Scottsdale HOA says manager stole $1.6M

Mar. 17—At the upscale Scottsdale House community of 263 condos near Old Town, where a community dining room and social center open up to a dazzling view of Camelback Mountain, residents alternately boast and complain about their grandchildren.

"My grandson is moving to Seattle for some kind of great job — but I'm not sure what," one senior woman told another.

"At least you can get that much out of him," the other answered. "Mine never look up from their phones."

Scottsdale House board members wish they had been more attentive a few years ago.

After failing to do a background check on a twice-sued manager who ran the HOA for years, the board started discovering money was disappearing from funds targeted for repairs and upgrades.

The deeper into the books they dug, board members found more and more money missing — hundreds of thousands of dollars.

Last month, Scottsdale House board member Hiram Champlin told Scottsdale City Council his board reported thefts to the Scottsdale Police Department at the end of 2022.

"The alleged crime was the theft of over $1.6 million from our HOA by the general manager and bookkeeper," Champlin said.

The Progress did not hear back after leaving messages for the former general manager and bookkeeper. This newspaper is not naming the two, as no charges against them have been filed.

In a polite, carefully-worded statement, Champlin told his elected officials he understands Scottsdale Police and the detective assigned to them are busy.

"I have nothing but respect and admiration for Det. Steven Negron — but it is apparent that he has work overload and it is hurting our investigation," Champlin said.

Champlin said the Scottsdale House HOA reported the theft to its insurance company, which reimbursed the community a little less than half of the $1.6 million.

"The insurance company did not dispute any of our claims," he said. "Our policy only went back two years, which prevented us from collecting more."

He asked Mayor David Ortega and City Council to look into the matter, as "the 500-plus victims of Scottsdale House, many of whom are elderly, are still awaiting justice with no end in sight."

When the Progress followed up with him two weeks later, Champlin said the stolen funds "were either deposited in personal bank accounts or spent on personal items" by the former general manager — who was fired June 10, 2022, after 13 years at Scottsdale House — and former bookkeeper.

The bookkeeper, who resigned three weeks after the manager was fired, worked at Scottsdale House for 11 years.

Twisted trail

Champlin described a twisted trail of thefts, near and far.

"We know that relatives of (the manager) were hired and paid in cash," he said. "ATM cash was withdrawn from our bank account often from as far away as Chicago or Florida with no receipts for how it was spent."

And, he added, "Personal credit card bills were paid with no receipts."

The damage was done, according to Champlin:

"The stolen $300,000 per year should have been used to maintain the property in a first-class manner. Instead we have deferred maintenance issues."

Court records show the former manager was sued in 2001 for failing to live up to a business contract and seven years later for "stealing" a former HOA management company's clients after she left to join a rival company.

The 2001 lawsuit was dropped after the former Scottsdale House manager filed for bankruptcy. In 2009, a judge dismissed the lawsuit regarding the HOA management companies.

Tom Jones, president of Scottsdale House, said he was not a resident there when the former manager was hired. "I do not know whether a background check was performed at the time" of his hire, he said.

In a 2022 letter to Scottsdale House residents, Jones described a months-long investigation by the board, which showed the former general manager and bookkeeper wrote and cashed hundreds of checks made out to themselves.

According to Jones' letter, "books and records contain no expense reports, receipts or credit card statements to support the issuance of the checks, payments on the Capital One credit card, or the ATM withdrawals."

On top of that, "Scottsdale House financial records contained copies of two checks that had been altered to make it appear that these disbursements were paid to a former landscaping employee. The actual checks, received from Wells Fargo, show that in one case the payee was (the former bookkeeper), and in the other case (the former manager)."

He said the checks were signed and cashed by both the former employees.

Near the end of Jones' letter to residents, he stated the former general manager's attorney contacted Scottsdale House, "claiming wrongful termination and breach of contact. This claim has not been filed in court as of this writing."

It still has not been filed, as of March 14.

Meanwhile, the senior-filled community attempts to recover its losses — and learn from oversight mistakes.

"We were a self-managed HOA from inception," Champlin said. "We are now using a third party management company."

Officer Aaron Bolin, a Scottsdale Police spokesman, said detectives on the Scottsdale House case "are still trying to get some official documentation from one financial institution."

Though he expects "significant progress" can be made soon, Bolin noted the Scottsdale House investigation "goes back to 2011 and putting all the documents together, doing an analysis and tracing the movements of the alleged stolen funds takes a very long time."

Champlin was asked how they would answer someone who says, "You have insurance paying you back — what's the big deal?"

"A lot of the money that was taken from us will never be fully accounted for or recovered," Champlin said.

And, he insisted, "The emotional toll this has taken on the community is huge."

Touring the cheery Scottsdale House, one would not guess the clean, welcoming community had its funds drained.

Even so, Champlin and others here refuse to let two potential villains ride off into the sunset without retribution.

"We also have a civic duty to pursue justice," Champlin added. "These criminals should pay a price for their crimes."