Casa Grande HOA stripped of powers over accusations of theft and fraud
Published: October 7, 2009 at 8:23 pm
A Casa Grande homeowners association was placed in receivership, following allegations that board members drained funds for their own benefit – including what was described as the “theft” of more than $600,000.
Pinal County Superior Court Judge Robert Olson’s Sept. 30 order placed a receiver in charge of the Desert Carmel Lot Owners Association.
Along with other reasons, Olson cited a board member’s unauthorized withdrawal of $665,000 from association’s account.
“The court finds that the parties controlling the DC Lot Owners Association were grossly negligent in failing to protect to, protect, preserve or detect these withdrawals, which constituted the bulk of the liquid assets of the association,” Olson said in his order. “This alone justifies the appointment of a receiver.”
The defendants include Las Vegas developer Shawn Lampman and Denver real-estate consultant Robert Bealmear. Together they own most of the 3,500 lots in the Carmel subdivision. They also continue to sit on the three-member DC Lot Owners board.
A third board member, also a defendant, Thomas Lozzi, recently resigned. Other defendants include companies in which 44-year-old Lampman and 65-year-old Bealmear had an interest.
Desert Carmel’s original developer established the community in the 1980s. But it went bankrupt and only 100 or so homes have been built since. The thousand of unsold lots changed hands several times since. Most ended up with Lampman and Bealmer, known in the suit as “majority owners.”
Fifty-seven Desert Carmel residents and “minority” lot owners sued Lampman, Bealmear and others in November 2007, claiming they had used their board memberships to enrich themselves at the expense of the community. They claimed the board members – the majority owners – had conspired to drive down property values to acquire more lots at a discount. They planned to re-subdivide and redevelop Desert Carmel, according to claims in the lawsuit.
Plaintiffs said the association made it all but impossible for minority owners to build on their own lots. On top of that, the association neglected maintenance and upkeep of common areas, closing two clubhouses and filling a swimming pool with dirt, according to documents filed by the plaintiffs.
Lampman denied that he or other board members sought to drive down property values. He and his partners invested $13 million in buying some 2,500 lots in a 2005 bankruptcy sale, he said.
Bealmear first bought into Desert Carmel in 2001. His investments include some 150 lots, he said.
“Why the hell would we want to hurt something we put so much money into,” Lampman said in an interview.
In a Sept. 8 motion, however, plaintiffs’ attorneys said board members bled the association’s account by some $345,000 – leaving a balance of only $44,000. The complaint added: “They have spent nothing on maintenance or improvements for the community.”
One of the more serious complaints accuses Lampman himself of stealing association funds. The Sept. 8 motion said he made 19 separate withdrawals totaling $665,000 beginning in September 2007.
In February 2008, the court appointed a special master to audit the association’s financial records. The DC board made the books available in May of that year – just after Lampman returned all the money.
Plaintiffs’ attorneys noted, “It certainly cannot be described as a coincidence.”
In a Sept. 21 response, Lampman’s defense team said the withdrawals were made in error. It was mixup as Lampman kept his personal account at the same bank as the association, attorneys said.
“As such the removal of the funds was purely accidental,” they wrote. In addition, Lampman returned the money when the error was discovered.
“We have trouble accepting that it was purely accidental,” Melanie McKeddie, plaintiffs’ attorney, said in an interview.
In the plaintiffs’ motion, she told the court: “Theft is theft, regardless of whether the thief returns what he wrongfully took.”
Lampman, however, stood by the assertions made by his attorneys.
“It’s a bank error,” he said. “Whatever they want to say, it’s a bank error.”
As for Bealmear, plaintiffs said from January until July of 2008 he was paid a salary of $5,000 a month. State law bars members from getting paid for serving on the board. In addition, Bealmear billed the association for trips to Las Vegas, where meals and alcohol were put on the association tab.
By then, the DC Lot Owners Association office had been moved to Las Vegas. Rent was paid to a company owned by Lampman.
Bealmear’s attorneys, however, said the payments were legal. The board members, attorneys said, voted in open session to hire Bealmear as an independent contractor for the association. He was not paid for his board work, they said.
Bealmear said his work included making phone calls on behalf of the association and arranging contracts with vendors, among other things.
“At the time, we didn’t have a management company,” he said in an interview. “Somebody, in my view, needed to do the work.”
Desert Carmel now contracts with PMG Services of Mesa.
While defendants spent money they shouldn’t have, they failed to pay money they owed, plaintiffs said. They didn’t pay association dues on their own property.
“In fact, from January 2008 through July 2009, defendants have not made a single assessment payment,” the Sept. 8 filing said. “Defendants, collectively, are indebted to the association for approximately $900,000, just for 2008 and 2009 assessments.”
On the other hand, the association – under Lampman and Bealmear’s control – threatened foreclosure on minority lot owners for back dues, plaintiffs said. It was part of a scheme to acquire more property, they alleged.
Shortly after receiving demand letters, lot owners would receive offers to have the property taken off their hands. Buyers said they would pay off the assessments owed the association, in some cases totaling nearly $4,000. The offers came from companies in which Lampman or Bealmear had an interest, according to the court documents filed by plaintiffs, though that information wasn’t revealed to lot owners.
After the companies acquired the property, however, the association wrote off the debt – routinely backdating the write-offs to make it appear as if they had been cleared off the books prior to the sale, according to the plaintiffs’ claims.
In their response, attorneys for Lampman and Bealmear said the management company sent collection notices to all lot owners, majority owners included. Litigation, however, prompted the association to put all collection efforts on hold, their attorneys said.
Lampman said the association board played no role in the foreclosures.
“We had no control on how the foreclosures were handled,” Lampman said. “That was handled by Charlie Maxwell. He’s a lawyer for the association.”
Maxwell didn’t return a phone call to his Mesa office. His firm did not handle the Sept. 21 filing on behalf of association defendants. They were filed by a separate Phoenix law firm, with Tim Thomason as lead attorney.
Thomason told the court that Lampman, Bealmear and other defendants had agreed to repay the assessments. But the plaintiffs questioned the repayment plan, which would be stretched out over 10 years. The plan was worked out between the association board and the majority lot owners, both controlled by Lampman and Bealmear.
Peggy Neisent, a Desert Carmel resident and one of the plaintiffs, attended a Sept. 29 hearing on the motion for receivership.
She said Judge Olson asked defendants’ attorneys if anybody beside majority owners had been offered a chance to work out a payment plan.
“They really couldn’t come up with an answer,” Neisent said.
Lampman said the association has begun work to improve Desert Carmel. That included clearing weeds and adding landscaping to the Desert Carmel entrance. Plans were afoot to reopen one of the clubhouses, along with the swimming pool. The receivership order put that on hold, he said.
“Once we determine we can move forward, this stuff can be done,” he said.
Plaintiffs’ attorneys, however, said the board voted to spend just $35,000, after years of neglect.
“Whatever the case, nobody has repaired or improved anything,” they argued. “The director defendants cannot be trusted to meet their obligations … as they have demonstrated for nearly four years.”
Neisent said some improvements have been made to the entry.
“Nothing was happening until about a month ago,” she said. “They started making an effort to clean up the place. They did some landscaping, cut down some palm trees that were dead.”
On a road that had been washed out, they put in piles of dirt so motorists wouldn’t accidentally drive into a canal, she added. Near the Desert Carmel entry, trees were planted as part of the landscaping.
Neisent said landscaping crews took the trees from elsewhere in community.
“There were actually taking trees from anywhere in the development that they thought they wanted,” she said. “For sure, they took one tree that was off somebody’s lot that was not theirs.”
Lampman dismissed the idea trees had been taken from others’ property. He said the association bought the trees.
“Nobody took any trees from anywhere, and if anything was mistakenly moved, it was put back,” he said. “I wasn’t personally down there, so I don’t know.”