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.

 

 

 

Elder Abuse: Part II – SCA Agents

We have another covert systemic type of elder abuse going on right here at SCA. We have all of the problems endemic to Nevada HOAs in general, but those generic problems have been fueled here by a historically divided community and exacerbated by a poorly-executed transition to “self-management.”

Our system fails to provide sufficient competent owner oversight and internal controls necessary to prevent abuse by professional agents who are supposed to be fiduciaries acting SOLELY in the best interests of the owners,  but who are taking unfair advantage of us for their own unjust enrichment.

You are going to hear this same refrain from me repeatedly:

The biggest risk SCA owners face is being screwed over by unscrupulous agents who are supposed to be acting solely in our best interest, but who are not. They are actually unfairly acting in their own self-interest and profiting at our expense.

The reason “they” kicked me off the Board is they wanted to shut me up. They wanted to prevent me from telling owners what they are doing. They wanted me to stop publicly trying to force them to make system changes that would protect SCA owners from abuse by our own, highly-compensated, but unscrupulous, agents.

Who is “they”?

  • “They” are now (2016-now) GM Sandy Seddon and (May, 2017-now) association attorney/debt collector Adam Clarkson Law Group now.
  • Before (2009-2015), “they” were FirstService Residential (FSR)/formerly RMI, SCA’s managing agent, also licensed debt collector dba Red Rock Financial Services (RRFS).
  • In between (2015-2016), “they” were Alessi & Koenig, LLC attorney-debt collector that went into chapter 7 bankruptcy after being sued on 500 of the 800 HOA foreclosures they did between 2011-2015 and then…
  • “they” illegally morphed into HOA Lawyers Group, LLC (2016) but continued being SCA’s debt collector until replaced by Clarkson.

“They” are NOT necessarily the members of the Board, but “they” need to control the Board. “They”get their hands so far into our pockets only because the Board lets them do it. At least a majority of the Board has to negligently, maybe unwittingly, enable the attorney and management to take over the reins.

I believe the Directors are probably acting in good faith and trying to do their best, but are simply placing their faith in the wrong “experts”. However, even if the Directors are just innocently looking the other way, their ignorance is allowing SCA owners to be taken for an expensive ride.

So, what now?

Too bad for them.

“They”didn’t really get rid of me by unlawfully deeming my Board position vacant.

Now I have the time to tell you all about it. And I think I’ll start with what’s wrong with paying Sandy Seddon twice as much as we should be paying her.

 

Elder abuse: Part I – Guardianship

Many of you may not be familiar with the guardianship problem, but it’s where unscrupulous people become legal guardians and take over the finances and lives of the frail and elderly. They use a legal loophole to victimize the elderly and even take away the rights of the victim’s family. Guardianship abuse has been much worse here in Nevada because of the corruption that is rampant throughout our legal system.

Click this link https://www.newyorker.com/magazine/2017/10/09/how-the-elderly-lose-their-rights for an in-depth article published October 9, 2017 in the New Yorker, “How the Elderly Lose Their Rights: Guardians can sell the assets and control the lives of senior citizens and make a profit from it” by Rachel Aviv.

For more information about guardianship abuse, visit  http://www.stopguardianabusenv.org/ This website was produced by the Nevada Association to Stop Guardian and Elder Abuse, a non-profit organization dedicated to stopping exploitation and abuse of those in need.

SCA resident, Rana Goodman, the President of the nonprofit, is mentioned in the New Yorker article. Rana deserves our profuse thanks for being such a tireless advocate for these most vulnerable among us. She has successfully gotten some legal changes to allow us to prospectively (before we are of diminished capacity) nominate who we want as our guardian so we can prevent some unscrupulous professional guardian from swooping in and taking over our lives.

It’s tragic to think that this type of abuse can even happen. Legal guardians are supposed to be fiduciaries. They are supposed to protect people who can’t take care of themselves. They are supposed to act solely in the best interest of the client. They are supposed to use the powers they “legally” get over their wards only for the good of the person under their charge, but sadly, and with the support of lawyers and judges, many helpless people have been victimized.

Whenever there is a lot of money involved, there will be those who will scam the system and rip innocent people off, and with unfortunate frequency here in Nevada, there will be judges and attorneys who help them get away with it.

As time goes by, I will show you in my blogs how a similar type of systemic corruption is pervasive within Nevada HOAs, and I’ll show you how it can work unfairly to the advantage of HOA agents, like managers, debt collectors, and attorneys, to rip off HOA owners. I’ll show you how SCA’s former agents essentially stole my late fiance’s house, and I’ll show you how SCA’s current agents are getting the Board’s unwitting blessing to rip SCA owners off in a lot of different ways.

$50,000 for the removal election and still counting

Last June I did not think passing around recall petitions was a good idea. I thought it was a fool’s errand – disruptive and doomed to fail.

However, I am a strong, some say overly-aggressive, defender of owners’ rights. I just hate it when people with power abuse ANY owner’s rights, but especially if they use dirty tricks or create an uneven playing field and make the little guy pay the price. 

That’s what’s happening here now. The opponents of the removal election are making owners pay way more than we should, and they are trying to get us to blame the wrong people.

All the tens of thousands we will be paying for this removal election (above the less than $10,000 cost of an annual election) could have been avoided if the GM hadn’t blown me off by not even acknowledging my July 20 email:

Sandy Seddon didn’t answer me. Why should she? She knew that there was no one on the Board except me that cared one whit about maintaining the independence and neutrality of the Election Committee. Quite the opposite, she knew that she had the votes to approve anything she wanted to do make the removal election process difficult.

Who decided that these actions were in the best interest of owners?

Now, SCA owners are obligated to pay a bungling CPA firm $20,000 for the work done through September 30 no matter how poorly it was done. We will be on the hook for maybe triple that amount because their errors or omissions are significant enough that a second recall ballot may need to go out with Bob Burch’s name added to it.

Who made the decision to take away the Election Committee’s job?

Who decided that it was in the owners’ best interest to use an attorney and a CPA for the removal election when the attorney in five months is already billed $150,000 – FOUR times the $37,500 budget (In just September the attorney billed $43,873 and the CPA who replaced the volunteer Election Committee billed $20,000)?

Did I mention that there was:

  • no RFP for a CPA,
  • no approved CPA contract,
  • no Board approval to change the Election and Voting Manual,
  • no budget authorization for the CPA, and
  • the CPA has made so many mistakes that there might have to be a second removal ballot?

 

 

 

Owner concerns should never be ignored

The biggest reason Rex, Aletta, and Tom should be voted off the Board is that they chastise owners who have concerns about GM performance and adamantly refuse to hold the GM accountable for one of the most critical aspects of her job – owner satisfaction. And, they have spent thousands of our assessment dollars misusing the attorney in an attempt to silence criticism of the GM’s management style that many perceive as autocratic, divisive and unfair.


Refusal to listen

When over 800 people complained about how the GM is performing (by signing petitions) and stated that they have no confidence in her ability to lead our organization, the correct response by both the GM and the Board would have been to look at what the customers are complaining about and find a fix. However, the Board’s solution was to silence her detractors by yelling “Enough is enough!” and then give an irrelevant litany of her deferred maintenance accomplishments. I propose that during this recall election, Rex, Aletta, and Tom need to be held accountable for refusing to listen to, or correct, ANY of the extraordinarily high number of owners’ complaints about the GM.

Refusal to accept owner oversight

Before I was elected to the Board, I campaigned on the principle that there should be owner oversight in relation to personnel issues. I ran for the Board because of my expertise in HR and employee contract negotiations and proposed performance standards that would be linked to the GM compensation as well as, customer service ratings as part of the GM’s performance evaluation.

The Board’s reaction to my proposal was not only “NO,” It was “HELL, NO.” The Board refused to design a system that allowed ANY owner input into the GM’s evaluation and compensation. Additionally, President Rex’ strategy for keeping the decision-making overly consolidated and away from owner involvement is to refuse to have owner oversight committees even on an ad hoc basis.

I personally brought several recommendations to the Board to increase owner-involvement in oversight of insurance, investments, legal services and personnel, none of which got approved. The Board is steadily moving away from effective means for using owner expertise in governance and controlling costs.   Rex simply uses his authority as President to appoint work groups of two Board members so he can exclude owners and  Directors he does not agree with or he wants to punish. This politicizing control is, in my view, a Machiavellian abuse of power, and it prevents the creation of a system that would produce (significantly) better results for the membership.

Refusal to treat owners as customers

That, my fellow neighbors and homeowners, is the way your current HOA Board of Directors is refusing to utilize much-needed owner expertise while simultaneously dismissing your right to complain about the performance of staff that you pay to manage this community responsibly. Pay more. Get less.

 

How to avoid unnecessary election costs

Some people have told me they are voting no on the removal election because they are under the impression that it will cost between $50,000 and $100,000 to hold another election for replacement Board members.

Cost to replace

This cost estimate is both wrong, and a poor reason for keeping the current ineffective Directors that are costing the community even more money.

First, let’s address the cost. The GM removed the “volunteer” SCA Election Committee (chartered to handle all SCA elections) from the removal election process. Instead, a CPA was hired without any official Board action to take over the EC’s duties at an unbudgeted cost of $10,000. As I have stated before, the CPA’s contract was not approved at any open Board meeting, and therefore the unnecessary cost of his services skews the actual cost of the removal election.

As far as the election for replacement board members; the established “volunteer” Election Committee is experienced and fully capable of handling the same fair election process as we have had in the past, with very little overhead. Our 2017 annual election cost $11,900, and the budget for the 2018 election is $17,500.

Reporting a falsely-inflated cost is a scare tactic and is being used to make owners mad at the petitioners for exercising their legal rights to call for an election to remove Directors that are not serving us well. I read in Dan Folgeron’s message re-posted on AnthemToday.com that the Solera removal election cost $8,000.

Cost to keep

More importantly, the cost of an election is no reason to keep Directors in office who are not protecting the membership. The cost of an election pales in comparison to the cost of abdicating control of the Association policies, owner oversight and budget to the GM and attorney. These Directors have given a blank check to the attorney and are allowing the GM to disregard the budget when she unilaterally decides to make expenditures.

Cost of cheating

Rex, Aletta, and Tom should be removed from office because they didn’t let owners vote and didn’t follow our bylaws 3.6 when they appointed someone to fill my seat one month after they unlawfully removed me:

“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.” – SCA bylaws 3.6 (page 11)

Rex, Aletta, and Tom should be removed from office because they doubled down and compounded problems created by my removal. They shouldn’t have filled my board seat without waiting for my appeal to be adjudicated, and they shouldn’t have filled my seat without letting any owners compete for the position. No one knew they were recruiting so no owner could compete equally for a chance to be appointed to the board. Instead, they just picked a guy (Jim Coleman), decided to appoint him in secret and appointed him to my seat at the very next properly noticed Board meeting. It’s not Jim Coleman’s fault the Board acted unlawfully, both to remove me and to replace me without an owner vote. Why can’t the Board make decisions that fast and decisive when it comes to doing something good for the membership, like opening the restaurant?

Cost avoidance and karma
I have a suggestion that I think would treat everybody fairly. I don’t want to displace Jim if I am reinstated because, in my opinion, Jim will be much better than Rex as a board member, at least he will listen to and respect owners. However, a fair way to avoid the expense of another election would be to put Jim in Rex’ seat when I am reinstated by the Commission and Rex is either voted off during the recall election or removed by the Commission.

Cost of dirty tricks

Note that I was elected to serve until May 2019 for the same two-year term as Rex. Rex got his role as President by using dirty tricks, and he is doing a terrible job for the people. As such, I believe that Rex is the most important one to remove from the Board, and if he were the only director voted off, no election would be needed. Aletta’s and Tom’s terms end in May, 2018, and if they were voted off in the removal election, their seats could remain vacant until the normal election.

By the way, when Jim Coleman was appointed, I told the Board that they made a mistake by appointing him only until 2018 since my term expires in 2019, and the bylaws 3.6 say that the replacement of a director that is removed shall “… fill the vacancy for the remainder of the term of such director”. Rex insisted that appointing Jim only until May 2018 was intentional, but there is no legal authority for the Board to decide that the new director’s term will be a year less than the term of the director being replaced.

Cost of cherry-picking rules and karma

Rex should be removed for cherry-picking which governing documents he choses to comply with. He led the Board in the violation of SCA Bylaws 3.6 by usurping owners exclusive right to vote to determine whether a Director is removed from the Board. He is responsible of Bylaws 3.6 being being violated a second time by not giving owners the right to vote on the replacement of a Director who was removed. Rex insisted on violating SCA bylaws a third time by shortening Jim Coleman’s term again since the new Director is required by our governing documents to fill the remainder of the removed Director’s term. Appointing Jim only until 2018 unfairly gives Rex the benefit of not having to run against Jim (by Rex making their terms not end at the same time. Rex’ act is to the detriment of Jim Coleman who is an innocent owner/volunteer who should have been appointed, if at all, to the end of my term. This act exemplifies Rex’s pattern of cherry-picking which rules he chooses to follow. Rex acts  benefit himself by consolidating political power and do not treat all owners, particularly political opponents, equitably. We deserve leadership that is better than that, not self-serving and that acts solely in the best interest of the membership by the consistent enforcement of the rules of the game.

 

Voter Suppression Tactics

The following essay was written by Jim Mayfield, former member and Vice-President of the Sun City Anthem Board, and is republished here with his permission. Jim retired after six years service last May at the same time I was elected to replace Carl Weinstein.

On Saturday, we received our ballot for the recall election in the mail. At first, I almost discarded it in the recycle bin without even opening it.  I though it was another piece of solicitation junk mail.  (Subsequently, I was told that I was not the only one who thought this way.)  However, I opened the letter and found out that it was the ballot for the recall election and the instructions for how to mail in the ballot.

The purpose of this email is not to reiterate the obvious flaws (already noted by others) in the ballot process that should and could have been avoided by the CPAs retained to perform the voting process if they had studied and incorporated the time-tested SCA election processes.  Instead, the purpose of this email is to raise the ominous issues regarding 1> the motivation for the use of voter suppression tactics, and 2> the ethics behind obvious voter suppression tactics.

Preface
During my six years of service on an SCA committee and board of directors, I observed a steady decline in the willingness of SCA homeowners to volunteer their time to serve as club officers, SCA committee members and to seek election to the SCA board of directors.  This trend is indeed regrettable because of the large number of intelligent, talented residents who live within SCA and whose talents could be used to insure efficient operations at SCA and continuous improvement of the quality of life within SCA.  I also observed that fewer than half of the SCA homeowners vote in the annual board of directors election.  Even more significant, less than .75% of the SCA homeowners attend public board and committee meetings.

On one level, I empathize with why SCA homeowners do not chose to participate in the governance of their homeowners association.  Most people retired to enjoy pursuing life-long retirement objectives.  Annual assessments appear low compared to the benefits received.  However, as consequence of the lack of involvement by a broad group of homeowners in the governance of SCA, a small group of self-serving homeowners and management control and manipulate the operations of SCA. Their personal agendas frequently do not represent the best interest or service expectations of the homeowners.

Motivation for Use of Voter Suppression Tactics
The threshold to remove a director is just over 2,500 votes of the 7,144 SCA homeowners.  Anyone who doesn’t vote or whose ballot is disqualified is an automatic “no” vote. Obtaining the “yes” vote from 2,500+ homeowners is an almost impenetrable barrier to the removal of a director.  This reality begs the question of why management, members of the current board, and individuals wanting to maintain the status quo feel compelled to

  • use voter suppression tactics,
  • disseminate false and misleading information,
  • spend over $4,500 to get out their fake fact message, and
  • conduct possible violations of state law and SCA governing documents

to defeat the removal election.

The obvious answer is that they want to send the message that any attempts to dislodge them will be unsuccessful;` so, don’t waste your time.  They also fear that even an unsuccessful attempt at removal in which a majority of the votes cast are for removal will send the communication that a majority of the active members of the community are not supportive of the performance of current management or board of directors.  When faced with dissent, they rely on brutal, frequently illegal, tactics to suppress homeowner involvement and the dissent of any elected director who doesn’t “go along to get along”.

Ethics Behind Obvious Voter Suppression Tactics
The question we, the homeowners, need to answer in this recall election is the message we want to send regarding the ethics and culture of the SCA community. My experience since moving to SCA is that it is a community of fine, diverse people who share an incredible moral compass.  I do not believe that the actions of the current board or management reflect the moral values of the residents of SCA.

Personally, I never believed the recall election stood a chance of being successful. However, I believe that every “yes” vote sends a message to the corrupt, self-serving insiders who currently control the governance of SCA that their morals and actions do not represent the community.

I urge you to spend the 50 cents to send in you ballot and to vote “yes” in the recall election.

Thanks for reading a best wishes to all of you.

Jim Mayfield