The new Board of Directors, given the facts provided at the Annual Meeting, now have the opportunity, and duty, to recover the funds improperly disbursed to Lynn Thompson and Julie Handley. Some suggestions follow:
1. Thompson and Handley should file a claim. Our examination of the Association’s books and records revealed that Thompson and Handley have not filed a claim. At the very least an invoice from them to the Association, together with an explanation of why the Association is liable, needs to be filed.
2. Examine the facts of their claim. The Association has nothing on the record stating what Thompson and Handley were doing on behalf of the Association for which they should be held harmless. There are several witnesses who contest Thompson’s and Handley’s version of the events of October 1, 2005. They should be heard. I understand that the Reddy’s have requested this.
3. Determine if Thompson and Handley were acting in their official capacity. The Reddy’s and another couple (neither of whom had anything to gain) have stated that Association Counsel, Mr. Mercer, in an informal conversation at the 2005 Annual Meeting said that this was a private matter. Apparently, Mr. Mercer has since reversed himself. How he is able to make any determination absent an examination of the facts is beyond us? Thompson’s and Handley’s guilt or innocence in a criminal trial is irrelevant. The Association is not liable for Thompson’s and Handley’s "own individual willful misconduct or bad faith."—Southampton Bylaws, Article VII, Section 1.
4. Vote on whether or not Thompson and Handley should be reimbursed. Prior decisions in this matter are not “effective”. Prior disbursement were without proper authorization (see Virginia Condominium Act § 55-79.75). Therefore, the Board must either vote to authorize payment, or recover the $8885 disbursed, plus amounts billed in this matter by Association Counsel.
The insurance carrier, St. Paul Travelers, has stated (June 30, 2006), "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors." Another letter states (August 15, 2007), "this matter never rose to meet the definition of a Claim".
Resolving this issue is of the utmost importance to the Association because (a) we could be held liable for defending Thompson and Handley in a civil suit, plus damages sought by the Reddys, and (b) St. Paul Traveler’s could view our claim as an attempt to defraud them.
Lastly, the Board needs to determine who authorized the improper payments to Thompson and Handley and who knew about them, and take appropriate action.
[Sent to the Board of Directors October 16, 2007 via fax to CMS— added sentence in bold to item 3, and sent on November 9, 2007 via fax to CMS]
Tuesday, October 16, 2007
Friday, October 12, 2007
Thanks for voting
Thanks for voting. We had the biggest turnout in Southampton's history—over 68%. Past turnouts, when we had a quorom, were barely over 50%.
The results: Karunesh Khanna and Joe Smith are in. Lynn Thompson and Julie Handley are out. And the Reddy's will get a hearing before the Board.
The new members of the Board met and appointed Frank Conformti as President, Robert Dogan as Vice President, Karunesh Khannna as Treasurer, and Jess Watkins as Secretary.
The results: Karunesh Khanna and Joe Smith are in. Lynn Thompson and Julie Handley are out. And the Reddy's will get a hearing before the Board.
The new members of the Board met and appointed Frank Conformti as President, Robert Dogan as Vice President, Karunesh Khannna as Treasurer, and Jess Watkins as Secretary.
Monday, October 8, 2007
Questions regarding Thompson's and Handley's legal fees
Dogan, Pariente, Seekford, Watkins: When, and upon what authority—none is reflected in the minutes, did you authorize the check to Julie Handley in the amount of $3000?
Conforti: When, and upon what authority—none is reflected in the minutes, did you authorize the second check to Julie Handley in the amount of $4085?
Conforti, Dogan, Pariente, Seekford, Watkins: When, upon what authority, and by whom—none is reflected in the minutes, was Stephen Pickard asked to expunge Thompson’s and Handley’s arrest records?
Conforti, Dogan, Pariente, Seekford, Watkins: The minutes of the January 11, 2007 meeting indicate that in a 3 minute Executive Session the Board “resolved to satisfy the request for reimbursement of legal fees.” § 55-79.75.C requires the “substance [be] reasonably identified”. Why did you not specify who was to be reimbursed, and the amount?
Conforti: The Bylaws, Article XIII, Section 3 requires an audit at the close of each fiscal year. Has that audit been performed? Who performed the audit?
Thompson: What were you doing on Saturday, October 1, 2005 around 8:30 PM when you were observed moving plants from the area adjoining 1635A across the cul-de-sac toward Julie Handley's place? Please describe what you removed, where you removed it to, how you took it there.
Handley: What was your role in removing plants from the area adjoining 1635A? Please describe what you removed, where you removed it to, how you took it there.
Thompson and Handley: On April 14, 2005, Association Counsel advised that “a picture should be taken first, then a letter written, and if no action was taken, then to remove the item(s), but not before advising the resident.” Did you follow Counsel’s advice?
Conforti, Dogan, Pariente, Seekford, Watkins: After the insurance carrier informed you that "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors" why did you not investigate further?
Thompson: What was the effective date of resignation of the former Treasurer, and did he submit a letter of resignation? Who nominated Frank Conforti to the Board? What is the effective date that Conforti became Treasurer?
Conforti, Dogan, Pariente, Seekford, Watkins: You have a fiduciary duty, and are expected to exercise due diligence. Why did you not hear what the Reddys and witnesses had to say prior to making your decision to reimburse Thompson and Handley?
Association Counsel: Your client is the Association, not the Board, and you are expected to exercise due diligence. Why did you not hear from the Reddys and witnesses prior to drafting your opinion?
Conforti, Dogan, Pariente, Seekford, Watkins: The Reddy's have requested a hearing in a letter dated September 26, 2007. When will you hold this hearing?
Conforti, Dogan, Pariente, Seekford, Watkins: If upon hearing from the Reddy’s and witnesses you find that Thompson and Handley were not acting in their capacity as members of the Board, are you prepared to recover funds paid to Handley, and to Counsel in this matter?
Conforti: When, and upon what authority—none is reflected in the minutes, did you authorize the second check to Julie Handley in the amount of $4085?
Conforti, Dogan, Pariente, Seekford, Watkins: When, upon what authority, and by whom—none is reflected in the minutes, was Stephen Pickard asked to expunge Thompson’s and Handley’s arrest records?
Conforti, Dogan, Pariente, Seekford, Watkins: The minutes of the January 11, 2007 meeting indicate that in a 3 minute Executive Session the Board “resolved to satisfy the request for reimbursement of legal fees.” § 55-79.75.C requires the “substance [be] reasonably identified”. Why did you not specify who was to be reimbursed, and the amount?
Conforti: The Bylaws, Article XIII, Section 3 requires an audit at the close of each fiscal year. Has that audit been performed? Who performed the audit?
Thompson: What were you doing on Saturday, October 1, 2005 around 8:30 PM when you were observed moving plants from the area adjoining 1635A across the cul-de-sac toward Julie Handley's place? Please describe what you removed, where you removed it to, how you took it there.
Handley: What was your role in removing plants from the area adjoining 1635A? Please describe what you removed, where you removed it to, how you took it there.
Thompson and Handley: On April 14, 2005, Association Counsel advised that “a picture should be taken first, then a letter written, and if no action was taken, then to remove the item(s), but not before advising the resident.” Did you follow Counsel’s advice?
Conforti, Dogan, Pariente, Seekford, Watkins: After the insurance carrier informed you that "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors" why did you not investigate further?
Thompson: What was the effective date of resignation of the former Treasurer, and did he submit a letter of resignation? Who nominated Frank Conforti to the Board? What is the effective date that Conforti became Treasurer?
Conforti, Dogan, Pariente, Seekford, Watkins: You have a fiduciary duty, and are expected to exercise due diligence. Why did you not hear what the Reddys and witnesses had to say prior to making your decision to reimburse Thompson and Handley?
Association Counsel: Your client is the Association, not the Board, and you are expected to exercise due diligence. Why did you not hear from the Reddys and witnesses prior to drafting your opinion?
Conforti, Dogan, Pariente, Seekford, Watkins: The Reddy's have requested a hearing in a letter dated September 26, 2007. When will you hold this hearing?
Conforti, Dogan, Pariente, Seekford, Watkins: If upon hearing from the Reddy’s and witnesses you find that Thompson and Handley were not acting in their capacity as members of the Board, are you prepared to recover funds paid to Handley, and to Counsel in this matter?
Tuesday, October 2, 2007
Members of the Board of Directors respond to our concerns
Members of the Board of Directors, Conforti, Dogan, Pariente, Seekford, Watkins, in their October 1, 2007 letter to Southampton Condominium Property Owners, have responded to our concerns. Their stated position, and our comments follow:
Conforti, Dogan, Pariente, Seekford, Watkins: "On October 1, 2005, two Board Members conducting a routine walk-through inspection of Southampton were accused by a property owner of removing plants from the common areas."
The property owners were not present to accuse anyone when the plants were removed. On May 17, 2006, after a seven month investigation, Linda K. Thompson and Julie Carole Handley were arrested and charged with Grand Larceny (Case #GC06001924-00 and #GC06001925-00). Thompson and Handley told investigating detective Guevarra that the plants belonged to them. The plants were observed being loaded on a green truck belonging to a male sharing Handley's unit. At their trial Thompson and Handley claimed they were removing "trash and weeds".
Conforti, Dogan, Pariente, Seekford, Watkins: The "Board delayed any decision on the disbursement of legal expenses pending disposition of the legal actions."
Handley received a check for $3000 dated August 17, 2006—two months prior to the "disposition of the legal actions". The grand larceny charge—later reduced to a misdemeanor—was decided on October 19, 2006. The minutes do not show that this "disbursement" was authorized by the Board.
Conforti, Dogan, Pariente, Seekford, Watkins: "The insurance carrier likewise recommended that the Board await the conclusion before submitting the judgement and legal bills to the carrier."
A June 30, 2006 letter from the insurance carrier states, "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors." Letters dated June 29, 2007 and August 5, 2007 from Enver Masud, plus a letter dated September 26, 2007 from the Reddy's asking for a hearing, provided Conforti, Dogan, Pariente, Seekford, Watkins with facts showing that the conduct complained of does not stem from Thompson's and Handley's capacity as members of the Board of Directors.
Conforti, Dogan, Pariente, Seekford, Watkins state, "a claim has since been filed with the insurance carrier".
The insurance carrier responded to the claim by letter dated August 15, 2007 which states, "this matter never rose to meet the definition of a Claim". In other words, based upon the facts provided, the insurance carrier will not reimburse the Association. The claim was filed on July 18, 2007—after Joe Smith and Enver Masud began their inquiries. The Association has spent more than $8885 on this issue—invoices submitted by the Association's attorney are not included in this amount.
Conforti, Dogan, Pariente, Seekford, Watkins: "The arrest and other records of the proceedings were subsequently ordered expunged."
Who requested the records expunged, who issued the order, when was the work performed? From the date on the invoice from Stephen Pickard to Tom Patti—which does not itemize tasks and time spent, it would appear that this work was performed prior to any decision by the Board. It's curious that the check for $1800 is made to Julie Handley—not Stephen Pickard.
Furthermore:
Conforti, Dogan, Pariente, Seekford, Watkins have a fiduciary duty. They, and the Association's attorney, are expected to exercise due diligence. They should have heard from the complainant, Mr. and Mrs. Reddy, from Ron Graham and Enver Masud who witnessed the removal of the plants, and from three other witnesses who were available to testify to the ownership and condition of the 32 to 34 potted plants which were removed, before making their decision.
By not hearing from the Reddys and witnesses, the Board incurred unnecessary legal expenses, and may have forced the matter into civil litigation, thereby, incurring additional liabilities for the Association. They did this despite the cautionary note from the insurance carrier: "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors." According to Bylaws, Article VII, Section 1 the Association is not liable for “individual willful misconduct or bad faith”.
Dogan, Seekford, possibly Conforti have a conflict of interest. They were not elected. The minutes show that they owe their position on the Board to Thompson and/or Handley.
Conforti, Dogan, Pariente, Seekford, Watkins, when they met to compose their letter of October 1, 2007 may have violated the condominium Act. § 55-79.75.B states: "All meetings of the unit owners' association or the executive organ, including any subcommittee or other committee thereof, shall be open to all unit owners of record. The executive organ shall not use work sessions or other informal gatherings of the executive organ to circumvent the open meeting requirements of this section." § 55-79.75.A requires that an officer or his agent "at least seven days in advance . . . send to each unit owner notice of the time, place, and purposes of such meeting."
The Executive Sessions at which this matter was discussed were held in violation of § 55-79.75. C: "The executive organ . . . may convene in executive session . . . upon the affirmative vote in an open meeting to assemble in executive session. The motion shall state specifically the purpose for the executive session. Reference to the motion and the stated purpose for the executive session shall be included in the minutes. . . . No contract, motion or other action adopted, passed or agreed to in executive session shall become effective unless the executive organ . . . , following the executive session, reconvenes in open meeting and takes a vote on such contract, motion or other action which shall have its substance reasonably identified in the open meeting."
Conforti, Dogan, Pariente, Seekford, Watkins: "On October 1, 2005, two Board Members conducting a routine walk-through inspection of Southampton were accused by a property owner of removing plants from the common areas."
The property owners were not present to accuse anyone when the plants were removed. On May 17, 2006, after a seven month investigation, Linda K. Thompson and Julie Carole Handley were arrested and charged with Grand Larceny (Case #GC06001924-00 and #GC06001925-00). Thompson and Handley told investigating detective Guevarra that the plants belonged to them. The plants were observed being loaded on a green truck belonging to a male sharing Handley's unit. At their trial Thompson and Handley claimed they were removing "trash and weeds".
Conforti, Dogan, Pariente, Seekford, Watkins: The "Board delayed any decision on the disbursement of legal expenses pending disposition of the legal actions."
Handley received a check for $3000 dated August 17, 2006—two months prior to the "disposition of the legal actions". The grand larceny charge—later reduced to a misdemeanor—was decided on October 19, 2006. The minutes do not show that this "disbursement" was authorized by the Board.
Conforti, Dogan, Pariente, Seekford, Watkins: "The insurance carrier likewise recommended that the Board await the conclusion before submitting the judgement and legal bills to the carrier."
A June 30, 2006 letter from the insurance carrier states, "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors." Letters dated June 29, 2007 and August 5, 2007 from Enver Masud, plus a letter dated September 26, 2007 from the Reddy's asking for a hearing, provided Conforti, Dogan, Pariente, Seekford, Watkins with facts showing that the conduct complained of does not stem from Thompson's and Handley's capacity as members of the Board of Directors.
Conforti, Dogan, Pariente, Seekford, Watkins state, "a claim has since been filed with the insurance carrier".
The insurance carrier responded to the claim by letter dated August 15, 2007 which states, "this matter never rose to meet the definition of a Claim". In other words, based upon the facts provided, the insurance carrier will not reimburse the Association. The claim was filed on July 18, 2007—after Joe Smith and Enver Masud began their inquiries. The Association has spent more than $8885 on this issue—invoices submitted by the Association's attorney are not included in this amount.
Conforti, Dogan, Pariente, Seekford, Watkins: "The arrest and other records of the proceedings were subsequently ordered expunged."
Who requested the records expunged, who issued the order, when was the work performed? From the date on the invoice from Stephen Pickard to Tom Patti—which does not itemize tasks and time spent, it would appear that this work was performed prior to any decision by the Board. It's curious that the check for $1800 is made to Julie Handley—not Stephen Pickard.
Furthermore:
Conforti, Dogan, Pariente, Seekford, Watkins have a fiduciary duty. They, and the Association's attorney, are expected to exercise due diligence. They should have heard from the complainant, Mr. and Mrs. Reddy, from Ron Graham and Enver Masud who witnessed the removal of the plants, and from three other witnesses who were available to testify to the ownership and condition of the 32 to 34 potted plants which were removed, before making their decision.
By not hearing from the Reddys and witnesses, the Board incurred unnecessary legal expenses, and may have forced the matter into civil litigation, thereby, incurring additional liabilities for the Association. They did this despite the cautionary note from the insurance carrier: "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors." According to Bylaws, Article VII, Section 1 the Association is not liable for “individual willful misconduct or bad faith”.
Dogan, Seekford, possibly Conforti have a conflict of interest. They were not elected. The minutes show that they owe their position on the Board to Thompson and/or Handley.
Conforti, Dogan, Pariente, Seekford, Watkins, when they met to compose their letter of October 1, 2007 may have violated the condominium Act. § 55-79.75.B states: "All meetings of the unit owners' association or the executive organ, including any subcommittee or other committee thereof, shall be open to all unit owners of record. The executive organ shall not use work sessions or other informal gatherings of the executive organ to circumvent the open meeting requirements of this section." § 55-79.75.A requires that an officer or his agent "at least seven days in advance . . . send to each unit owner notice of the time, place, and purposes of such meeting."
The Executive Sessions at which this matter was discussed were held in violation of § 55-79.75. C: "The executive organ . . . may convene in executive session . . . upon the affirmative vote in an open meeting to assemble in executive session. The motion shall state specifically the purpose for the executive session. Reference to the motion and the stated purpose for the executive session shall be included in the minutes. . . . No contract, motion or other action adopted, passed or agreed to in executive session shall become effective unless the executive organ . . . , following the executive session, reconvenes in open meeting and takes a vote on such contract, motion or other action which shall have its substance reasonably identified in the open meeting."
Monday, October 1, 2007
Why did Southampton's Treasurer resign?
The minutes of the November 9, 2006 Board meeting show that Stephen Dougherty resigned as Treasurer, and Conforti was "welcomed" as Board member and Treasurer. The timing of Dougherty's resignation may be significant.
A June 30, 2006 letter from Rachel Plazk of St. Paul Travelers to Southampton states, "based on the information provided to date, there is a question as to whether the conduct complained of stems from their [Thompson and Handley] capacity as members of the Board of Directors."
On August 17, 2006 Handley received a $3000 check (#1711) from the Southampton account at CMS. She received this without presenting an invoice to Southampton, and without approval by the Board.
On November 6, 2006 Handley received an invoice from Brian Moran—the attornery retained by her and Thompson to defend them against charges of grand larceny—later reduced to a misdemeanor.
On November 16, 2006 Handley received a $4085 check (#1771) from the Southampton account at CMS. She received this without presenting an invoice to Southampton (Brian Moran's invoice is to her, not to Southampton), and without approval by the Board.
Did the new Treasurer Conforti approve the payment of Chair Thompson's and Handley's legal fees? What part did the other Board members (Dogan, Pariente, Seekford, Watkins) play in the decision to reimburse Thompson and Handley?
Did Treasurer Dougherty resign because he disagreed with the payments made to Handley?
An August 15, 2006 letter from Rachel Plazk of St. Paul Travelers to Southampton states, "this matter never rose to meet the definition of a Claim". Travelers did not reimburse Southampton for Thompson's and Handley's legal expenses incurred in defending themselves against the charge of grand larceny—later reduced to a misdemeanour—by the Commonwealth of Virginia.
A June 30, 2006 letter from Rachel Plazk of St. Paul Travelers to Southampton states, "based on the information provided to date, there is a question as to whether the conduct complained of stems from their [Thompson and Handley] capacity as members of the Board of Directors."
On August 17, 2006 Handley received a $3000 check (#1711) from the Southampton account at CMS. She received this without presenting an invoice to Southampton, and without approval by the Board.
On November 6, 2006 Handley received an invoice from Brian Moran—the attornery retained by her and Thompson to defend them against charges of grand larceny—later reduced to a misdemeanor.
On November 16, 2006 Handley received a $4085 check (#1771) from the Southampton account at CMS. She received this without presenting an invoice to Southampton (Brian Moran's invoice is to her, not to Southampton), and without approval by the Board.
Did the new Treasurer Conforti approve the payment of Chair Thompson's and Handley's legal fees? What part did the other Board members (Dogan, Pariente, Seekford, Watkins) play in the decision to reimburse Thompson and Handley?
Did Treasurer Dougherty resign because he disagreed with the payments made to Handley?
An August 15, 2006 letter from Rachel Plazk of St. Paul Travelers to Southampton states, "this matter never rose to meet the definition of a Claim". Travelers did not reimburse Southampton for Thompson's and Handley's legal expenses incurred in defending themselves against the charge of grand larceny—later reduced to a misdemeanour—by the Commonwealth of Virginia.
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