Collier community files suit, claims fraud, embezzlement by property management company
A Naples property management company that oversees more than two dozen communities in Collier County is shuttered and its owners have apparently left the country.
Meanwhile, the associations have filed a restraining order and are trying to recoup hundreds of thousands of dollars entrusted to the company.
A $100,000-plus civil lawsuit by The Commodore Club charges financial misdeeds by the company, American Property Management Services LLC of Naples, that wreaked havoc against the club and its condo association.
The company's website says APMS is a full-service property management company, managing condominium, homeowners associations and commercial properties in Florida. It opened in 2008.
The suit, filed Jan. 3, claims the misdeeds were carried out by Orlando Miserendino Ortiz and his wife, Lina Munoz Posada, acting as officials of APMS.
The couple's Tamiami Trail East office was locked and the Collier County Sheriff's Office had affixed an eviction notice to the front door on Tuesday.
A temporary restraining order against APMS lists 26 Collier County condominium associations as plaintiffs. It was filed Jan. 11 before Judge Lauren Brodie in Collier County Court and asks for protection by freezing association accounts at Wells Fargo Bank.
The associations' legal actions could potentially include thousands of homeowners.
Local:Neighbor files second lawsuit over proposed Naples Beach Club redevelopment project
In case you mi:Former EMS chief who filed whistleblower lawsuit accused of certification fraud
More:Easement agreement struck to protect parts of Naples Beach Hotel's golf course but not a done deal
The temporary restraining order said AMPS established bank accounts at Wells Fargo Bank "allegedly for the benefit of the Associations. However, the Management Company established itself as the sole authorized user of the accounts."
The suit said that effectively cut the associations off from accessing or getting statements on their funds.
"The Associations have good cause to believe and fear that the Management Company already has or may wrongfully or unlawfully transfer funds or dissipate the Association's financial assets absent an immediate court order protecting same," the restraining order said.
The order freezing the Wells Fargo accounts was granted.
An issue of trust
"We entrusted them," Laura Rigsby, president of the Royal Bay Villas Condo Association in south Naples. "All the stories are very similar."
She said that, going by the funds missing in just her 90-unit community,about $600,000, there is the potential of up to $50 million in missing condo association funds across the 26 named associations involved.
Some of the communities listed have 100 to 550 homes.
Rigsby said she was tipped off in December that something wasn't right.
She said the association has been told that initial contact has been made by a number of federal agencies, specifically the FBI, Secret Service, Internal Revenue Service and the U.S. Postal Service.
The association's reserve account was drained, she said. "There was $10 in there."
Royal Bay Villas is investigating, she said, and waiting for Wells Fargo to provide information on the frozen accounts.
The community's funds have been frozen, she said, until Ortiz and Posada can be served with summonses, which have been issued.
"We're starting to piece it together," she said.
Rigsby filed a complaint with an investigator from the Collier County Sheriff's Office. That report is not yet available, the Sheriff's Office said.
"All the stories are very similar," she said of the other communities involved. "We had no reason to believe foul play. He was highly recommended to us."
A local Realtor familiar with APMS was shocked the situation went on as long as it appears to.
"I'm surprised it took so long," James Hinson of Naples said. "The communities have no means of taking care, to pay out vendors."
Hinson, whose own community of Abaco Bay off Bayshore Drive in Naples has been affected, said home sales could be hindered and possibly leave a person with a pending home sale without a residence to move into.
"The new owner could get hit from no fault of their own," he said, if the community's funds are locked or non-existent and special assessments need to be levied to owners.
"Someone is trying to buy a home for their family and they're getting a mortgage, well, the lender doesn't care," Hinson said. "They're going to want to see that the money is there and it's adequate."
Those levels will be checked a few days before a sale is closed, he said.
"If they see that those funds have gone down dramatically, or ... if there's a litigation involved, they're not going to fund that," Hinson said. "
Hinson said there's also the community aspect where the grass is still growing, the pool needs to be serviced, there is an expectation that these properties are not going to go to disrepair.
"But how do you do that, whenever you have to have a management company to pay these vendors and you can't?" he asked.
Condo associations that entrust management companies give the businesses wide latitude, via a signed agreement, to pay bills, collect funds and perform other fiduciary roles. Funds collected include association fees paid by home and condo owners that can range from hundreds to thousands of dollars usually paid quarterly.
Ortiz and Posada could not be reached for comment.
Phone calls to the company were interrupted by a Verizon network recording that the wireless customer being called was not available "at this time" and emails to a company-listed address bounced back undelivered.
Rigsby said office workers at the company's now shuttered office had been telling clients that Ortiz and Posada had been mostly out of the country since January 2021 due to the health of a family member in South America.
She was hoping that the locked office would reopen to retrieve items belonging to community members.
"They have unit keys from some of the members," she said.
In the suit The Commodore Club Association, off Harbour Drive along Moorings Bay in Naples, claims APMS committed fraudulent educement, embezzlement and breach of contract.
Those actions have caused the association's community to "suffer significant financial harm."
Commodore's complaint said that the duties agreed upon by APMS included:
- billing and collections of common expenses, special assessments, reserves, charges, rentals and other payments from unit owners and other funds owed the association;
- depositing funds collected into accounts at one or more financial institutions;
- payment of bills and costs;
- ensure that all required insurance be carried and maintained in full force;
- helping unit owners and the association comply with all laws, statutes, ordinances and rules.
The suit claims APMS breached its agreement with the association by not timely paying bills, including the association's fidelity insurance policy.
Furthermore, the suit claims the company breached state statute by opening bank accounts in the company's name rather than the association's.
Got a break
Rigsby said her association got a break in one respect.
"We were lucky," she said. "We have fiduciary insurance. I called our agent and asked 'is our insurance paid?' They said 'Yes'."
Rigsby and Hinson said their respective communities have retained new property management companies.
The issue is, Rigsby said, how do you proceed when funds are locked up?
"We've no money to pay our bills. We're just stuck right now," she said. "We've applied for a line of credit."
Rigsby said one of her biggest concerns was letting other communities know about the issue.
"We want people to be aware that this happened," she said. "Just don't assume that everything is OK."
Collier County courts have issued a temporary restraining order against American Property Management Services LLC of Naples on behalf of these communities:
Abaco Bay Condominium Association
Amador Village Association
Bellagio Village Association
Boca Bay at Bridgewater Bay Neighborhood Association
Bridgewater Bay Carriage Homes Association
Bridgewater Bay Garden Homes Association
Bridgewater Bay Property Owners Association
Caneel Bay at Bridgewater Bay Neighborhood Association
The Coach Homes at Serrano Condominium Association
Coral Bay I at Bridgewater Bay Condominium Association
Coral Bay II at Bridgewater Bay Condominium Association
Coral Bay III at Bridgewater Bay Condominium Association
Cypress Gate Condominium Association
Fairway Towers Club, Building "D"
Mango Bay at Bridgewater Bay Condominium Association
Princeton Place at Wiggins Bay Condominium Association
Royal Bay Villas Condominium Association
Serrano Master Association
Shadowood Villas Condominium Association
St. Regis Club Association
Terrace VI At Cedar Hammock Association
The Fountains Professional Park Condominium Association
Veranda III at Cedar Hammock Association
Veranda IV at Cedar Hammock Association
Veranda II at Cedar Hammock Association
Yacht Harbor Cove Condominium Association
Connect with breaking news reporter Michael Braun: MichaelBraunNP (Facebook), @MichaelBraunNP (Twitter) or firstname.lastname@example.org.