America’s Biggest HOA Fraud Cases and the Need for Real Reform
HOA Detective™ | July 1, 2025: Over the last 20 years, homeowners’ associations (HOAs) across the U.S. have been rocked by staggering fraud cases, each revealing glaring gaps in governance and oversight. From the infamous Las Vegas HOA scandals that dragged on for almost a decade in the early 2000s, to multi-million-dollar embezzlements in Georgia, California, Oregon, and Florida, these cases show just how easy it can be for corrupt board members or managers to siphon funds from unsuspecting homeowners when transparency and accountability are absent. Consider the following notorious cases of malfeasance involving HOAs and management companies (Mancos):
- Las Vegas, Nevada – HOA scandals (2003-2009): Organized criminals were found to have rigged elections across at least 11 HOAs, steering lucrative construction defect lawsuits and repairs to insiders in exchange for kickbacks. More than 40 individuals were convicted, but not before tens of millions were lost and entire communities left in disrepair. Annual, independent audits and a state ombudsman office empowered to intervene could have exposed these schemes early.
- Sandy Springs, Georgia (2014-2016): A management company (Manco) employee embezzles $1.3 million from 28 HOAs by forging checks and falsifying records.
- Orange County, California (2017): An HOA manager and accomplices siphoned nearly $2.8 million through inflated invoices and unauthorized payments.
- Kendall, Florida (2017-2022), In the now-famous case of The Hammocks Community Association in West Kendall, Florida, a former HOA Board President and several coconspirators stole over $2M while orchestrating a suspicious dues increase to cover their tracks.
- Portland, Oregon, (2012): In 2012, it was discovered that $1.5M to $2M had gone missing under the watchful eye of Portland-based Northwest Empire Community Management – a smallish Manco responsible for overseeing the finances of over 30 HOAs across Oregon. Eventually hauled into both civil court and under federal criminal indictment, NWECM principal David Kobbeman was sentenced to 48 months in federal prison in May of 2014. As of 2/10/201,7 Kobbeman – inmate register number 75437-065 – was no longer in the custody of the BOP.
Each of these scandals could have been minimized or prevented through stronger laws requiring independent audits, better segregation of financial duties, and meaningful enforcement mechanisms. Regular, independent audits provide boards and homeowners with a clear picture of financial health and catch irregularities before they balloon into crises. Yet in most states, even when statutes require audits or reviews, there is no government agency tasked with enforcing the law. Nevada offers a powerful counterexample:
- Under the Nevada Revised Statutes, HOAs with revenues above $150,000 must submit annual CPA audits directly to the Nevada Real Estate Division. The state’s Ombudsman for Common-Interest Communities has investigative and enforcement powers, including the ability to levy fines or suspend licenses of noncompliant managers or boards.
- Florida’s Division of Condominiums also holds HOAs accountable with real penalties for failing to provide required audits or financial transparency.
In states like California, which require audits or reviews based on association revenue (Civil Code §5305), but stop short of assigning enforcement to any agency. Owners can sue boards for noncompliance, but this places the burden entirely on individual homeowners, making enforcement rare and inconsistent.
Adding to the problem is the powerful lobbying of the Community Associations Institute (CAI), which often opposes legislation that would establish or strengthen government oversight of HOAs. CAI positions itself as a neutral educational nonprofit, but primarily represents boards, managers, HOA attorneys, and service vendors.
As a thinly disguised, de facto trade organization, CAI, through aggressive lobbying, has helped shape laws in many states that appear to promote transparency, but omit critical enforcement provisions, effectively rendering audit requirements voluntary.
The result is what we see today in states like Oregon and Washington:
- Statutes that mandate financial reviews or audits, but fail to create any oversight agency or enforcement tool.
- Boards that can and do ignore these requirements without fear of fines or administrative penalties.
- Homeowners who must rely on costly, time-consuming lawsuits to enforce their rights.
- Despite what might appear to be fertile soil for litigation in these states, it is rare for a Board of Directors to be sued for not complying with state statutes.
The lesson from America’s biggest HOA fraud cases is clear:
- Without mandatory, independent audits and real enforcement authority, HOAs remain easy targets for fraud and mismanagement.
- Homeowners deserve a transparent, accountable system in which financial malfeasance can be detected early and punished effectively.
- In the absence of meaningful legal and financial consequences, such bad behavior is likely to continue.
- In all likelihood, the situation will get worse until somebody steals SERIOUS MONEY!
Prominent States Bereft of Meaningful Oversight: States with minimal or no effective HOA fraud prevention framework include a shocking number of high-profile states:
- Oregon – Independent review requirement, ZERO enforcement.
- Washington – Independent audit and review requirement, ZERO enforcement.
- Arizona – NO oversight or enforcement despite statutory rights.
- Texas – broad owner rights, but ZERO agency enforcement.
- Colorado – registration only; ZERO investigative authority.
- Illinois – limited requirements with WEAK enforcement.
Improved Audit Standards Are Needed: Until more states adopt laws combining mandatory audits with real regulatory oversight, as seen in Nevada or Florida, the nation’s 75 million HOA and condo owners will remain vulnerable to the next big scandal.
Until the audit and review standards are strengthened by requiring auditors to document and report noncompliant HOAs, the requirement for an audit or review by an independent, trained party (CPA) will remain little more than lip service to the concept of financial reporting integrity.
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