“Recipe For Fraud”: Inside the Massive Alleged Fraud at the Hammocks

White Collar Defense and Investigations attorney Dan Small was quoted in The Real Deal about a massive case of fraud allegedly organized by the homeowner's association (HOA) of the Hammocks, a suburban Miami community. After years of complaints, authorities started looking into the Hammocks Community Association in 2017. Five years of investigation led to the arrest of four ex-board members for allegedly siphoning $2 million from association coffers.

This article discusses how the Hammocks case highlights the shortcomings of Florida's HOA law. While the law provides routes for legal action, it puts the onus on homeowners to react instead of giving a government authority the power to prevent fraud before it happens. Residents can get discouraged, since they would have to ante up for litigation, while the boards’ attorneys are bankrolled through homeowners’ dues.

“It really is the perfect recipe for fraud,” said Mr. Small.

He also emphasized that the Hammocks is far bigger than the traditional HOA that the state law was crafted to target. Association leaders were left in control of a community larger than some cities, without the oversight that would exist in an actual municipality.

“If the city council of the Hammocks, say it were organized that way, voted to raise taxes by 400 percent, it just wouldn’t happen,” he said. “Yet that’s exactly what this association did.”

READ: “Recipe For Fraud”: Inside the Massive Alleged Fraud at the Hammocks (Subscription required)