Cover up of check given to Handley while awaiting trial on a charge of grand larceny

Enver Masud
1707B S. Hayes Street
Arlington, VA 22202

April 22, 2008

David S. Mercer
Agent, Southampton Condominium
MercerTrigiani
112 South Alfred Street
Alexandria, Virginia 22314

RE: $3000 CHECK ISSUED FROM SOUTHAMPTON CONDOMINIUM ACCOUNT TO JULIE CAROLE HANDLEY FBO HANDLEY AND LINDA K. THOMPSON

Julie Handley was issued three checks ($3000, #1711; $4085, #1771; $1800, #1818) drawn on the Southampton Condominium (the Association) account by CMS Services, signed by Tom Patti. This letter concerns the first check for $3000 (copy attached) issued while Handley was awaiting trial on a charge of “Grand Larceny”. Examining the facts regarding this check may help unravel the issues raised during the October 11, 2008 Annual Meeting.

1 – The arrest on charges of “Grand Larceny” (Case #GC06001924-00 and #GC06001925-00) of Linda K. Thompson and Julie Carole Handley was a private matter — not a Southampton Condominium matter.

At the October 13, 2005 Annual Meeting, a couple residing at Southampton Condominium overheard the Association’s Attorney tell the Reddy’s, whose plants had allegedly been stolen by Thompson and Handley on October 1, 2005, that this was not a matter for the association.

Thompson was, at that time, President of the Association. Handley was its Secretary.

Thompson and/or Handley paid Brian J. Moran, P.C. $1500 by check #2246 on March 24, 2006; $1500 with a Visa on May 18, 2006; $685 by check #2301 on August 10, 2006; $100 by check #2318 on September 27, 2006; $2000 by MasterCard on October 18, 2006.

Between March 24, 2006 and October 18, 2006 Thompson and/or Handley made five payments to Moran — three of them after their arrest on May 17, 2006. These payments demonstrate that Thompson, Handley, and Southampton Condominium were treating Thompson and Handley’s arrest as a private matter.

2 – There is no evidence in Southampton Condominium records that prior to issuing the $3000 check (#1711), the Board of Directors met to consider whether or not the Association was liable for Thompson and Handley’s conduct on October 1, 2005.

Southampton Bylaws, Article VII, Section 1 states: “The officers and Directors of the Association shall not be liable to the members of the Association for any mistake of judgment, negligence, or otherwise, except for their own individual willful misconduct or bad faith.”

There is no evidence in Southampton Condominium records that the Board had made a determination that on August 17, 2006 this issue had become an Association matter. Absent this determination, the Association is not liable for defending Thompson and/or Handley against the charge of grand larceny.

Rachel C. Plzak, Bond Claim Representative at St. Paul Travelers — the Association’s insurance carrier, wrote to CMS that “that this matter never rose to meet the definition of a Claim”.

While the Board is authorized to settle claims against the Association, Thompson and/or Handley had filed no claim, invoice or explanation for seeking reimbursement, at the time the check for $3000 (#1711) was issued.

Thompson and Handley received an invoice from Brian J. Moran on November 6, 2006 (attached) — after the check was issued — which they provided to CMS Services without explanation as to why the Association is liable.

3 – There is no evidence in Southampton Condominium records that the Board of Directors authorized the $3000 (check #1711) issued to Handley.

I have searched the minutes of Board meeting, and find no evidence of an agenda item indicating that the Board of Directors even met to consider Thompson and/or Handley's liability to the Association pursuant to § 55-79.75.B.

If the Association’s liability was determined in executive session, there is no record in the minutes of an “affirmative vote in an open meeting to assemble in executive session” and/or motion stating “specifically the purpose for the executive session” pursuant to § 55-79.75.C.

Since the check was issued while Thompson and Handley were paying their attorney themselves — indicating they considered it a private matter, it is questionable that their meeting with the Board in executive session came under the provisions of § 55-79.75.C.

4 – Even if the Board met to authorize the $3000 check (#1711), their decision is not “effective” under Virginia law.

§ 55-79.75.C. states: “No contract, motion or other action adopted, passed or agreed
to in executive session shall become effective unless the executive organ or
subcommittee or other committee thereof, 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.”

There is no evidence in the record that the Board’s decision had its “substance reasonably identified in the open meeting” pursuant to § 55-79.75.C.

Since Julie Handley was then the Association’s Secretary, she had a duty to keep accurate minutes, and in this instance one would expect her to be particularly careful.

5 –Thompson, Handley, and Frank Conforti attempted to stymie investigation of this matter.

The January 11, 2007 minutes of the Board meeting state that the Board “resolved to satisfy the request for reimbursement of legal fees.” This was the first indication members of the Association had that something was amiss.

Joe Smith and I began looking into this matter around March 2007, and we were told that the “legal fees” referred to $1800 paid to Stephen R. Pickard, P.C. to “expunge the record” after Thompson and Handley had been found “not guilty” at their trial on October 19, 2006.

More investigation by Joe Smith and I revealed that the two other checks had been issued to Handley — checks for $3000 (#1711) and $4085 (#1771).

Our inquiries led to Frank Conforti, on October 4, 2007, threatening to sue me.

On October 8, 2007 I received a letter from Bernard J. DiMuro, attorney for Handley and Thompson, accusing me of issuing “false and defamatory statements” about his clients.

Frank Conforti has stymied attempts to get to the bottom of this matter by refusing to answer my letters, and by refusing to hear from witnesses who contradict Thompson and Handley’s story. He has refused to provide a hearing to the Reddy’s whose plants were stolen — allegedly by Thompson and Handley. Excerpts from witness statements are attached.

Conclusion and Demand

Thompson and/or Handley were awaiting trial, paying for their legal defense from personal funds, and had filed no claim, invoice, or explanation for seeking reimbursement when they were issued a Southampton Condominium check, dated August 17, 2006, for $3000 (#1711) by CMS Services.

Since Handley was the Association’s Secretary during the period in question, the absence of references to three checks she received in the minutes of the Association, for which she is responsible, raises a red flag.

That checks issued were made to Handley, although Moran’s services were provided to both Thompson and Handley, raises another red flag — did Thompson, who was then President of the Association, authorize the checks?

The Board can authorize payment retroactively, however, that may not negate criminal wrongdoing, if any. Conforti attempted to do so at the April 10, 2008 meeting of the Board.

Frank Conforti, now President of the Association, and Robert Dogan, now Vice President, have stymied attempts to unravel this matter by Joe Smith, Karunesh Khanna, and myself. Joe Smith was elected to the Board on October 11, 2007. Karunesh Khanna was also elected on October 11, 2007, and is serving as Treasurer.

As a homeowner at Southampton Condominium, I hereby ask for answers to the following questions:

1 – When did the Board determine that the Association was liable for the legal defense of Thompson and Handley?

2 – What criteria did the Board use to determine that the Association was liable for the legal defense of Thompson and Handley?

3 – Why did the Board choose to hear from the perpetrators of the alleged crime, but not from the victims, and their witnesses?

4 – When did the Board authorize the first check for $3000 (#1711) to Handley?

5 – How was Board’s authorization transmitted to CMS Services and/or Tom Patti?

6 – Did Steve Dougherty, the Association’s Treasurer on the day the check for $3000 (#1711) was issued, authorize the check?

7 – Why was the check for $3000 (#1711) made to Handley alone, and not Thompson and Handley?

8 – What is the effective date of resignation of Steve Dougherty, and when and by what means did Dougherty inform the Board of his resignation?

9 – What is the effective date on which Conforti was appointed Treasurer, and who moved to appoint him to the Board?

10 – What part did Board members Dogan, Pariente, Seekford, and Watkins play in the decision to issue the first check for $3000 (#1711) to Handley?

11 – Was the pending criminal trial of Thompson and Handley disclosed to potential homebuyers in the document packages they were provided by CMS?

12 – Since the County Attorney had not charged the Association, and/or Handley and Thompson as officers of the Association, why was Handley and Thompson’s claim for reimbursement not presented in open session?

13 –Did members of the Board with a conflict of interest disclose them prior to voting on issues herein? For several years, the Association had an unelected Board that included some nominated for appointment to the Board by either Thompson or Handley.

14 – What were the conflicts of interest disclosed, pursuant to Bylaws Article VII, Section 2, when the first check for $3000 (#1711) was issued to Handley.

In summary, the record appears to show misappropriation of Association funds, and a cover up, that may amount to criminal wrongdoing. I look forward to an early response so that this issue may be resolved.