# More HOA fraud, $3 million and counting

- URL: https://dynamicaccounting.net/more-hoa-fraud-3-million-and-counting/
- Date: 2023-12-22
- Topics: Fraud, Audit & Controls, Payables & Receivables
- Type: original article

The Hammocks is considered the largest homeowner’s association (HOA) in South Florida with more than 18,000 residents across single family homes and condos. The Miami area group of 40 subdivisions is larger than many towns in the U.S.

The HOA took in $4million a year in dues and fees. For years residents complained of mismanagement, a lack of transparency, and significant fee increases. In one case HOA dues increased 400% in a single year. [In 2017 authorities started investigating The Hammocks HOA. It would take five years, but in November of 2022 they finally arrested five people, four ex-board members of the HOA and the husband of an ex-board member.](https://therealdeal.com/magazine/national-january-2023/recipe-for-fraud/)  The amount missing is still in dispute, but $1 million quickly became $2 million and now the number is north of $3 million. The current tally is $3.4 million.

The core of this scheme is a fraudulent vendor scheme. Board president Marglli Gallego is alleged to have funneled cash to five companies, two controlled by her husband Jose Antonio Gonzalez. The companies in question were paid for services not rendered. Board members Myriam Rodgers, 77; Monica Ghilardi, 52; and Yoleidis Lopez Garcia, 47 are also alleged to have written checks to these fraudulent vendors. Vendors not controlled by Gonzalez were paid for services not rendered. They then kicked back part of those payments to Gallego and Gonzalez.

[![](/wp-content/uploads/2023/10/image-1024x577.png)](/wp-content/uploads/2023/10/image.png)

Attorney Sebastian Jaramillo said it is as if the board members didn’t try to mask their alleged chicanery.  “The fraud to me seems very unsophisticated. It’s a situation where she is paying to her husband’s company, which is domiciled in her own addresses,” he said, referring to Excellent Work. “There isn’t even any attempt to hide it.”

While they didn’t do a great job of hiding their fraud, they are accused of retaliating against homeowners who fought for greater disclosure and even against police during the investigation. The common reference to HOA board members as petty tyrants seems appropriate here.

A single firm tied to Gonzalez is alleged to have received more than $1.1 million in payments. Additionally, Gallego. who was initially arrested in 2021, is alleged to have spent more than $800k of HOA funds on her criminal defense.

Florida law mandates annual financial audits for HOA’s, which the Hammocks allegedly ignored starting in 2018. Yet the statute requires HOAs to provide the reports only once a records request is made. After the revelations a judge took the unusual step of putting the Hammocks HOA in receivership, essentially bankruptcy, with an appointed receiver.

Subsequent to the arrests, David Gersten, the receiver overseeing the Hammocks, filed a lawsuit against the other four board members alleging “[they failed to curb their arrested colleagues, including letting them funnel funds ‘without insisting on even minimal documentation to support the illicit payments](https://therealdeal.com/miami/2023/09/21/hammocks-wins-2m-settlement-in-case-against-ex-board-members/),'” Ultimately the parties settled with the board members tendering the full $2 million available under directors and officers insurance.

I think the lesson here is simple. If money is involved, ask to see the controls. The less sophisticated the organization, the more like it is to be messy.