SB 417- Testimony in opposition, Senate JudiciaryCommittee Tuesday April 11, 2023
My name is Mike Kosor. I strongly oppose SB 417. I serve as one of only two elected directors on mydeclarant controlled Master Board of a nearly 9,000 units community.
Senators, we should be seeking to ADVANCE board transparency, especially where boards are declarantcontrolled, and ENCOURAGE greater participation of owners in their HOAs. THIS BILL DOES THE OPPOSITE.
Prohibitions on defamatory statement is appropriate and long a violation of NRS. But as written, this bill (sec 2 & 3) will allow the association to determine what they consider defamatory and ultimatelyprovide the association the ability to censor free speech based on opposing positions from that of theboard (or declarant when appropriate). This section of NRS 116 was intended (in 2013 when added) toprovide the Division and Commission powers to protect homeowners from bulling, “out of control” HOAcorporate boards and management companies. Existing civil laws dealt with owner misconduct- amisdemeanor. What is now proposed creates as new crime and flips the protection on its head. It is anassault on First Amendment rights, an end-run of Nev anti-SLAPP laws, and generally works to chillowner opposition to the governance of their communities- not to mention a rainmaker for attorneys and management companies.
We have association attorneys routinely writing cease and desist letters to homeowners based onopposition to board actions made in person and/or on social media, most all of which are baseless and used simply to intimidate. They do not file litigation because 1) a vote of owners is righty required andmore importantly, 2) most all actions would be thrown out as baseless. But the threat of action -baseless or not- is the chilling element. If they could, as this bill attempts to permit, side-stepping theowner vote requirement or by using proxies, the chilling effect would be extensive and immediate – using the purse of owners.
I have been a victim of a defamation action- the first legal action of my life (Olympia v Kosor). It was 5years, A Neveda Supreme Court ruling, and nearly 7 figures in attorney fees, even when invoking Nevada’s anti-SLAPP law. While the developer lost its battle with me (the Court finding the action “quintessential SLAPP”), the developer and his appointed board won the war. My neighbors dare not benext. But they did subsequently elect me to represent them. I am a retired USAF Colonel and fighter pilot, with combat experience in the first Gulf War. This experience, defending the attacks by thisdeveloper on my family’s financial future, was in total the most stressful experience of my life.
I am uncertain as to the viability of the Division (or Commission) protecting the fundamental right of free speech and to perform the needed due process of law, censorship of communications in social media,work place violence, civil disobedience, etc., this bill could levy on it. Do you really want the Division orvolunteer directors susceptible to the influence of mangers and declarants involved here?
A second anti-transparency effort of the bill is it seeks to charge “actual” cost to inspect documents. Allcommunity managers are paid to provide the record keeping services for the association as part of theirbase fee. Any cost incurred in providing that service they are already made whole. Sec 1 of this billallowing for the “actual” (undefined and arbitrary) payment, is a doubling of the payment. It is inconsistent with other regulated charging for record inspections, will demand even moreassociation policies, and is totally inappropriate. This is simply, at best, a windfall subsidy to communitymanagers at the expense of the homeowners with a right to access community records. Ormore likely, it provides an ugly tool for association or managing agents so inclined to use cost barriers to chill transparency.
Sec 4 weaponizes the NRED complaint process to remove and ban “abusers” for up to 10 years fromserving on a board for a little as filing a “misleading” complaint (among other not well-defined offenses).
If “misleading” was a punishable standard for attorney’s filing civil litigation, we would most likely have a server shortage of litigators. In any case, in comparison, a convict out of probations can run for public office after only 4 years.
Sec 5 phrasing is nonsensical and adds ambiguity. An allegation of a violation is by definition a violationunder the condition of the hypothesis -“assuming it is true”. It would add an extra step to the complaint process and would take an already flawed complaint process, where the Division is not accountable forits decisions. It would make the process even more opaque, permitting a case closure at the outset before the Ombudsman is involved. Denying owners accesses to a Commission hearing leaves owners no recourse but costly litigation, where deep pockets and “influencers” have a huge advantage.
Lastly, had the CIC Task Force, specifically enacted by 2019 legislation to better bring HOAlaw changes for approval, been used as intended (not completely void for over 2 1/2 years) much if not all could have been avoided.
This is a bad bill all around. Please, do not pass.
Michael Kosor, Colonel, USAF Ret.Director, Southern Highlands Community AssociationMikekosor.com
HOA homeowners, protect your rights! Stop SB 417.
Contact your State representatives to oppose SB 417.
My daunting experience from 2017 until now strongly attests to the fact that Community Association Institute (CAI) lobbyists – attorneys representing HOAs, HOA debt collectors, and HOA managers – already wield excessive power for their own self-interest. This negatively impacts both the HOAs and the homeowners, to whom they owe a fiduciary duty.
My 8/16/17 notice of intent to complain vs. Sun City Anthem attorney Adam Clarkson was on the 8/24/17 A.M. closed session Board agenda.
My 8/14/17 notice of intent to complain vs. Clarkson alleged bullying, abuse of privilege, concealing records, misrepresentations and conflicts of interest.
My 8/11/17 notice of intent to complain vs. Sun City Anthem general manager Sandy Seddon and community association manager Lori Martin, also on the 8/24/17 morning closed Board agenda, has never been investigated or resolved by NRED.
Clarkson refused to let me put the notice of intent on the agenda on in the Board book despite the requirements of NRS 116.31087
I had another notice of intent to file NRED complaints against Clarkson, the managers, and the other Boardmembers, but Clarkson would not let it be placed in the Board book. Link to PDF 8/10/17 notice of intent to file the Form 530 re harassment and retaliation shown below.
I prepared an 8/24/17, 2-page settlement offer to replace the 8/10/17 notice of intent, but that was unilaterally rejected by Clarkson without me being allowed to place it in the Boardbook.
This controlling what goes into the official record so the facts are misrepresented is a critical part of the problem.
In my professional life, I administered a local government civil service system for about 8,000 FTEs. There is no way the records under my control were ever mishandled the way I have observed that Adam Clarkson and Sandy Seddon have manipulated, concealed and even falsified the records at Sun City Anthem.
Clarkson retaliated against me by falsely accusing me of profiting from my elected Board seat and declaring absurdly that my seat was “vacant by opertion of law”
Clarkson changed the election procedures so he can “vet” candidates for the Board. He has sent me a rejection letter every year.
Each year there are progressively more outrageous reasons for declaring that I am ineligible to run for or serve on the HOA Board.
Here are the links to Clarkson’s annual “notices of ineligibility”:
2023 Notice of Ineliegibility to run for or serve on the SCA Board
2022 Notice of Ineligibility to run for or serve on the SCA Board
2021 Notice of Ineligibility to run for or serve on the SCA Board
2020 Notice of Ineligibility to run for or serve on the SCA Board
2019 Notice of Ineligibility to run for or serve on the SCA Board
2018 Notice of Ineligibility to run for or serve on the SCA Board
On 12/19/22 I filed a motion for an order to show cause why written findings of attorney misconduct should not be forwarded to the State Bar
BAR COMPLAINT VS. OCHOA EXHIBITS G, G-1, G-2, G-3, G-4, G-5, H, ONLINE COMPLAINT RECEIPT
David Ochoa is named because he was the litigation attorney representing the HOA’s insurance company and protecting the HOA’s former agent, Red Rock finacial Services, that conducted the disputed foreclosure in 2014, but make no mistake, Adam Clarkson’s fingerprints are all over this fraudulent misrepresentation to the court and concealing the HOA’s official records that had probative value to my case.
The exhibits show that the attorneys produced falsified documents to the court when there was no benefit to the HOA to do so, but did it to cover up the wrongdoing of the former agents.
EXHIBIT A Obstructed settlement mandated by CC&Rs XVI
EXHIBIT G Concealed that there were no HOA Board authorizations of any foreclosure in meetings complaint with NRS 116.31083 and NRS 116.31085
EXHIBIT G-1 Legal limits on closed HOA Board meetings were concealed or misrepresented
EXHIBIT G-2 SCA Board did not comply with HOA meeting laws
EXHIBIT G-3 SCA Board secretly sold a dozen houses in 2014
EXHIBIT G-4 SCA Board did not properly authorize any foreclosures by Red Rock Financial Services or any other debt collector
EXHIBIT G-5 No valid HOA Board action authorized the sale and so the action is voidable
EXHIBIT H More disputed facts in meritless MSJ and order entered on 4/18/19
EXHIBIT H-1 Analysis of similarities with a Spanish Trail case shows that this case is not a one off; it is part of a corrupt pattern and practice where HOA attorneys aid and abet corrupt co-conspirators steal HOA homeowners’ property without notice or due process and allow banks to collect on debts they are not owed and debt collectors to refuse to distribute the excess proceeds from the sales in the manner proscribed by law.
Link to 12/19/22 Request For Judicial Notice of 481-page verified, evidence-backed, uninvestigated (pending court order) complaint to the State Bar and 78-page draft civil complaint requesting a court order for written findings of attorney misconduct.
The separate civil action (Link to separate PDF) will be necessary because the A-21-828840-C court chose not to issue a court order for the Sun City Anthem attorneys to show cause why written findings should not be forwarded to the State Bar for investigation).
This will ultimately be a huge waste of judicial resources because separate complaints will have to be filed against attorneys for Red Rock, for the the real estste speculators and for the banks as they all perpetrated fraud on the court for their own unjust profut, but their crimes were quite different.
This resulted in me unfairly, without just cause, being declared a vexatious litigant at an improper, unnoticed, ex parte 2/2/23 hearing I learned of two weeks after the fact.
On 3/28/23, a restrictive order was entered against me without notice or a chance to oppose.
I have tried unsuccessfully repeatedly for the last few weeks to get my opposition attached to the outrageously-inaccurate order so it is at least accurate enough for appeal.
No response has come from the court for five days.
HOA attorneys and managers fail in their fiduciary duty to the HOA, and the courts are not holding them to any standard.
HOA attorneys and managers are by law fiduciaries to the HOA that employs them. However, they routinely act in their own self-interest rather than solely and exclusively in the interest of the HOA.
The HOA homeowners are the intentional third-party beneficiaries of the CC&Rs contract in that the HOA exists for the purpose of maintaining the common areas, the community lifestyle and the property values of for the common good of the HOA membership at large.
The attorney and the manager are agents. They have no authority over the Board. Anything they assert over the Board is usurped, and that is the problem.
SB 417 will exacerbate the problem of attorneys and other agents enriching themselves by improper control over HOA Boards
My experience shows HOA attorneys lie with impunity to the courts now. The State Bar Assosication does not enforce the ethical codes of conduct. The Nevada Supreme Court thinks that’s okay, and it’s not its job either. The judges let the attorneys write orders that misrepresent the facts, the evidence and the law. The people of Nevada are simply stuck with a dysfunctional court system,
If SB 417 is approved, Nevadans in HOAs will witness NRED continuing to appease CAI lobbyists, while inadequately addressing the concerns of HOA homeowners in need of a channel to resolve their grievances.
Adam Clarkson has had the Ombudsman in his pocket for years.
…Or else, how has he kept all SCA homeowner complaints from being heard by the Commission for Common Interest Communities for the last six years?
After all, it has been enough for the past six years for the NRED to not investigate my complaints and the Ombudsman not to refer them to the Commission SOLELY because Adam Clarkson, the Community Association Institute lobbyist and Sun City Anthem’s debt collector and attorney, says I’m are just a “bad person” and not the kind that should be allowed to serve on the Board of Directors because I complained about things like how much over market the manager is paid?
Whose interests are being served?
What about NRED not investigating the “loss” of two pages of 22 signatures from the recall petition for Bob Burch? It is patently ridiculous to claim that attending the vote count was adequate when the issue was that he wasn’t on the ballot because two pages were “lost”.
Link to my unanswered 1/31/18 Affidavit regarding Clarkson’s denial of records request related to Sandy Seddon’s salary that I filed with Investigator Christina Pitch who was assigned to investigate three NRED Form 530s.
If SB 417 is passed, it will be legal for Clarkson to deny a request for informstion about why the manager is paid more than $100,000/year more than her job is valued, and it will be legal for him a continue to write contracts for her that do not contain the provisins required by lawfor community association management contracts, and it will be legal for him to keep the contracts that the puppet Board members aopt in closed session secret from the members, and it will be legal for NRED to refuse to investigate it. But then, the homeowner can be stigmatized and threatened with high-cost litigation for even asking.
9/7/17 NRED Form IA 530 re unlawful removal from elected Board seat by Clarkson’s declaring my elected seat on the Board vacant “by operation of law” rather than by the mandatory NRS 116.31036 removal election was resolved by NRED’s very thoughtful 8/8/18 letter below.
9/7/17 NRED Form IA 530 re Harassment, Retaliation Clarkson’s spearheading bullying, retaliation, and harassment was resolved by NRED’s very thoughtful 8/8/18 letter below.
8/8/18 NRED’s dismissal of the three Form 530s without prejudice, ignoring the Form 530 and ignoring Clarkson’s obstruction of the legitimate access to information about employee salaries. Link to 8/8/18 NRED letter PDF.
SB 417 gives power to the wrong people and takes it away from the ones who need it.
This TikToK video shows what happens when outsized attorney fees make it impossible for a homeowner and his HOA to resolve a problem that neither of them started.
Whats happening in Sun City Anthem?
I got elected to Sun City Anthem Board on 5/1/17, the same day that Adam Clarkson was hired to be both the HOA’s attorney and its debt collector. From my very first meeting, Clarkson took actions against me, beginning with ordering me to recuse myself from all collection matters, past or present, then repreated cease & desist orders, demanding that I stop identifying myself as an elected member of the Board with any authority to speak an opinion, regardless of my professional expertise, if it differed from his “advice of counsel” of from the majority of the board. His most strident attacks were designed to threanen me into silence whenever I made any comment that was negative about the manager’s performance.
SCA’s “HOME” Page Says it all
Why I set up SCAstrong.com
Before I got booted off the Board on August 24, 2017, my concept of this website was to improve owner relations and to develop a strategic vision and plan like www.HendersonStrong.org. However, that PollyAnna has left the building. Now, a sadder, but wiser, gal is talking and my new purpose is:
To show how owners are paying for the expensive ride the GM & attorney have taken us on by duping the Board into following instead of leading.
To restore my reputation to its former glory.
To get the Board members & bloggers out of power that are hurting us, dividing us, and are treating some of us a lot better than others.
To develop new leaders who have their heads on straight & who haven’t had the fire in the belly kicked out of them yet.
Hot Button Issues examined in blog posts
The cost of the failed 2017 removal election of four Directors which was made 10 times higher than it would have been by the GM and attorney usurping the role of the SCA Election Committee against the wishes of the petitioners
Huge expenditure of unbudgeted association funds for legal fees – tripe the budget since Adam Clarkson started
2017 Vote of no Confidence Petition against the General Manager
Unlawful actions by the SCA Board and management
Concealing and falsifying the official SCA records
Excessive management compensation
Eviction of the Foundation Assisting Seniors
What you’ll learn from blog posts on SCAstrong.com
What I’m doing about being illegally kicked off the Sun City Anthem Board just 116 days after 2,001 homeowners voted me onto the Board and two weeks after 825 owners called for a removal election to get rid of four of the other Directors.
Why those 825 homeowners signed petitions to remove four Board members: Rex Weddle, Aletta Waterhouse, Tom Nissen & Bob Burch.
Why 2,501 homeowners need to VOTE in the removal election scheduled for October 2nd – 20th, 2017.
Why all SCA homeowners need to take action to stop being taken for a very expensive ride by:
A Board that makes decisions over 50% of the time in secret
A General Manager who is paid more than $100,000 over market,
An unnecessary Community Association Manager who does not protect homeowners (so, why do we need two managers?), and
An attorney who has billed three times the budgeted amount – to stop me from being a whistle-blower, to evict the Foundation Assisting Seniors, and to overly protect management.
Why should you care?
If the Board is not fair to one, the system is not fair to all.
Six members of the board abused their power by making the decision to kick me off in secret without a hearing and without a membership vote.
Those same six Directors evicted the Foundation Assisting Seniors in the same sneaky and unfair way.
What you need to care about is how to stop these people from trampling on all of our rights.
Nona Tobin, 9/25/17 SCAStrong.com Home Page
September 2017 SCAStrong.com archives show the entrenchment of power
September 2017 blogs linked here show that the same things are happening now. Clarkson and Seddon are still being unjustly enriched by manipulating the composition of the Sun City Anthem Board.
Call to Action – Stop SB 417
Please contact your State legislator and beg them not to pass SB 417. It just legalizes the corruption SCA has been fighting for years.
Excessive executive compensation is a huge trigger for lots of SCA owners. Unfortunately, the Board and GM have taken the tact that they can do whatever they want and they don’t have to answer to anyone.
And, worse for owners, our money is being used to pay an attorney who will say that
there are no limits on the Board’s power to decide what to pay for management,
that management has privacy rights so pay should be kept secret and
it’s okay to threaten owners with legal action if the pay is disclosed to third parties.
These problems could have been avoided if the Board had only known that
It just ain’t so.
What training should the Board have taken?
If the Board had taken the NRED training, Responsibilities of the Manager,they might have learned that they should have, at least, had a written agreement defining ALL the terms and conditions for the GM’s employment, including compensation, as required by NAC 116A.325 and by her Community Association Manager (CAM) license.
Verbal deals aren’t good enough
Why no GM management agreement?
Probably because NRS 116.31085(2) PROHIBITS the Board from adopting or amending ANY contract in secret.
Or maybe because the Board “work group” who negotiated the GM’s terms and conditions of employment didn’t have the right expertise.
In 2014 SCA had a fine management agreement with FSR. It is a mystery why the 2015-16 Board would think they could just “wing it” with a handshake deal the first time SCA was flying without a management company’s net.
Isn’t a written agreement required just when contracting with a management company?
No. A written agreement is needed whenever an association pays a licensed community association manager (CAM) for management services.
Whenever management services are paid, the manager must be licensed. The only exception is when the association is small, and the board is able to manage the property by itself without paying a licensed professional manager.
A little common sense please
Besides, how can owners be protected if a community manager licensee does not have to meet the requirements of the CAM license just because he or she is an employee of an association as opposed to being the employee of a management company or being an independent contractor?
How does NRED exercise its authority over HOA managers?
NRED regulates ALL community association managers in Nevada through “licensure, registration, education, and enforcement”.
NRED states there is no legal prohibition against an association handling its own affairs if it does not need to hire/contract with a professional, licensed manager. Any HOA board can control its business directly without paying a licensed managing agent.
The law ONLY requires that the manager must be a licensed CAM, and subject to all the regulations of the community association manager license, if the manager is COMPENSATED.
Which duties don’t require a CAM license?
NRED has published a list of the specific duties that can be performed by UNLICENSED employees.
This means that it is unlawful to COMPENSATE any individual manager, or any management company, to perform the higher level CAM duties unless all the requirements of a CAM license are met.
SCA must be managed by a licensed CAM
The duties performed by the SCA GM require a community association manager license. The CAM license is required unless those duties are performed by a volunteer who receives NO compensation.
SCA bylaws are also controlling
SCA bylaws 3.13, 3.18, and 3.20 define, and limit, the Board’s authority to employ and compensate a LICENSED CAM to manage the association.
Section 3.20 gives the Board the authority to provide compensation to a manager, and specifies limits on what the Board can delegate to the manager.
Section 3.13 (f) says compensation to a community manager must be under the terms of a management agreement.
3.13 (a) prohibits compensation that creates an appearance of undue influence or a conflict of interest.
What conflict of interest?
Doesn’t it seem that paying the GM double the market rate, as well as paying a second licensed CAM the full market rate, created a huge, ACTUAL conflict of interest?
Who is protecting owners?
Ultimately, it is the Board’s job to protect owners from being taken advantage of by licensed professional agents.
If the Board does not do this critical job, then it is up to NRED to enforce NRS 116 requirements on the Board and the enforce the provisions of the CAM license on the GM.
NRED has no authority over the attorney because the attorney has ZERO decision-making authority over the association despite how it may appear.
Don’t you wonder who Adam Clarkson is representing when he turned a blind eye to the failure of the Board to publicly adopt a management agreement with the GM with the NRS 116A.620 REQUIRED TERMS that would protect the association membership:
This is the third, and final, part of my 6/6/18 email to the NRED Chief Investigator and Ombudsman to clarify NRED’s process for ensuring that
1. the rights of homeowners in HOAs are protected,
2. Nevada statutes are uniformly enforced, and
3. Board members or agents suffer consequences if they fail to act as fiduciaries.
Justice delayed is justice denied
Justice delayed is justice denied
The length of time NRED has taken to address the complaints I submitted last September without response has unfairly diminished their credibility or, in some cases, rendered them moot.
This is unacceptable, particularly since these issues (election interference, concealing association documents, retaliation, harassment, unlawful removal from the Board for essentially political purposes are all issues of great import to protect homeowners in all Nevada HOAs.
Denial without prejudice? Hardly.
Denial “without prejudice” in one election interference case was nonsensical. A 10/20/17 complaint that Bob Burch was wrongly left off the removal election ballot because two pages with a combined total of 22 signatures mysteriously disappeared so allegedly, he was two signatures short of being placed on the ballot. On 12/11/17 the complainant (not me) was notified by Christina Pitch that the case was closed stating:Say, what?
Claiming that the Ombudsman’s attendance at the vote count of the ballots (ballots that did not include Bob Burch) was sufficient justification to deny the complaint that Bob Burch’s name was wrongly excluded from the ballot (due to 22 missing signatures) is a complete non sequitur.
NRED might as well have denied the complaint because Kilauea volcano erupted.
Further, Bob Burch was treated as a non-conflicted Board member at the November 1 recall vote count despite the complaint about his not being included on the ballot was still open until NRED’s December 11 rejection.
To say that this was not prejudicial to the claimant (meaning that he could file the complaint again after the point was moot) adds insult to injury.
Inappropriate use of association attorney
NRED appears to condone SCA GM and Board giving an inappropriate level of deference to association attorney Clarkson.
Those same 11/1/17 recall vote count owner meeting minutes show the tip of the iceberg of the completely inappropriate role Adam Clarkson took in the recall election process. Not only was there no Board approval:
to amend the adopted SCA Election and Voting manual,
to dump the volunteer Election Committee and
no Board approval to hire a CPA and
no Board approval to pay the CPA firm and the Clarkson firm over $100,000 in unbudgeted funds to take over (and bungle) the recall election,
No law gives an HOA attorney decision-making authority
There is substantial additional evidence that Clarkson unlawfully acts as a decision-maker, or as the GM’s attorney, rather than solely as a legal advisor to the full Board.
What more does NRED need?
In what form can I submit this evidence where I can be assured that it will be weighed by an independent trier of fact?
Freedom of information is non-existent at SCA
GM’s concealing association records and using the attorney to threaten owners for even asking appears to be condoned by NRED.
NRED gave two different responses to the draconian records request form revised by the Clarkson law group 2/28/18 to suit the GM regardless of the law or best interests of the homeowners.
NRED response 1 was pro-homeowner.
The first was an email response to a homeowner in March correctly stated the owner protections in the law,
“The “mandatory acknowledgement” form…is contrary to NRS 116, as such a document is not required by law.”
NRED response 2, as reported by Bob Burch, was pro-management.
The second NRED response was only reported verbally.
I haven’t seen any written response from the Ombudsman to the SCA Board, but the Board President has reported that NRED approved the unlawful “acknowledgements” on the document request form that restrict the homeowner from sharing legally accessed material with third parties. Could this really be true?
According to the Board, NRED has approved the SCA threatening homeowners that, if the information (released per NRS 116.31175) is disclosed to third parties, the owners may be subject to fines and penalties up to foreclosure.
These Clarkson-crafted “acknowledgements” are allegedly (according to Clarkson) binding even if the owner does not sign or agree. According to SCA, NRED says this is okay, just so long as the owner is not required to sign the acknowledgement.
Does NRED have a double standard?
Note that the document request form’s revision was not approved by an official Board action despite the requirement of SCA bylaws 6.4(a)(b) p. 24.)
The Board abdicated its duty to make records accessible to owners contrary to NRS 116.31175, and the GM never signed a management agreement acknowledgement per NRS 116A.620(1)(a)and (m) that the HOA records do not belong to the manager. Yet, NRED apparently issued a verbal ruling giving the SCA Board and management carte blanche to carry on.
Could this really be true?
And one last thing
Lack of transparencyallows SCA homeowners to be put at risk due to
inappropriate use of the attorney at triple the adopted budget, and
resistance to implementing sufficient checks and balances.
My insistence in attempting to address these problems led to the harassment and retaliation that was the true impetus of my removal from the Board.
Note that NRED has not responded to my 7/21/17 Form 781 complaint other than to refer it to the investigations division. The problems of withholding and concealing records have been exacerbated over the past year, and I have submitted additional documentation to the complaints in September, November and January evidencing this unacceptable pattern.
This is the second part of my 6/6/18 email to the NRED Chief Investigator and Ombudsman to clarify NRED’s process for ensuring that
1. the rights of homeowners in HOAs are protected,
2. Nevada statutes are uniformly enforced, and
3. Board members or HOA agents suffer consequences when they fail to act as fiduciaries.
Issa Anale’a didn’t make us wait as long as NRED
Why has NRED needed more than nine months?
Tomorrow, I’ll see what NRED Chief Investigator’s perspective is on the 6/6/18 email I am sharing below in Part 2 “Secret meetings”, in the previous blog, “Why so quiet?“, and in the final part 3, “In case you don’t think this is enough evidence”
Part 2: Secret meetings in general
The second complaint was that the Board deliberates in secret meetings. This complaint being dismissed perfunctorily is also problematic. It appears as if NRED condones a pervasive pattern at SCA of decisions being made by the Board, the attorney, the GM or individual directors without proper action by the Board in open session.
It also appears that there are no consequences if SCA Board is not compliant with NRS 116.31083, NRS 116.31085, or SCA governing documents.
NRED previously instructed SCA on this point
Previous NRED officials have issued letters of instruction (attached to previous email) to require statutory conformance (with owner protection laws) which SCA now ignores.
I, as well as other SCA residents, have alleged that, currently, many Board decisions are made improperly, i.e.,
in group emails,
in improperly noticed meetings,
private Board training (no notice, agenda or minutes) sessions which are
deemed “attorney-client” privilege while
simultaneously are deemed to NOT be executive sessions, but of which recording is prohibited:
meetings or email chains involving only a few Board members or which pointedly exclude dissenting directors
What does it mean when the NRED investigation of these complaints just stops without a finding?
Obviously, the SCA Board was notified that SCA has won by default, but apparently the owner who complained was not.
As Bob Burch said,
Both complaints were closed without any action being taken against the Association when the division determined that there was no good cause to continue with the investigation. In other words, we prevailed.
This is essentially what has occurred in 100% of the cases filed in the past year.
Is that NRED’s intent?
Does NRED really intend to say that this Board conduct, that has generated many owner complaints, is permissible despite the Board’s failure to meet the requirements of NRS 116.31183 or NRS 116.31085?
Or are you not convinced that the complainants accurately reported impermissible acts?
Does NRED’s investigative protocol permit your investigator to rely on information provided by the HOA, but prohibit further investigation by seeking additional information, or at least a response, from the complainant?
Whose call is it anyway?
NRED needs to be aware that at SCA, Board decisions are routinely made by the GM or attorney in policy areas in which the Board is prohibited from delegating by SCA bylaws 3.20 and 3.18 pursuant to NRS 116.3106(1)(d).
These wrong parties (the GM, the attorney, a subset of the Board) falsely claim the Board made decisions that the Board didn’t make correctly, or worse, didn’t make at all, e.g.,
hiring debt collectors without an RFP (competitive process),
increasing group exercise user fees,
failing to comply with the Election & Voting Manual in the 2017 recall election,
hiring a CPA without a contract or an RFP to do the volunteer Election Committee’s job,
paying that CPA and attorneys, at a $100,000+ un-budgeted combined cost, to usurp the recall election process,
over-expending the legal fees budget by $200,000+ in 2017,
taking punitive actions, without legal authority, against me as a Board member and unit owner, i.e., threatening letters and kicking me off the Board in retaliation for my complaints and records requests,
authorizing the use of owners’ money to pay for the association attorney
to appear in the GM’s divorce and
to withhold SCA records in discovery that had been previously released to OSCAR, the anti-recall group.
When the NRED investigation into these actions just stops, or maybe never even starts, what does it mean?
Is abdication and usurping of Board authority okay in NRED’s view?
Does NRED need more documentation and more specific examples to establish that this practice is occurring?
What else does NRED need to stop this?
Here is a link to a www.SCAstrong.com blog, “If they had only known, part 3” that gives some examples of GM decisions that resulted in election interference, hiring bankrupt or conflicted debt collectors without due diligence or following proper procedure, a biased selection of a restaurant vendor (that is not proceeding for unknown reasons, leaving SCA with no restaurant for 2 1/2+ years and counting).
I can also provide you links to the actual documents that are are evidence of these and other specific incidences if NRED needs more documentation to make a finding and prohibit agents from taking advantage of SCA.
Part 3: In case you don’t think this is enough evidence
Sorry for the big break in my updates about SCA shenanigans.
I’m in California for some family events,
and a new granddaughter due any minute
But, while we’re waiting for the next big thing, I’ll tell you
The real cause for pause
After a fun-filled trip to Mexico, I dragged myself to the May 24 Board meeting. I was immediately stunned by the President’s report that NRED had stopped investigating two complaints that impacted me.
I wondered if NRED’s practice was to rely on management or agents rather than get the whole story. I hoped not. But, I had a sinking feeling…
Ordinarily, I would have posted something right away, but I decided to talk to NRED’s new chief investigator, Terry Wheaton, first. Multiple attempts to set up a meeting were unsuccessful so I documented my concerns in writing.
It is even longer than my usual missives, so I’ll break it up for you. It was full of hyperlinks to the actual evidentiary documents. I will break the links in this public distribution, just in case, my transparency forces the SCA Board and GM to claim it is their fiduciary duty to pay the attorney $10,000+ to threaten to sue me to kingdom come.
Part 1 of email to NRED
Fwd: Issues related to dismissed and open investigations; NRED Letters of Instruction to SCA
I have not received a response to my request for a meeting with you, and I have been instructed not to contact the Ombudsman because all my intervention affidavits (IAs) and complaints against management have been referred to the investigations division. I understand you are new to your position and may not have seen the full measure of the issues that I, and other SCA owners, are asking your office to address.
The fundamental questions raised by this myriad issues are:
How does NRED fulfill its role in ensuring that licensed HOA agents (managers, attorneys)
act as fiduciaries and not for personal, political, or financial purposes?
do not take advantage of homeowners or disenfranchise voters to manipulate the composition of HOA Boards?
How does NRED use the negative experiences of this HOA to develop policy guidance that protects all of the 3,000+ HOAs and 57% of Nevada households that are in HOAs?
I am writing you now to document my concerns and request that you evaluate these documents before there is a final determination on my form 514a, 781, and three form 530 complaints (harassment/retaliation, recall election interference, and for removing me from the Board without complying with NRS 116.31036 on false and unproven charges that I had placed matters before the Board from which I stood to make a profit.
1. NRED investigations are closed without notice or reason
In March, I raised this concern to Christina Pitch in the email I am forwarding here. You can see her response. However, the pattern of NRED closing complaints without a clear, legally defensible, equitable resolution seems to be continuing.
At the last Sun City Anthem Board meeting on 5/24/18, the new President Bob Burch made the following claims in his President’s report which were extremely disheartening because I have received no communication from NRED about these issues which intimately affect me and about which I have formally filed affidavits and declarations.
Next, I would like to report that we have been advised by the Nevada Real Estate Division that two complaints filed against the Association have been closed. In one case, it was alleged that the Executive Board held an emergency meeting on July 18, 2017 to discuss employer liability and that the meeting did not meet the requirements for an ‘emergency’ under NRS116. In the second case, it was alleged that the Executive Board held secret meetings beginning in March or April 2017 in which appointments to committees were agreed upon and Association business was decided upon. Both complaints were closed without any action being taken against the Association when the division determined that there was no good cause to continue with the investigation. In other words, we prevailed. – Bob Burch, 5/24/18
What does “no good cause to continue the investigation” mean?
Does NRED condone or just not care?
Dismissed complaint 1: July 13 “emergency” executive session
In my view, having a Board meeting without notifying me for the other six directors to approve a cease & desist order against me was an unlawful abuse of authority and certainly not an emergency.
What does NRED think?
Does NRED’s closing the complaint investigation without disciplinary action against SCA mean:
That NRED says it’s okay for the GM to fail to give me, an elected Board member, ANY verbal or written notice that the Board I was elected to was being called into an “emergency” executive session two hours after I was standing in her office being denied access to ANY SCA records despite NRS 116.31175 and SCA bylaws 6.4(c)?
That NRED says it’s okay for a GM, an at-will employee, to use the association attorney at SCA owner expense to threaten litigation against SCA (her employer) and me, a Board member, personally for creating “employer liability” for asking for justification for her being paid double the market rate and criticizing her performance and judgment despite NAC 116A.345(5)?
That NRED says it’s okay for six Board members to meet without and issue orders against me, the seventh EQUAL, ELECTED Board member, to limit authority as a Board member, restrict my duties, TOTALLY restrict my access to information needed to make decisions as a Board member, and restrict my right to vote on an equal basis with the other directors despite the prohibitions in NRS 116.3103(2)(d)?
That NRED says it actually was an emergency as defined by NRS 116.31183(12) affecting the health, safety and welfare of the community for 6/7 of the SCA Board to meet to order me, the seventh, to stop asking for a verification of the GM’s former salary and to reprimand me, without legal authority, for asking the GM to reconsider a ruling she made to prevent equal time in SCA official publications for a proponent of the recall election?
That NRED says that six members of the Board constitutes a quorum, and they (6 of 7) can meet in executive session to make decisions for the Board as a whole or to take action against the seventh Board member even if the six directors prevent the seventh Board member, despite the limitations defined in NRS 116.31185 or NRS 116.3103(2)(d),
from attending their secret session,
from voting, or even
from knowing their secret meeting is going to occur ?
That NRED doesn’t care that the SCA Board failed to comply with multiple provisions of state law and SCA governing documents?
Or is NRED saying
these owner complaints are frivolous and aren’t serious matters worthy of at least a complete investigation?
That meeting, actually held on 7/13/17, had numerous flaws which I spelled out to NRED in form 514a on pages 4-5 and claims are supported by written evidence.
1. When SCA became “self-managed”, the GM/CAM were hired without of a management agreement. Not okay.
Absent a management agreement, the GM is an “at-will” employee and has no other rights than those bestowed by the SCA Employee Handbook.
2. RFPs are required for professional services not just construction or maintenance contracts per NRS 116.31086.
2. The GM wasted $85,000+ for an unknown CPA, Ovist & Howard, to take over the recall election:
without an RFP,
without a Board-approved contract,
without funding to pay for a CPA to do the recall in the adopted budget,
without the Board amending the Election & Voting Manual to strip the Election Committee of its duties, and
after the GM and attorney were both the subjects of active complaints that they were interfering with the independence of the Election Committee
which resulted in diminishing the integrity of the election process.
Guess who benefitted. (P.S. It wasn’t the owners.)
Four of the six Board members who allowed the GM to usurp the Board’s authority benefitted personally from unlawfully hiring a CPA to replace the Election Committee.
Owners’ right to lawfully petition for a removal election was besmirched by the subjects of the petitions who wrongfully blamed the owners who petitioned for their recall for the huge cost of hiring a CPA that was done solely, 100%, by the GM under their watchful, grateful eye.
“For every action, there is an equal and opposite reaction.” – Newton’s 3rd law
Hiring a CPA wasn’t the only way the GM sashayed in to usurp the authority of the Board, but to really take over, all dissent had to be crushed. These are things a properly trained Board would never have tolerated.
As the liaison to the Election Committee, I tried to get the GM, President Rex, and the attorney to leave the Election Committee independent and neutral to do their normal job during the recall.
I was removed as the Board liaison to the Election Committee by the very people accused of interfering with the Election Committee’s independence.
As a non-conflicted Director (not one signature, not one petition against me), I was one of the three Directors who should have decided
how the recall election was to be conducted,
whether the Election Manual should be amended for this one election
how best to protect the integrity of the election process
The GM and the attorney decided to relieve the Election Committee from its duties despite having no legal authority to do so.
I gave the Board notice of my intent to file a complaint of harassment and retaliation for all the actions they had taken against me in retribution for my recommending that the attorney and the GM be fired.
The Board took the law into their own hands and kicked me off the Board without notice, process or appeal.
Kinda the same way Putin handled the one serious challenger to his re-election.
3. Restaurant RFP mistakes
GM and one Director met with one competitor to give a leg up prior to RFP.
Board was not informed of GM + director actions until it was a fait accompli.
RFP issued to a hand-picked group of possible bidders
Bids were not opened at a Board meeting.
Bids were not not submitted on the same terms.
After the number of vendors dropped to two, the “operating parameters” were adopted.
Winning bidder who negotiated with GM in advance was allowed to change bid after the other bidder dropped out because the terms had been changed.
No other bids were sought nor considered.
4. Last two debt collectors shouldn’t have been hired without RFPs
Doesn’t it seem like it’s a problem that
HOA Lawyers Group became SCA’s debt collector without issuing an RFP to replace the defunct Alessi & Koenig, LLC?
The Clarkson Law Group became the SCA debt collector without a RFP?
The Clarkson Law Group, hired via the RFP issued to replace the Leach law firm as SCA legal counsel, used its “authority” as the SCA legal counsel to “rule” that its own selection as the SCA debt collector did not require a separate RFP?
Who cares about debt collection?
We all should. Debt collectors are the source of huge expenses for HOA owners because of the weird way the Nevada courts allow HOA foreclosures to extinguish the bank’s security interest. While you might think this is good for HOAs, it is actually only good for the debt collector.
Remember, abdicating debt collection is:
a huge cost to owners
a violation of SCA bylaws 3.20 and 3.18(a)
The cost of collection exceeds the amount recovered.
HOA homeowners pay for the debt collectors’ fight with the banks.
The loss of property value to each and every home in a Nevada HOA is, according to the UNLV 2017 study commissioned by the Nevada Association of Realtors, is 1.7% per foreclosure for delinquent dues.
and he has convinced them that the budget doesn’t matter when it comes to legal fees.
The Board, following Rex’s leadership, foolishly insisted that the 2017 Board training be conducted in secret by Adam Clarkson.
Despite the excellent free training programs available through NRED, the Board refused to allow owners to see how they were being trained to abdicate their decision-making authority.
And the the Board certainly didn’t want owners to be able to comment on the self-serving training that was provided by Clarkson so it was deemed “attorney-client confidential” even though the training packet began with a legal disclaimer.
NRED complaint still pending
The secret Clarkson training was a self-dealing disaster. It bordered on elder abuse, and my complaints about the abusive conduct at that July 25, 2017 “attorney-client-privileged, not-an-executive-session workshop” are still under investigation by NRED.
Naturally, Adam Clarkson is billing the association ($325/hour, thank you very much) to defend himself and the other perps from my complaints about being bullied and harassed in that session in retribution for my telling the lot of them that they needed to straighten up and follow the spirit as well as the letter of the law.
What was wrong with the way Clarkson trained the Board?
Setting aside the for the moment the attorney-led misconduct of the participants (shunning, threatening and bullying me), Adam Clarkson twisted the interpretation of the law so far as to assert that it was a violation of the Board’s fiduciary duty to act ON ANYTHING without the attorney’s blessing.
Reward for complicity
Adam Clarkson rewarded the Board members who fell for his money grab, by creating a punitive cone of silence around non-confidential, discoverable SCA records against the non-compliant Director. Clarkson has also given his blessing to the unlawful claims that
the GM controls which owner or Board member can access SCA records and can withhold records at will, including in violation of a court order
the GM, President or Secretary
can exclude a Board member from Board meetings, and
can prevent a Director from voting,
and can block a Director from placing items on a Board meeting agenda
and can falsify the minutes of those meetings
the President does not have to follow Parliamentary procedures and
can magically use non-existent “substitute motions” and
can block a vote on a Director’s seconded motion and
can prevent a nomination for an officer position that would compete with the President’s pre-selected slate.
Annual reporting of gifts is voluntary
What does “fiduciary duty” mean?
Adam Clarkson actually gave this self-dealing definition of fiduciary duty saying that being guided by legal professionals was required by law AS IF only lawyers were experts on every subject.
The legal requirement is actually to consult with appropriate experts of all types (not just attorneys) when it is prudent to do so. This means reserve specialists, HR experts, accountants, construction experts, not just attorneys. There is no legal requirement for a Board to delegate its decision-making authority to attorneys. In fact, it is prohibited by both NRS 116.3106 and SCA bylaws.
“Consult with appropriate professionals as necessary before making major decisions…”
And the definition of fiduciary really is focused on the duty of care that the fiduciary has to ACT SOLELY AND EXCLUSIVELY IN THE BEST INTEREST OF THE MEMBERSHIP.
A fiduciary is personally accountable for a duty of care and using good judgment to serve owners, not oneself.
It does not cut it to do (or not do) something that hurts the membership and then claim,
“The attorney made me do it.”
Defy the ruling of Judge (and jury) Adam Clarkson at your peril!!!
According to Adam Clarkson, attorneys are justified in verbally attacking and threatening a Director who tells the other members of the Board that:
attorneys don’t have the expertise to assist on ALL Board decisions and that
it is the individual Director’s responsibility to use common sense and ethical principles to evaluate courses of action to decide how to vote.
Give me a break. That’s idiotic.
We are actually paying $325/hour for that type of inane self-dealing pronouncement against a Director who tells the attorney to knock it off.
Guilty until proven innocent
“Unauthorized practice of law” for “advising other members that legal counsel is not necessary”????
“… will be deemed to have committed a prima facie violation of NRS 116.3103”?????
“Prima facie” = A factpresumed to be trueunless it is disproved.
Quid pro quo = “something for something”
“Guilty until proven innocent” is the Clarkson pro forma edict he uses to bully Board members who are not in his or the GM’s pocket.
At the same time, Clarkson has protected the interests and defended the unlawful actions of the GM and those Board members who unquestioningly have agreed to pay whatever he bills with OPM (other people’s money).
“Prima facie” = “presumed guilty”
Here’s what NRS 116.3103 actually says
Clarkson is wrong
Telling the Board that the buck stops with it, and not with the attorney, is NOT a violation of a director’s fiduciary duty.
It is a true statement made on an informed basis, in good faith, and in the honest belief that
getting attorneys out making decisions for management or the Board, and
preventing attorneys from self-dealing or
serving the personal interests of a few individuals over the interests of the membership
is acting in the best interests of the association.