Co-op Treasurer Fraud
The president of the board received a letter from a landscaper for the cooperative (co-op), which stated that if the outstanding balance was not paid soon, the landscaping company would commence legal action. The president was surprised by this, as she was unaware there was an outstanding balance. She discovered that the co-op treasurer, who was responsible for paying the service contractors’ invoices, had failed to pay many of them and kept the money for himself instead. Because he was the only board member responsible for handling money and the invoices went to him directly, no one else on the board was aware that there were a large number of unpaid invoices. The treasurer had made copies of checks and put the contractor’s name and amount owed on the copy, so it looked like he had made the payments. However, the real check was made out to the treasurer and deposited in his account. An investigation revealed that there was over $100,000 in unpaid invoices and that the treasurer had stolen the money over a five-year period.
Risk Control Tip
The board should not appoint a single person to be responsible for the funds of the association. Larger expenses should require the approval of more than one board member, and board members should share the responsibility of ensuring that invoices are paid in a timely fashion. Bank statements should be carefully reviewed. Consider having an outside accountant review the association’s funds on a yearly basis.
CNA is the market leader in providing Liability and Crime insurance products for Condominium Associations.
The purpose of this material is to provide information, rather than advice or opinion. The information it contains is accurate to the best of the author’s knowledge as of the date it was written, but it does not constitute and cannot substitute for the advice of a retained legal professional. Only your own attorney can provide you with assurances that the information contained herein is applicable or appropriate to your particular situation. Accordingly, you should not rely upon (or act upon, or refrain from acting upon) the material herein without first seeking legal advice from a lawyer admitted to practice in the relevant jurisdiction.
These examples are not those of any actual claim tendered to the CNA companies, and any resemblance to actual persons, insureds, and/or claims is purely accidental. The examples described herein are for illustrative purposes only. They are not intended to constitute a contract, to establish any duties or standards of care, or to acknowledge or imply that any given factual situation would be covered under any CNA insurance policy. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All CNA products and services may not be available in all states and may be subject to change without notice.
“CNA” is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporations subsidiaries use the “CNA” trademark in connection with insurance underwriting and claims activities. Copyright © 2023 CNA. All rights reserved.