In recent news, a woman by the name of Kristin Davis was imprisoned for stealing over one million dollars from two homeowner’s associations in California. Her sentence of 12 years was decided by a jury on Thursday, March 3rd and reflected a long list of felonies. While this is the worst case scenario for any HOA, these common yet unfortunate events can devastate the community. As we take a closer look at this breaking headline, ensure your association is adequately protected with the right Ventura HOA Insurance policy to protect your operations.
According to the Ventura County Star, the judge stated that Davis took advantage of a position of trust and defrauded the Big Sky Homeowners Association in Simi Valley and the Oak Park Calabasas Homeowners Association, which her company managed, in a highly elaborate scheme.
It was determined that Davis stole approximately $1 million from Big Sky Homeowners Association and $600,000 from Oak Park Calabasas Homeowners Association. As a result, Davis was convicted of eight counts of felony grand theft, four counts of felony tax evasion, two counts of felony forgery and one count each of felony insurance fraud and failure to file state income taxes, says the article.
Davis was the former CEO of Paradigm Management Group and managed many HOA’s. While the company is now closed, this discovery will have a lasting impact. Senior Deputy District Attorney Howard Wise explains “Her crimes affected an entire industry. They’re all under a cloud of mistrust because of Davis’ actions.”
It’s important to note, however, that despite this extravagant scheme, directors and employees of HOAs are not required to have access to cash in order to steal. As the economy is in limbo and there is more pressure to survive financially, numerous fraudulent actions are more likely to occur. In fact, the typical perpetrator in these cases are first-time offenders-only 7 percent have previous criminal records.
In order to protect against these potential threats, the proper amount of insurance is required. In order to protect your bottom line, consider reviewing the limits of protections of the fidelity and employee dishonesty coverage. This will provide protection against employee theft, forgery, counterfeit currency, credit card fraud, robbery, ERISA plan fraud, and more. While no HOA wants to believe any director or employee is capable of these actions, it’s imperative to be protected.
Having the proper amount of fidelity insurance would have saved this HOA hundreds of thousands of dollars. If the HOA had the proper limit of coverage, the HOA could have filed a claim with the HOA insurance carrier and collected the stolen money and been done. Instead, they were forced to hire legal counsel to go after the property manager, wait over a year for the trial, and compete for funds with other HOA’s she had stolen from and were not able to recoup the full amount of embezzled money.
At Scott Litman Insurance Agency, we are committed to protecting you against the variety of risks HOAs face. Our unique understanding of the industry has allowed us to serve Los Angeles and beyond for over twenty years. For more information about the products you need to be completely secured, contact us today at (855) 999-4505 or fill out our online form.
Scott Litman and his agency have been educating property management companies, HOAs, and Board of Directors on the benefits of maintaining proper insurance for over 20 years. Scott received his Law Degree from Southwestern University School of Law. Scott attended the University of California, Los Angeles and California State University of Northridge in receiving his undergraduate degree.
Scott represents many insurance companies and has earned the “Elite Commercial Agent” status from Farmers Insurance. Scott is also an active member of the Community Association Institute (CAI). Due to years of hard work and dedication to the needs of their clients, the Scott Litman Agency was named one of LA’s “Best in Insurance” for 2013, 2014 & 2015 in Los Angeles Magazine.