Rex appointed a couple of Directors to be a Board Communications “task force” (with no owner involvement)  and here are their recommendations:

Here’s what should be done immediately:
  1.  Either use SCA-TV to video broadcast Board meetings live or use some service like GoToMeeting.com to make the Board meetings accessible online in real time and interactive.
  2. Take the password off the website.
  3. Make the eblast mailing list opt-out instead of opt-in
  4. Follow the lead of Sun City Summerlin’s new GM in attitude.
  5. Stop using Board work groups that withhold information from owners.
  6. Expand the committee structure to utilize expertise of residents and have meaningful owner oversight and influence in governance.

Item 15B “Self-Management” is listed as New Business to be presented by Tom Nissen rather than the GM. The paragraph above the total back-up in the Board book to let owners know what the Self-Management item is about.

This raises a lot of questions about the Board’s failure to protect homeowners by hiring a GM without ANY of the defined terms and conditions of employment required in a management agreement.

  • Why is a Board member making a presentation on the transition?
  • Why doesn’t the GM whose compensation is $100,000 greater than other GMs at comparable Sun Cities like Summerlin make the presentation?
  • Why hasn’t the GM been held accountable for the development of the complete policy framework needed to protect SCA from legitimate risks and potential liability associated with becoming an employer or
  • Why hasn’t the GM held accountable for AT LEAST having written plans and timetables for getting the job done?
  • How will the Board – let alone the owners  – even know if the job is done right and on time?
  • Why did the Board let the GM unlawfully conceal SCA records on the transition to self-management from one Board member in violation of our bylaws 6.4c when this information should have been easily available to any unit owner?

After the Board meeting, I’ll let you know if any of these questions have been answered. Or if there are just new ones.

GM Dumped $73,000+ Removal Election Costs on SCA Owners

The GM is to blame for the big bill – not the SCA owners who must pay it

This huge expense is still climbing, but it was totally unnecessary, not legally authorized by the Board, and did not serve the best interests of SCA.

Both the GM and the attorney should be fired for spending our money to interfere with the integrity of the removal election.

This unauthorized expenditure is sufficiently egregious to warrant the termination of both the GM and attorney, but that won’t happen because the beneficiaries of the election interference by SCA’s agents included a majority of the Board which was apparently important enough to them to stand by and let SCA owners foot the huge and unnecessary bill.

While I was on the Board I aggressively attempted to protect the independence of the Election Committee,  but alone and constrained by ethical boundaries, I was no match for the abuse of power by the Board President and SCA’s agents who were not so constrained.

A well-documented contributing factor to my unlawful removal from the Board was that I informed the Ombudsman on July 24 of my concerns about the need to protect the independence of the Election Committee (and also to protect owners lawfully collecting petition signatures) from the significant GM/CAM/attorney/Board interference I observed.

Berman’s constant improper placement of blame

David Berman continues to perpetuate the myth that these unnecessary and unauthorized costs were caused by the petitioners who (legally) called for the removal election.

This targeting of unit owners is obviously wrong. Owners don’t have enough power to be culpable.

Think about it.

  • If 1,200 unit owners had wanted  the Election Committee to conduct the removal election, but the GM did not want it, would they have been able to make their wishes happen over her objections?
  • If any of the petitioners had come to the Board meeting and begged to have SCA fork out over $73,000 to pay an unknown CPA and the attorney to do the Election Committee’s job, would SCA have spent one dime?

Both the GM and the Board President had to want SCA money to be spent on agents of their choosing  to run the removal election (incompetently or, more likely, unethically), or OUR money  would still be safely in the bank.

The Spin Doctor at work

Yet, despite all evidence to the contrary, David Berman persists in promulgating this almost laughable propaganda that unit owners could make the GM do something that doesn’t serve her interests. Smug in this delusion, today he blogged with a melodramatic and an almost audible sigh that this big $73,000 number would still be bigger when the attorney and CPA bills all come in:

Sad. SCA deserves so much better.
But, wait, hope may be on the horizon:

CIC Commission recently held a GM accountable despite HOA attorney advice that action was OK under NRS.

If Rex and Sandy having Clarkson on speed dial is no longer as good an excuse as “the dog ate my homework”, then maybe…

AnthemOpinions blogspot reported about a case that was heard at the recent CIC Commission meeting which seemed to demonstrate the Commission’s repudiation of the “the attorney said I could” defense.

 

The Zeitgeist
Perhaps, we are reaching a tipping point.

In the whole country, the public conversation has shifted seismically around sexual harassment. Suddenly, society-at-large is not just standing silently by while men in power abuse vulnerable people with impunity.

Maybe the tide is turning here at SCA too.

Now, owners no longer seem so resigned and no longer seem willing to tolerate inexcusable behavior or poor leadership. A critical mass is forming, and this is a necessary step to creating a healthier balance of power in our community.

As formerly discouraged and disenfranchised owners are more willing to speak up and stand up to bullies, SCA’s bullies will predictably face a Come to Jesus reckoning. A tectonic power shift will occur that, in retrospect, we will be surprised at how long it took us to take our power back.

 

 

On the Advice of Counsel is No Defense

After a relaxing couple of weeks in Cabo, I have been immediately hit by how badly SCA homeowners are being treated by our highly compensated and highly self-serving agents.

This first example from the November Spirit demonstrates how our well-meaning volunteers on the Election Committee have been duped into allowing the GM and attorney to violate the integrity of the removal election process at great expense to the membership.

Who gives the association attorney the power to make such decisions?

No one. At least not legally.

NRS 116 does not give an attorney who is advising the Board ANY authority to decide any policy issue.

NRS 116 does not give the attorney ANY authority to advise the Board to violate any provision of Federal, state, or local law or of our governing documents or policies.

NRS 116 does not give the attorney ANY authority to require the Board or the GM or a committee to take it not take any particular action.

Whose authority is it?

The buck stops with the Board, and they can only legally delegate some of their duties, but can’t delegate ANY of the ultimate accountability. The GM is a licensed manager, and she can’t get out of being accountable for the standards of practice listed in the law by getting the attorney to say its okay to break or bend the law.

NRS 116 and SCA governing documents and policies define clear requirements for:

  • contracts must be authorized by the Board in open session,
  • the Board SHALL NOT delegate policy authority over the budget
  • getting bids for contracts
  • how elections are conducted
  • under what circumstances attorney’s opinions are sought BY THE BOARD and for what purpose

None of the legal requirements were followed in this case, just as they are frequently ignored in other cases, for self-serving purposes and not for the benefit of the membership of the association.

I would like to point out that the issue of the Board President Rex Weddle, the GM Sandy Seddon, and the former-CAM Lori Martin taking actions in excess of their legal authority to interfere with the removal election process is the subject of numerous complaints and is currently under investigation by NRED. If their defense is simply that “the lawyer said we could do it”, they better be ready to take their wallets out. I would expect that feeble excuse to fall on deaf ears.