HomeMy WebLinkAboutSubmittal-Commissioner Suarez-County ResolutionIN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT
OF FLORIDA IN AND FOR THE COUNTY OF MIAMI-DADE
FINAL REPORT
OF THE
MIAMI-DADE COUNTY GRAND JURY
SPRING TERM A.D. 2016
State Attorney
KATHERINE FERNANDEZ RUNDLE
Chief Assistant State Attorney
DON L. HORN
Assistant State Attorney
JOHN PERIKLES
CLERK
FILED
February 6, 2017
INDEX
PN -
ADDRESSING CONDO OWNERS' PLEAS FOR HELP:
RECOMMENDATIONS FOR LEGISLATIVE ACTION ............................... ........................... 1— 31
I.
INTRODUCTION...................................................................................................................1
TheCondominium Association.........................................................................................2
TheBoard..........................................................................................................................2
II.
CONDOMINIUM OWNERS AND THEIR ASSOCIATIONS..........................................2
III.
CURRENT PROBLEMS.......................................................................................................4
A. Access to Records..............................................................................................................4
B. Association Management Problems....................................................................................9
1. Conflicts of Board Members...........................................................................................9
2. Conflicts of Property Management Companies..............................................................1
l
C. Perceived Lacy of Enforcement by the DBPR..................................................................13
D. Board Elections..................................................................................................................20
1. Election Monitors..........................................................................................................24
IV.
SHOULD ENFORCEMENT OF CONDO LAWS REMAIN WITH DBPR? .................27
V.
CONCLUSION.......................................................................................................................28
VI.
RECOMMENDATIONS........................................................................................................29
INDICTMENTS................................................................................................................................ 32-33
ACKNOWLEDGMENTS..................................................................................................................34
ADDRESSING CONDO OWNERS' PLEAS FOR HELP:
RECOMMENDATIONS FOR LEGISLATIVE ACTION
I. INTRODUCTION
South Florida, the land of sun and fun, is not only a major tourist destination. It is also
one of the premier destinations for persons looking to retire and the perfect location for
foreigners and others who are seeking to own a second residence or invest in real estate. Add to
this mix, parents who have become empty -nesters looking to downsize from their single-family
homes and you have the perfect storm for an explosion of new condo construction in the real
estate market.
Condominiums have become one of the primary sources of home ownership in the South
Florida area, both before and after the housing bubble began to burst in 2007. However, with
the increase in the number of properties has also come an increase in the number of problems for
persons purchasing, living in and managing condominiums. So too has there been an increase in
the number of issues, problems and complaints lodged against the agency assigned to conduct
investigations of fraud, wrongdoing and violations committed by condominium associations.
That agency is the Department of Business and Professional Regulation, generally referred to as
is 6t
This Grand Jury decided to conduct an investigation looking specifically at some of the
problems and issues confronting condo owners and how well those problems and issues are
being resolved by DBPR. As set forth below, our investigation reveals that for condo owners,
there are a great number of problems. Unfortunately, the DBPR seems ill-suited to resolve,
correct or prevent many of the recurring problems that have been brought to their attention.
Included within this Grand Jury Report are recommendations we believe will address both areas
of our inquiry.
For starters, we must point out that Chapter 718 of the Florida Statutes, also known as the
Condominium Act, governs condominiums and establishes procedures for the creation, sale, and
operation of condominiums in this state. Among other topics, the statute contains sections
addressing General Provisions (Part I); Rights and Obligations of Association (Part II); and
Regulation and Disclosure Prior to Sale of Residential Condominiums (Part V). As defined in
the statute, " `Condominium' means that form of ownership of real property created pursuant to
1
this chapter, which is comprised entirely of units that may be owned by one or more persons, and
in which there is, appurtenant to each unit, an undivided share in common elements."' Each
condominium is governed by a board of directors in accordance with the bylaws of its
association, The board members are elected by the condo owners to run the association and
manage condominium property, which the board may do directly or indirectly, by hiring a
manager.
The Condominium Association
The operation of the condominium shall be by the association, which must be a Florida
corporation for profit or a Florida corporation not for profit. Any association that was in
existence on January 1, 1977, need not be incorporated.2 The condominium is run by a board
that oversees operation of the association. "Association" is defined in Chapter 718 as "any
entity responsible for the operation of common elements owned in undivided shares by unit
owners, any entity which operates or maintains other real property in which unit owners have use
rights, where membership in the entity is composed exclusively of unit owners or their elected or
appointed representatives and is a required condition of unit ownership." 3 The owners of units
shall be shareholders or members of the association.
The Board
The "Board of Administration" or "board" means the board of directors or other
representative body, which is responsible for administration of the association.' The officers and
directors of the association have a fiduciary relationship to the unit owners.6 Notwithstanding
good intentions and motives, a unit owner does not have any authority to act for the association
by reason of being a unit owner.'
II. CONDOMINIlUM OWNERS AND THEIR ASSOCIATIONS
Problems between condo owners and their boards and associations are not new. In fact,
many of the complaints, concerns, and criticisms described by our witnesses are the same or
' Florida Statute, 718.103 (11)
' Florida Statute, 718.111 (1) (a)
3 Florida Statute, 718.103 (2)
A Florida Statute, 718.111 (1) (a)
s Florida Statute, 718.103 (4)
6 Florida Statute, 718.111 (1) (a)
Florida Statute, 718.111 (1) (c)
FA
similar to those reflected in the Florida House of Representatives' Final Report of the Select
Committee, issued almost nine (9) years ago.8 The charge given to that Select Committee was to
examine "the governance of condominiums ... to include accounting, budgeting, audits, theft by
officers and directors, elections ... access to records and the state regulation of condominiums
by the Department of Business and Professional Regulation"9
Over a 3 -month period, starting in January, 2008, the Select Committee convened in five
locations throughout the state to hear public testimony about condo associations. 10 At the end of
2007, the year before they received testimony, there were 1,394,467 condominium units in
Florida." In 2007, DBPR received 2,482 complaints about condominiums and cooperatives.12
Fast forward to 2016 and there are now thousands more condominium units (and more under
construction) in Florida as a result of the new building boom. These were the most prevalent and
problematic issues Florida citizens discussed with the Select Committee in 2008:
0 Access to Records. 13 Associations were failing to comply with the law that requires
them to make records of the association available to unit owners. 14 Specifically, as
provided in Section 718.111 (12)(b), "The official records of the association must be
maintained within the state for at least 7 years. The records of the association shall be
made available to a unit owner within 45 miles of the condominium property or within
the county in which the condominium property is located within 5 working days after
receipt of a written request by the board or its designee." Too often, unit owners were
making requests to the association for copies of documents and those requests were
being denied or the replies significantly delayed;
® Association Management Problems. This category included concerns voiced about
maintenance and repair contracts and was most probably related to major repairs that
had to be done due to damage caused by several hurricanes and tropical storms which
s The "Select Committee" was the Select Committee on Condominium & Homeowner Association Governance.
The Final Report was issued on March 4, 2408.
9 Id. at P. 1.
10 The five locations were Pembroke Pines, Miami Beach, Orlando, Tampa and Tallahassee.
11 Final Report of the Select Committee, p. 2.
11 12 Id, at p.3.
13 Final Report of the Select Committee, p. 4.
14 Florida Statute, 718.111 (12).
E3
impacted Florida in 2005 and 2006.15 Such damage would have resulted in Special
Assessments. 16 Another major concern raised in this category involved "insider
contracts," The complaints involving insider contracts included both management
companies employing firms with which they have related business associations to
provide maintenance and repair work at inflated prices and officers and board
members (directors) of the association entering into contracts with corporations and/or
businesses in which they were pail owner;
9 Perceived Lack Of Enforcement By The DBPR. Rounding out its top three
categories of complaints from unit owners' comments, the Select Committee noted a
"perceived lack of enforcement by the DBPR." More specifically, "numerous
speakers at the hearings discussed their perception of DBPR delay and inaction. ,17
Some unit owners testified to the Select Committee that their complaints filed with
DBPR had been pending for over a year. 1'3
Sadly, nine (9) years later, this Grand Jury heard testimony from unit owners that mirror
the complaints identified in the Select Committee's Final Report. Unfortunately and almost
irrationally, some of the problems seem to have gotten worse.
111. CURRENT PROBLEMS
A. Access to Records
One complaint that has not improved, and may have gotten worse, is the response to
requests for documents or access to official records of the association by condo unit owners.
Florida Statute 718.111(12)(b) provides that the official records of the association must
be maintained within the state for at least 7 years. 19 The official records of the association are
open to inspection by any association member or the authorized representative of such member
at all reasonable times. The right to inspect the records includes a member's right to make or
15 Hurricanes Katrina and Dennis made landfall in Florida in 2005. Tropical Storms Ernesto and Alberto made
landfall in Florida in 2006.
" 718.103(24) "Special assessment" means any assessment levied against a unit owner other than the assessment
required by a budget adopted annually.
17 Final Report of the Select Committee, p. 5.
18 Final Report of the Select Committee, p. 11.
19 Florida Statute 718.111 (12)(b)
4
obtain copies, at a reasonable cost. Each association may adopt reasonable rules regarding the
frequency, time, location, notice, and manner of record inspections and copying, 20
We are mindful of the fact that some unit owners may become nuisances and abuse their
right to request official records of the association. For that reason, we believe it is perfectly
reasonable that the Florida Legislature gave the association the authority to "adopt reasonable
rules regarding the frequency, time, location, notice, and manner of record inspections and
copying. "21 However, we find the remedy afforded by the statute to unit owners when the
association fails to comply to be totally ineffective. We must explain this position.
In summary format, Section 718.111 (12)(c) provides, in part:
• Failure to provide records within ten (10) working days of receipt of a written request
constitutes a violation;
• That violation creates a rebuttable presumption that the association willfully failed to
comply with this provision;
• A unit owner is entitled to actual damages or minimum damages for the association's
willful failure to comply;
• On the 114' working day after receipt of the written request, minimum damages are $50
per calendar day for up to ten (10) days (for a maximum of $500 in minimum damages);
• The unit owner who requested the documents may file an enforcement action. If the unit
owner is successful and prevails in the enforcement action, the unit owner is entitled to
recover reasonable attorney fees from the person in control of the records who directly
or indirectly, knowingly denied access to the records.
We have observed that these provisions are not effectively protecting unit owners' right
to access records. While we recognize that unit owner records requests can be vexing to the
association, associations, in turn, can be antagonistic to the unit owners and act in apparent
abrogation and nullification of this statutory provision. Under the law, if the association fails to
comply with a valid request, monetary damages can be awarded to the unit owner. The problem
is that the source of those funds will come from assessments levied against all of the owners 22
20 Florida Statute 718.111 (12)(c)
" Nd.
22 718.111(4) Assessments; Management Of Common Elements. The association has the power to make and
collect assessments and to lease, maintain, repair, and replace the common elements or association property;
however, the association may not charge a use fee against a unit owner for the use of common elements or
association property unless otherwise provided for in the declaration of condominium or by a majority vote of the
5
Essentially, any awarded damages paid to the unit owner seeking the documents — will be paid,
in part, by the unit owner himself. As the other unit owners will have to contribute, the
requesting owner may earn the enmity of the entire association. This arrangement results in no
real consequences to the individuals responsible for the violation. They can act with impunity
and have others bear most of the costs. 23
Further, any efforts by the requesting unit owner to initiate an enforcement action will be
done with the unit owner footing the bill for his/her attorney to bring that action. The attorney
opposing the enforcement action and representing the offending association will be paid from the
same source of funds — the assessments. It does not seem right to us that a recalcitrant board,
acting against the interests of the association, can take willful action and not personally suffer
serious consequences. To the extent that the association can engage in these tactics when a unit
owner is making record requests for budget, accounting, audit or other financial records, is most
troubling. The willful failure to provide such documents may be part of a broader scheme to
cover up embezzlement or other financial wrong -doing committed by the board or association.
In furtherance of possible cover-ups, directors may also choose to intentionally deface or destroy
accounting records or knowingly or intentionally fail to create or maintain accounting records
that are required to be maintained by statute. Even such willful action, which again, may be
done to cover-up theft of funds from the association, is only punishable by a civil penalty.24
Again, the unit owners are the ones who are harmed in these situations. We strongly believe
these provisions need to be amended. A right without a remedy is effectively no right at all.
To encourage persons to serve as directors on non-profit boards, the law in Florida
provides immunity from civil liability to such officers and directors for any statement, vote,
decision or failure to take an action regarding organizational management or policy. 25 However,
the availability of that immunity presumes that the directors will act in accordance with another
association or unless the charges relate to expenses incurred by an owner having exclusive use of the common
elements or association property.
23 Board Directors have to be unit owners. We recognize that if the Directors of the condo association board are the
ones at fault for turning over documents that they will also contribute to the payment of the fine as unit owners.
However, we see a huge difference between liability for a $500 fine unposed on a 3 -member board versus a $500
fine imposed on 100 unit owners in a condo association.
24 DBPR records show that for the fiscal year ending June 30, 2016, only $23,064.80 in fines was levied against all
of the condominiums in Miami -Dade County for all violations, including those related to records.
21 617.0834 (1)(a) & (b)
0
statutory provision. Section 617.0830 sets forth the general standards for persons who serve as
board directors in this state:
617.0830 General standards for directors.—
(1) A director shall discharge his or her duties as a director,
including his or her duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances; and
(c) In a manner he or she reasonably believes to be in the best
interests of the corporation.
The marriage of those two statutes provides that if directors discharge their duties in good
faith, act with care as ordinarily prudent persons in similar positions and operate in the best
interests of the corporation (association), those directors will receive the benefit of immunity
from civil liability. However, we must point out that each statute has a caveat. Section
617.0830(4) specifically states: "A director is not liable for any action taken as a director, or any
failure to take any action, if he or she performed the duties of his or her office in compliance
with this section." Consequently, if a director did not discharge his duties in good faith, did not
act with care as an ordinary prudent person and against the best interest of the association, he or
she should be personally liable for those actions.
Similarly, Section 617.0834 provides that directors are not personally liable for monetary
damages... unless the directors breached or failed to perform their duties as directors and the
directors' breach or failure to perform their duties constitutes a violation of the criminal law; or a
transaction from which the directors derived an improper personal benefit; or the failure to
perform their duties constitutes "recklessness. ,26 The statute goes on to say recklessness covers
an act or omission that was committed in batt faith or with malicious purpose or in a manner
exhibiting wanton and willful disregard of human rights, safety, or property. 27
We have examined these two statutory provisions in great detail to establish two (2)
points. First, the Florida Legislature intentionally cloaks directors with immunity when they act
in good faith and in the best interests of the corporation they are serving. Second, the Florida
Legislature intentionally removes that cloak when directors breach or fail to perform their duties
26 617.0834 (l)(a) & (b)
27 617.0834 (l)( b) 3
7
by committing criminal acts, engaging in "self-dealing" or acting with recklessness, i.e., in bad
faith or with malicious purpose.
For directors who repeatedly fail to provide official records and documents to unit
residents, the cloak needs to be removed. The statute covering this area already provides that
"the failure of an association to provide the records within ten (10) working days after receipt of
a written request creates a rebuttable presumption that the association willfully failed to comply
with this paragraph."28 Such repeated willful behavior by the directors and their associations fly
in the face of the protections afforded by the immunity statutes. Similarly, directors who engage
in fraudulent activity with regard to the annual election are also acting "in bad faith or with
malicious purpose." Moreover, they are not "acting in good faith," nor are they acting in the best
interests of the [association].29 The cloak on immunity should be removed from directors
engaging in such behavior. In both scenarios, the directors should be subject to personal
liability for damages caused by their actions. Any fines levied against the directors for such
violations should be paid by the directors personally. Such directors should also be precluded
from using pLny association funds to pay for fines, damages, penalties or attorney's fees to defend
claims for such wrong -doing by those directors.
Some might say this could have a chilling effect on those who would otherwise be
willing to volunteer their time and serve on these boards. We are mindful of that concern.
However, our position is that the only persons who have to be concerned about these
recommendations are those directors who have engaged in or who intend to engage in wrongful,
fraudulent, willful behavior that is contradictory to the fiduciary responsibility they owe to the
association and its unit owners. Accordingly, we make the following recommendations:
• That Florida Statute 718.111 (12) (c) be amended to provide that Directors and members
of the board or association who wilfully and repeatedly fail to comply with their statutory
obligation to appropriately and timely respond to written requests for official records of
the association (more than two (2) violations within a rolling twelve (12) month period)
shall be personally liable for payment of damages to the requesting unit owner(s);
• That Directors and members of the board or association who knowingly or intentionally
deface or destroy accounting records or fail to create or maintain such records that are
required by law shall be criminally liable for such conduct. We recommend that each
28 Section 718.111 (16)(c) (emphasis added)
29 Section 617.0830 (a) and (c) and 617.0834 (1)(b)(3)
N
such act will constitute a 2nd degree misdemeanor _for a first offense, and that any
subsequent offenses or violations will constitute a I st degree misdemeanor;
® That any association, board director; management company or management company
employee who wil f dly, knowingly or intentionally refuses to release or otherwise
produce official association records, and such refusal is done to facilitate or cover-up the
commission of a crime, shall be criminally liable for such conduct. The violation shall be
classified as a P degree felony;
• That management companies which sever their ties or terminate their contractual
agreements with condo associations must turn over all official records of the association
to the association within ten (10) business days. A management company that fails to
turn over the association's official records within that time frame shall be fined at a rate
of $1,000 per day for tap to ten (10) days and then thereafter, shall be subject to a
mandatory license suspension until all records are turned over.
B. Association Management Problems
1. Conflicts of Board Members
One of the other areas of inquiry that concerned the Select Committee and still troubles
us today involves board directors who use their position to enrich themselves or their business
partners or family members, contrary to the fiduciary duty they owe to the unit owners. As we
understand it, directors are authorized to make decisions as to the entities with which they will
do business. They can enter into contracts on behalf of the condo association for repairs,
maintenance, lawn services, gardening, accounting, etc. The money spent by condominiums for
these services is not trivial. At some condominiums, associations routinely authorize
expenditures for hundreds of thousands of dollars each year. Every member of this Grand Jury
firmly believes that a conflict of interest exists for any board member who has the power to vote
for or against awarding a contract that involves the board member, a relative of the board
member or any person or entity that has a relationship with that board member or the board
member's relative. To our great shock and amazement, what we thought was a 'basic ethical
principle that would prevent such situations apparently does not.
Under Florida Statute 617.0832'30 a board member of a condo association can vote to
award a contract that directly benefits the board member or a relative and not violate any laws.
The statute permits a condo association director to be present at the meeting, to have his presence
30 Section 617.0832 covers all Florida corporations, including those set up to run condominiums.
W,
counted in determining the presence of a quorum for that meeting and to vote in favor of entering
into a contract with a corporation or entity where that director is an officer or director of that
corporation and has a financial interest in that corporation. The contract or transaction will be
valid and the law will uphold it as long as "the fact of such relationship or interest is disclosed or
known to the board of directors or committee" which ratifies the contract without counting the
vote of the interested director. If the fact of such relationship or interest is disclosed or known to
the members certified to vote on such contract ... and they authorize ... it by vote "then the
transaction is legitimate." Finally, even absent knowledge or disclosure, it appears that
approving such a contract may still be permissible if "the contract or transaction is fair and
reasonable as to the corporation at the time it is authorized by the hoard, a committee or the
members." But, who determines the "fairness" and "reasonableness" to the corporation? The
very board of directors who approved the contract! Given the current state of the law, unit owner
complaints to DBPR and to local law enforcement about conflicts of interest are usually met with
some variation of, "Well, you voted for the board."
We were repeatedly told by witnesses that many of these transactions and contracted
arrangements are not in the best interest of the unit owners. Although the directors have a legally
mandated fiduciary obligation toward their unit owners, it appears that some of them are more
involved in self-dealing and looking out for their own financial interests. The position of board
director is not generally a paid position. 31 Yet, some directors appear to view the ability to get
into office as an opportunity to cash in. This should not be countenanced. No board member
should be given fi•ee rein to engage in self-serving behavior to the detriment of those whom they
should be serving. Our Florida Legislature should not encourage such behavior. For that reason,
we recommend that the legislature amend Morida Statute 617.0832 to make the provisions of
that statute inapplicable to directors of condominium associations.
" Section 718.112(2)(a)1 Florida Statutes, states that "Unless otherwise provided by the [condo] bylaws, the officers
shall serve without compensation..." The vast majority of Florida condominiums do not compensate their board
members.
10
2. Conflicts of Property Management Companies
A similar situation presents itself when we look at some of the property management
companies. 32 For those associations who decide not to self -manage their condominiums, Florida
law requires the hiring of a licensed management company or licensed community association
manager when the size of the condominium association exceeds ten (10) units or when the
budget for the condo association exceeds $100,000.33 The board of directors of the condo
association hires the property management company or an individual property manager.
Although the manager services the unit owners, the property manager reports to the board of
directors. The board is the liaison between the unit owners and the manager, so the unit owners
have little direct input into the routine affairs of management,
The purpose of the property manager or property management company (PMC) is to
handle the community and lifestyle management of all unit owners in the association. The duties
of the PMC may include handling the accounting and corporate financing for the association. On
the financial side, the duties include paying the bills, handling the bookkeeping, and the receipt
and processing of payments from residents. In addition, they send out monthly bills and notices
to residents for condo dues and assessment.
Although the PMC can assist the association by recommending support staff for the
association, i.e., engineers, janitors, gardeners, etc., large PMCs can contract with the board to
provide those services by the PMC. The problem with this, as we see it, is the PMC has a
32 Section 468.431(2), Florida Statutes states "Community association management" means any of the following
practices requiring substantial specialized knowledge, judgment, and managerial skill when done for remuneration
and when the association or associations served contain more than 10 units or have an annual budget or budgets in
excess of $100,000: controlling or disbursing funds of a community association, preparing budgets or other financial
documents for a community association, assisting in the noticing or conduct of community association meetings,
determining the number of days required for statutory notices, determining amounts due to the association,
collecting amounts due to the association before the riling of a civil action, calculating the votes required for a
quorum or to approve a proposition or amendment, completing forms related to the management of a community
association that have been created by statute or by a state agency, drafting meeting notices and agendas, calculating
and preparing certificates of assessment and estoppel certificates, responding to requests for certificates of
assessment and estoppel certificates, negotiating monetary or performance terms of a contract subject to approval by
an association, drafting pre -arbitration demands, coordinating or performing maintenance for real or personal
property and other related routine services involved in the operation of a community association, and complying
with the association's governing documents and the requirements of law as necessary to perform such practices.
11
financial interest in these situations similar to those raised in the section above involving the
directors. The PMC will receive a financial benefit in this scenario, if it can convince the condo
Board to enter into a contract with the PMC for those services.
Our concern is that witnesses advised us that when operating in these situations, the PMC
charged inflated prices for the services. The unit owners are at a loss because there is nothing
they can do to undo the contract. And, what can they do if the work being done is substandard,
or worse, not being done at all? Clearly, this is a very frustrating predicament for the unit
owners to be in.
One of the other troubling aspects of this entire arrangement is often times the PMC is the
entity involved with conducting elections for the condo association. As revealed by a
horrendous election process discussed later in this report, 34 they are supposed to be unbiased.
The PMC (and/or the property manager provided by the PMC) may have a vested interest in
seeing an existing board of directors re-elected. The PMC might even be willing to go to great
lengths to try to accomplish that — even to the extent that they might participate in or turn a blind
eye to those involved in fraudulent election activity that results in double ballots for scores of
residents. 35 Is this the reward for securing a cozy and lucrative contract with the association via
the approval and authorization of the Board of Directors? We do not know, but is that a
reasonable conclusion that one can reach, looking at this from the outside? We think it is.
For these reasons, we recommend that the DBPR create a new rule that requires PMCs to
provide notification and disclosure to the Board and condo association residents of any financial
dealings and/or interests the PMC has with any company, corporation or entity being
recommended to the Association Board by the PMC. Failure to provide such notice shall result
in cancellation of any contractual agreement entered into with the association without such
notification or disclosure.
We further recommend that in any situation where a PMC is recommending that a condo
association enter into a contractual agreement with any company, corporation or other entity
with which the PMC is affiliated or has sone other type interest or relationship, prior to voting
on any such contract, the Board of Directors for the association shall first be required to obtain
34 See pgs 21-23 herein.
35 1d.
12
at least three (3) bids from tint -elated coinpanies, corporations or entities providing those same
services. Stich information shall be provided to all unit olvners at the board meeting where the
voting on said contract will take place.
C. Perceived Lack of Enforcement by the DBPR
The Select Committee heard numerous speakers at its hearings express their frustration
with DBPR "delay and inaction." In fact, the Grand Jury had its issues with the DBPR during its
investigation. When we extended our initial invitation to DBPR witnesses to testify, we were
notified that General Counsel for DBPR actually challenged our jurisdiction and authority to
conduct this investigation. Unlike other public officers and officials who appeared voluntarily,
to obtain the appearance of two (2) DBPR investigators we were required to issue subpoenas.
Further, all the DBPR witnesses who testified were accompanied to the Grand Jury by attorneys
sent from Tallahassee. Collectively, their testimony was guarded and strained. Not one DBPR
witness offered a criticism or suggestion for improvement of any DBPR practices. Based on our
examination of the problems plaguing many Florida condominium associations, we believe the
perceptions of "inaction and delay" in 2008 have become the realities in 2017.
Every condominium created or existing in Florida is subject to the provisions of the
Condominium Act enacted by under Chapter 718 of the Florida Statutes. The Department of
Business and Professional Regulation is the state agency charged with regulating Florida
Condominiums through its Division. of Florida Condominiums, Timeshares, and Mobile Homes.
In addition to the statutory language outlined in Chapter 718, the division also has authority to
adopt administrative rules necessary to implement, enforce and interpret the laws in Chapter 718.
The rules for condominiums can be found in Chapters 61B-15 through 6113-24, Florida
Administrative Code. The jurisdiction of the division is limited once a condominium has been
turned over by the developer to the association. After turnover has occurred, the division may
only investigate complaints related "to financial issues, elections, and unit owners' access to
records..."36
The division is organized into two (2) units: the Bureau of Standards and Registration
and the Bureau of Compliance. The first unit, the Bureau of Standards and Registration reviews
36 Florida Statute, 718.501(1)
13
public disclosure documentation prepared by those who offer condominiums, cooperatives,
timeshares, and leased spaces in mobile home parks to the public. The Grand Jury did not focus
on the activities of this unit of the division.
The second unit, the Bureau of Compliance is supposed to ensure compliance with both
the statutory and the administrative rule requirements related to financial issues, elections, and
unit owners' access to records. The Bureau of Compliance (BoC), therefore, is the primary entity
that investigates complaints from condominium owners. In order to initiate a complaint,
however, the complaint must be submitted in writing and forwarded to Tallahassee for review.
The review for legal sufficiency determines: 1) whether the alleged activity is subject to division
jurisdiction; and 2) whether sufficient documentation has been submitted to initiate an
investigation. According to the testimony of a Fort Lauderdale -based BoC division Investigator
and a BoC Financial Examiner, division employees may not initiate an investigation based upon
their own independent observations, no matter how obvious. Unlike police officers that can act
on their own initiative, division investigators must receive a written complaint that has been pre-
screened in Tallahassee. An investigation can only be opened after the branch office has
received the pre-screened written complaint from the State Capitol. The BoC division has
offices in Tallahassee, Tampa, Orlando, and Fort Lauderdale to carry out these investigative
functions. According to the DBPR website, once "an investigation is opened the division collects
evidence to determine whether the alleged violation can be substantiated. The division may use
many tools to resolve complaints: education, settlement agreements and formal administrative
action including the imposition of penalties." As will be discussed below, the division's
"evidence collection" process leaves much to be desired.
Two other units within DBPR impact the regulation and administration of condominiums
in Florida. The first, the Division of Regulation, monitors professions and related businesses to
ensure that the laws, rules and standards set by the Legislature and professional boards are
followed. One of the professions regulated is that of community association manager (CAM). A
state license is required to operate as a CAM when an individual receives compensation for
management services; or when the association or associations served contain more than ten (10)
units, or have an annual budget or budgets in excess of $100,000. The Division of Regulation
will investigate complaints against licensed CAMs and will also investigate individuals who act
as unlicensed CAMS. As of November 2016, there were 19,155 licensed community association
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managers (LCAMS) and 2,065 CAM firms in Florida. Unfortunately, the Division of Regulation
has only 53 available investigators throughout the state to regulate the CAMS as well as the
thousands of other professionals in unrelated fields. The responsibilities of the Division of
Regulation seem truly daunting.
According to DBPR, the Department does not maintain specific records of the actions
brought against licensed and unlicensed property managers so the work product of the Division
of Regulation is not easily quantified. A review of a publicly available database of the Florida
Division of Administrative Hearings 37 shows hundreds of administrative disciplinary actions
against licensed and unlicensed property managers, which indicates that the fifty-three (53)
available investigators are very active.
The second unit within the DBPR that impacts the regulation and administration of
condominiums in Florida is the Office of the Condominium Ombudsman. This office was
created by the Legislature in 2004. The Ombudsman's duties are described in Section 718.5012
Florida Statutes, as follows:
(1) To prepare and issue reports and recommendations to the Governor, the department, the
division, the Advisory Council on Condominiums, the President of the Senate, and the
Speaker of the House of Representatives on any matter or subject within the jurisdiction
of the division. The ombudsman shall make recommendations he or she deems
appropriate for legislation relative to division procedures, rules, jurisdiction, personnel,
and functions;
(2) To act as liaison between the division, unit owners, boards of directors, board members,
community association managers, and other affected parties. The ombudsman shall
develop policies and procedures to assist unit owners, boards of directors, board
members, community association managers, and other affected parties to understand their
rights and responsibilities as set forth in this chapter and the condominium documents
governing their respective association. The ombudsman shall coordinate and assist in the
preparation and adoption of educational and reference material, and shall endeavor to
coordinate with private or volunteer providers of these services, so that the availability of
these resources is made known to the largest possible audience;
(3) To monitor and review procedures and disputes concerning condominium elections or
meetings, including, but not limited to, recommending that the division pursue
enforcement action in any manner where there is reasonable cause to believe that election
misconduct has occurred;
;' The Division provides independent administrative law judges to conduct hearings pursuant to sections 124.569
and 120.57(1), Florida Statutes, and other laws, and under contract with governmental entities.
15
(4) To make recommendations to the division for changes in rules and procedures for the
filing, investigation, and resolution of complaints filed by unit owners, associations, and
managers;
(S) To provide resources to assist members of boards of directors and officers of associations
to carry out their powers and duties consistent with this chapter, division rules, and the
condominium documents governing the association;
(6) To encourage and facilitate voluntary meetings with and between unit owners, boards of
directors, board members, community association managers, and other affected parties
when the meetings may assist in resolving a dispute within a community association
before a person submits a dispute for a formal or administrative remedy. It is the intent of
the Legislature that the ombudsman act as a neutral resource for both the rights and
responsibilities of unit owners, associations, and board members;
(7) Fifteen percent of the total voting interests in a condominium association, or six unit
owners, whichever is greater, may petition the ombudsman to appoint an election monitor
to attend the annual meeting of the unit owners and conduct the election of directors. The
ombudsman shall appoint a division employee, a person or persons specializing in
condominium election monitoring, or an attorney licensed to practice in this state as the
election monitor. All costs associated with the election monitoring process shall be paid
by the association. The division shall adopt a rule establishing procedures for the
appointment of election monitors and the scope and extent of the monitor's role in the
election process.
As this Grand Jury learned, the Ombudsman is an essentially powerless position.
Measuring the success or failure of the office as an institution is quite difficult. As designed, the
Ombudsman is a neutral information resource and "facilitator" with no power to investigate or
demand compliance. In the one area that the Ombudsman could potentially serve as an ally to
condominium owners i.e., monitoring elections, owners express frustration that the power and
scope of election monitors are extremely limited.
Although the Ombudsman has the power to appoint a division employee to monitor
elections, in practice, only private individuals "specializing in condominium election
monitoring" or an attorney licensed to practice in this state are regularly appointed. According to
an election monitor who testified before this Grand Jury, even the training is conducted through
privately run seminars. These are ad hoc, nongovernmental positions with no official powers.
Monitors do not control. the location or manner of the election. They cannot collect the ballots or
take statements to document potential fraud. The only true power they possess is the potential
"threat" of the filing of a bad election report. Unfortunately, as this Grand Jury learned fiorn one
16
condo election we examined extensively, even a damning election report result carries no weight
with the DBPR.
As discussed, the Bureau of Compliance is tasked with investigating complaints against
associations related to financial issues, elections, and unit owners' access to records. The DBPR,
in response to a public records request, reported that there are thirty-three (33) investigators in
the entire state (67 counties) to investigate complaints by condominium owners. Of those thirty-
three (33), twelve (12) investigators are assigned to investigate complaints from Miami -Dade
County. This Grand Jury heard testimony from two of those investigators, an "Investigation
Specialist" and a "Financial Examiner." Both testified concerning their training, policies, and
procedures. We found both witnesses to be generally evasive and reluctant to answer basic
questions. We observed that both witnesses did not seem to have a firm understanding of their
office policies. Curiously and shockingly, both witnesses answered numerous questions with, "I
would have to ask my supervisor." We found their lack of knowledge about their own policies,
or their unwillingness to share their knowledge, exasperating.
During the questioning of these investigators from the Bureau of Compliance, the Grand
Jury explored some specific complaints brought by condo unit owners to the DBPR for
investigation. We are troubled by what we learned. The DBPR complaint process seems
designed solely to screen out complaints. First, all complaints must be filed in writing, via mail
or email. The complaints are all forwarded to Tallahassee where they are reviewed to determine
whether the complaint is subject to division jurisdiction and to verify whether "sufficient
documentation" has been submitted. Once pre-screened, the case is sent to a local area office for
investigation. After the pre-screening one might anticipate that the investigation could begin.
However, in the case of one complaint, alleging the failure of an association to turn over records,
the Investigation Specialist "rescreened" the complaint and sent the complainant a closeout letter
because the complainant did not have "standing." 38 The investigator made this determination
after he conducted a records search and concluded that the complainant was not a unit owner.
Why he believed there was a need to "weed out" a perfectly straightforward complaint was never
made clear. In the close-out letter, the investigator wrote, "It is my understanding that the prior
Board of Directors has resigned. The new board is you, C. C., and L. P. A. I tried to get in
38 The Investigation Specialist testified that he subsequently learned that the complainant did have standing and
reopened the investigation.
17
contact with you via E-mail and also via telephone, with no success. Your new position as
President of the Association provides you with access to the association's records." To serve on
the Board of Directors one must be a unit owner. In what can only be described as baffling, in
the following paragraph the investigator wrote that he could not find any record that the
complainant was a unit owner, and that as a result, the complainant had "no standing" to file a
complaint. The investigator admitted that at the time he closed out the case, he took no
independent action against the complainant that he had determined was "not a unit owner," but
was now the President of the association! Even though he was proven ultimately wrong about
the complainant's standing, it makes little sense to us that the investigator could not, or did not,
open a new investigation into a condo association being run by an unauthorized person.
The manner in which this complainant's investigation was handled encapsulates many of
the concerns that we have with DBPR. The complaint was based on allegations that the
association failed to turn over records. The records sought by the complainant unit owner were
requested in October 2015, to assist that unit owner as a candidate for the November condo
association election. The records were not timely provided and the complainant lost the election.
As seen later in this report, this was the same election in which an election monitor found clear
evidence of fraud. Following that election, the complainant filed another complaint with the
DBPR outlining the election fraud. The complainant and the Investigation Specialist exchanged
numerous telephone calls and emails between December 2015 and March 2016 concerning both
the October records complaint and the newer, election complaint. Thus, it is hard to understand
how the investigator could write "I tried to get in contact with you via E-mail and also via
telephone, with no success." In March 2016, despite clear evidence that the requested records
were not turned over, and clear evidence of election fraud, both investigations were still
unresolved. In middle and late March, the complainant emailed the Investigation Specialist and
demanded action on the election fraud complaint. Subsequently, independent of any action by
the DBPR, the entire board of the condominium resigned. The reasons for the resignations were
never offered, but it was likely due to intense media scrutiny of the election. The complainant
was installed as President and two other unit owners were also appointed to the board. On April
5, 2016, the investigator wrote the complainant the letter detailed above closing his investigation
into the records complaint. On the same date, the investigator wrote a letter closing the election
18
fraud allegation due to a "lack of clear and convincing evidence." We find this conclusion
particularly astounding.
This Grand Jury heard abundant evidence of election fraud, both by the complainant and
the election monitor. When questioned as to why the case was closed, the investigator kept
repeating that there was "no evidence." Significantly, in addition to the complaint, the
investigator was given a copy of the election monitor's report as well as the names of numerous
condo unit owners whose votes were faudulently cast. Yet, when asked, the investigator
admitted that he never went to the scene and never interviewed witnesses, not even the election
monitor. The investigator did not seem to comprehend that the observations of the election
monitor and the other unit owners would constitute evidence, were the monitor to testify.
Curiously, the investigator also insisted that the other unit owners needed to file their
own complaints about the election fraud for him to consider their accounts. 39 Inexplicably, the
investigator could not understand that the other unit owners could simply be viewed as witnesses
to the fraud rather than complainants. The investigator acknowledged that he was provided the
names of scores of individuals whose ballots were fraudulently prepared, but he placed the
burden on the complainant to obtain and provide him with notarized witness statements. This
defies understanding. Why would the DBPR place the burden, and the cost, of gathering
evidence on the complainant?
DBPR's failure to demand that its investigators utilize, or comprehend, basic
investigative techniques is breathtaking. According to the witnesses, the Bureau of Compliance
does not have anyone that can take sworn statements. Based on the collective testimony of the
DBPR witnesses, as to the investigators, we learned that there was no requirement of prior
investigative experience and no formal investigative training was offered. The investigators
learned "on the job" and appeared completely dependent upon their supervisors. The
investigators expressed no eagerness to root out corruption or solve problems, and did not seem
empowered to make any independent decisions. Our clear sense was that the investigators were
more intent on closing cases than solving them.
ss A second unit owner did file a written complaint, but even the addition of a statement from a second unit owner
was insufficient to constitute "evidence" to the investigator.
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One condo unit owner testified to numerous complaints filed with DBPR about her condo
board, alleging acts that were astounding. In 2013, the board voted special assessments of nearly
$200,000 in order to obtain a certificate of occupancy for the building. The money was spent,
but no certificate was ever obtained. Approximately $60,000 of additional association funds was
spent on a lobbyist to ask the City of Miami to reduce or eliminate $54,000 in fines. ° The unit
owner complained that two directors of the board never showed proof that they had paid their
share of the special assessment. Despite repeated requests to the PMC and the board members
personally, no records proving they had made such payments were ever provided. The unit
owner later learned that the board was trying to take out a $150,000 loan with the justification
that it was to obtain the certificate of occupancy.
When the complaining owner tried to run for a seat on the board to end the antics, the
condo board canceled the election? The complainant had to pay over $3,000 for her own
attorney to pursue arbitration for the board's failure to hold elections. The directors hired
attorneys to defend the actions of the condo association board. While the arbitration proceeding
meandered its way through the DBPR, the old board continued to serve. Ultimately, the
complainant won the arbitration. However, the association had to pay the $25,000 fee that the
attorneys hired by the association charged - to lose the case. The canceled election was not held
until a full year later. At the time the witness appeared before the Grand Jury her numerous
complaints about being denied access to records remained open with DBPR. The frustration of
this witness was apparent to us all. She has written to nearly every major figure at the DBPR,
and inside the state government, including the Governor. 41 She cannot understand why the
DBPR allows this behavior to go on, and frankly, neither can we!
D. BOARD ELECTIONS
In addition to the three (3) major areas of concern, the Select Committee also noted that
there were a number of complaints concerning association election procedures, primarily
concerning recall elections. 42 The committee failed to reach a consensus on how to resolve the
problems and recommended that the DBPR examine the issues and propose statutory changes.
40 There was no evidence that the fees were reduced or eliminated due to the efforts of this "lobbyist." In any event,
paying $60,000 to reduce a $54,000 debt seems like a questionable investment.
41 We have only elaborated on a few of this witness' misfortunes with her condo board and the DBPR.
42 Final Report of the Select Committee, p. 11. Florida Statute 718.112(2)0) contains provisions for the recall of
board members.
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Unfortunately, this Grand Jury has learned that election issues are still a major area of concern
for unit owners. We too are concerned and our concerns are several -fold.
First, Section 718.112 of the Condominium Act has very specific processes, procedures
and prerequisites for unit owners who intend to run for office and/or vote in the election for new
board members at the annual meeting. 43 At least "60 days before a scheduled election, the
association shall mail, deliver or electronically submit... to each unit owner entitled to a vote, the
first notice" of the date of the election. A unit owner desiring to be a candidate for the board
must give written notice of his or her intent at least forty (40) days before a scheduled election.
A second notice of the election, together with an agenda and ballot that lists all candidates, must
be sent to all unit owners entitled to vote. (Emphasis added)44 A witness explained that one
tactic used by some associations to impact the elections is to intentionally delay notifying unit
owners of their delinquent assessments. Unit owners who are delinquent cannot vote in an
election nor can that unit owner serve as a board member. To avoid this result, we recommend
that at least 90 days before an election the association shall send out notices of delinquent
assessments to all affected unit otivnets. This notice gives the unit owner at least thirty (30) days
to try to rectify and/or pay any outstanding or delinquent assessments. This change in procedure
will allow for greater participation of unit owners in the elections and on the ballots.
Fraud in the election process itself was a major factor impacting unit owners. As
previously indicated the election at one condo association was fraught with fraudulent activity
that included the following actions:
o A unit owner was so frustrated with the actions of her condo board that she decided to
run for a director position;
® An Election Monitor was present for the election. He received sealed ballots from three
different sources;
• Sealed ballots were provided by the directors to the Election Monitor;
• Sealed ballots were provided by the condo's management company to the Election
Monitor;
s Sealed ballots were provided by the unit owner candidate to the Election Monitor;
43 Section 71$.112(4)2,3 and 4
44 Section 71$.112(4) 4.a
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• The sealed ballots provided by the unit owner were collected by going door-to-door to
pick up the ballots from owners who supported her candidacy;
• Before the ballots were opened, the envelope for each sealed ballot was stamped in a
certain section based on the source of the ballot (directors, management company or
candidate);
• As the Election Monitor counted ballots, he discovered there was some double voting, It
appeared that many unit owners had submitted two sealed ballots,
• The candidate realized that some of the double votes were of owners from whom she had
collected their ballots personally. She contacted those owners and asked them to come
downstairs where the votes were being counted;
• Those owners identified their signatures on the true ballots and saw their names on other
ballots, purportedly signed by those owners. The signatures on the other ballots were
forged, notarized and dated;
• Other owners identified their true ballots and identified forged signatures on ballots
containing their names. Those ballots were also notarized and dated;
• All ballots with forged signatures were notarized by the same notary on the same day;
• Some unit owners whose names were on forged ballots were not in the country on the
date the notary verified their signature and identity;
• None of the unit owners whose signatures were forged and notarized had ever met the
notary;
• The notary who notarized the ballots with the fraudulent signatures later admitted that
the ballots were not signed in her presence;
• The existing board members submitted signed, sealed ballots to the Election Monitor
that were purportedly from absentee unit owners. Surprisingly, those envelopes from
owners who were not living in the condo, were not postmarked;
• Fifty-seven (57) ballots were disregarded for double voting;
• Twenty-six (26) ballots were disregarded as a result of forged unit owner signatures;
• Due to the special type of envelopes that were used by the management company and the
ballots submitted in those envelopes, the Election Monitor would be able to identify the
source of most of the fraudulently obtained, forged, improperly notarized ballots;
• It would appear that both the existing board members as well as the management
company were involved in fraudulent activity in connection with the election. The
evidence of the fraud was contained on the ballots as well as on, and within, the
envelopes.
22
The election monitor present at the election meeting where these events occurred fled a
report confirming many of the bullet entries above. Further, depending on whether ballots were
turned in by the owners, turned in by management or collected en masse and turned in by a unit
owner, the election monitor stamped each ballot envelope such that the source of the ballot could
be distinguished. Identifying the source of the various double voting ballots and the forged
signature ballots could have been accomplished had the election monitor maintained possession
of all of the ballots and envelopes. We knew that the notary public engaged in fraudulent
behavior as she knowingly notarized purported signatures of some unit owners when she knew
those ballots were not signed in her presence. However, even knowing the identity of the notary
and being able to prove that she notarized documents that were not signed in her presence is
useless; her actions did not constitute a crime because the documents notarized were not done in
connection with a statutorily recognized "official election proceeding." We strongly believe this
short -coming encourages persons to engage in fraudulent election procedures as a means of
obtaining or retaining a seat on the board of the association.
The facts surrounding this event were so outrageous that details of certain aspects of this
election ended up being reported in the media. On April 20, 2016, the Miami Herald published
an article entitled, Documents Meant To Combat Fraud In Condo Election Raise More
Questions. The article described in detail how owners living at two (2) different condos
managed by the same management company ended up with a great number of "notarized"
ballots purportedly submitted by unit owners. However, many of the owners stated they never
signed those ballots; the signatures affixed to those ballots were not theirs, and they had never
met the woman who notarized the signature on the suspect ballots. At one condo association's
annual election the presence of fraudulent notarized ballots and the ensuing double ballots
reportedly resulted in an illogical and impossible 115 % voter turnout. We received testimony
that corroborated many of the facts set forth in the newspaper article. Why do we make note of
this article? Because it is further indication of the lengths persons will go to maintain their
fiefdoms, often at the expense of those they should be serving.
The existence of this article and the contents therein, underscore the need for a renewed
focus that is aimed at ensuring fair elections and filing criminal charges against those who dare
to corrupt the process with fraudulent activity.
23
Accordingly, we recommend that any person or entity that engages in any f •audulent
activity conducted in connection with the election of board members for the association shall be
subject to criminal liability.
We further recommend that any director, LOAM, management company, notary, attorney
or any other person who engages in, or who conspires with another person to engage in
fraudulent election activity shall be subject to criminal charges classified as a 3r`r degree felony.
We further recommend that any Board Director of a condo association who enters a plea
of guilty or nolo contendere, or who is found guilty of any such criminal violation or fraudulent
conduct, including election fraud or intentional destruction of official records of the association,
shall be permanently barred by the DBPR f •orn serving on any other condo board in the State of
Florida.
We further recommend that any LCAM who enters a plea of guilty or nolo contendere, or
who is found guilty of any such criminal violation or other fraudulent conduct, shall be issued a
mandatory license suspension by the DBPR of no less than twelve (12) months for a first
violation. For any subsequent violation, the DBPR shall permanently revoke their license.
Election Monitors
In the above-described fraudulent election, an election monitor was present. The monitor
was requested because some unit owners were concerned about the upcoming election. Under
Chapter 718, if unit owners have concerns about the integrity of an upcoming election for the
board of directors, they may request that an election monitor attend the election. An election
monitor will be appointed if 15% of the total voting interests in a condominium association, or
six unit owners, whichever is greater, petition for a monitor.
In the above-described fraudulent election, an election monitor was appointed by the
Ombudsman. As revealed by his actions in stamping the various stacks of ballots (based on the
source from which they came) it appears that he was very knowledgeable about the task he had
to perform. Although the election monitor was able to determine that fraud was "afoot," there
was nothing he could do to cancel or void the election results. Even though it was clear that
there were forces at work trying to rig the election, his charge as election monitor did not
24
authorize him to try to determine who was responsible for the fraudulent activity. He did not
have the power to take possession of the "evidence" of the fraud, namely, all of the envelopes
and ballots. Absent the evidence, there was nothing law enforcement could have done to
determine whether any crimes were committed and who committed them. We believe this is a
tremendous oversight.
This Grand Jury recommends that if circumstances are such that an election monitor
needs to be present, that the election monitor has the power and authority to:
1) Ensure the integrity of all ballots submitted;
2) Ensure the integrity of the process used at the Annual Election;
3) Confirm that all notice requirements and prerequisites were met in advance of the
Annual Election;
4) Take possession of all envelopes, ballots and other election -related material;
5) Provide copies of all such documents to the law enforcement agency that has
jurisdiction over the location where the Annual Election was held;
6) Cancel and invalidate Annual Election results when there is a clear demonstration of
fraudulent activity;
7) Where fraud has occurred, order another election;
8) Attend and serve as election monitor for the "do -over" election;
9) Prepare and submit a detailed report of the events and findings and forward to law
enforcement and the DBPR;
10) Identify in that report any persons found to have engaged in fraudulent activity in
connection with the Annual Election;
11) Summon law enforcement to the Anmral Election, if needed
Empowering the election monitor to act in accordance with the mandate above should go
a long way to reducing the number of contested Annual Elections shenanigans. Having an
election monitor with such powers present for the Annual Election should also help restore
integrity to what may have been questionable election practices of the association in the past.
And finally, having election monitors who are charged specifically with ferreting out any
inappropriate or fraudulent activity should be a comfort to unit owners and an encouragement to
25
those who had thought about running for office, but who failed to do so out of fear that the
election would be rigged.
We received information that years ago DBPR had a certification process for all election
monitors. It is our understanding that the certification process is no longer utilized. However, in
light of the expanded powers that we have recommended, we believe that those serving as
election monitors should be required to undergo training and certification.
Therefore, we recommend that the DBPR restore the certification process for election
monitors. We also recommend that the training portion of the certification be modified to
provide specialized trainingfor the expanded ditties recommended above.
During our term, we became aware of a television news report that was published online
on October 25, 2016, entitled "Condo Crime Family" Pleads Guilty To Felonies. The news
report describes members of a family (a married couple and their daughter) who, for close to
twenty (20) years, were engaged in illegal behavior and took actions that were injurious to the
associations for which they were serving. According to the article, more than thirty (30)
complaints were filed with DBPR ranging from "rigging elections to stealing funds." The
defendants were able to commit fraudulent acts due to the positions they held with the
association. They were able to hold on to those positions due to their ability to rig the elections.
Despite all the complaints to DBPR, family members were also able to keep their property
manager licenses. Were it not for a lead generated by local law enforcement in an unrelated
criminal matter, the family may not have been stopped.
Persons who are not acting in fiduciary capacity towards the unit owners should have
every possible obstacle placed in their path to prevent them from creating any more havoc or
committing other crimes. Directors will be hard-pressed to commit such acts if they are not in
those positions of power.
How was the "condo crime family" able to steal money and stay in business without
being caught? Did they fail to have the required financial statements prepared on an annual
basis? Did they have financial statements prepared that were doctored? Did they fail to respond
to unit owners' requests for copies of official records of the association? Based on the reported
thirty (30) complaints filed over the years, we can safely assume that they probably engaged in
26
all that and more. For all of these reasons, it is critically important that DBPR, the associations,
the Ombudsman, and the management companies do all they can to maintain the integrity and
fairness of board members and board annual elections.
IV. SHOULD ENFORCEMENT OF CONDO LAWS REMAIN WITH DBPR?
One of the problems with DBPR may lie in the sheer number of areas that it regulates.
According to information found on its website, "[t]he Department regulates the following
businesses and professions; Alcoholic Beverages & Tobacco, Certified Public Accounting,
Athletic Agent, Asbestos, Auctioneer, Barber, Building Code, Community Association Manager,
Child Labor Program, Cosmetologist, Condominiums, Timeshares, & Mobile Homes,
Construction, Electrical Contractor, Employee Leasing, Farm Labor Program, Geologist, Home
Inspection, Hotels & Restaurants, Landscape Architecture, Mold Related Services, Professional
Engineer, Pari-Mutuel Wagering, Real Estate Appraisers, Real Estate Commission, State Boxing
Commission, State Pilot, Talent Agency, Veterinary Medicine, Drug, Devices, and Cosmetics,
and Unlicensed Activity."45 Looking at this wide array of professions and services one cannot
help but recall the comment, "a jack of all trades, a master of none."
The present areas of responsibility for DBPR, the inept manner in which they handle this
area of responsibility, and an apparent nonchalance from the DBPR witnesses who appeared
before us lead us to wonder whether it might be more effective to totally remove this area of
oversight from DBPR and place it elsewhere. Although we do not have sufficient information to
make a specific recommendation for placement, should the investigative arm of DBPR be
reassigned, we have specific recommendations for the receiving department or agency.
• The investigative arm of the new department must have investigators who have training
and experience in basic investigative techniques (including criminal investigations);
• The new department must have the authority to conduct criminal investigations;
• The new department investigators must have the authority to take sworn statements and
collect evidence;
• The neer department investigators must be given the authority to initiate investigations
based upon their personal observations.
45 http://www.myfloridaticense,coin/dbprlos/Open(loverninent/GovQA.html
27
V. CONCLUSION
We commenced our investigation of this topic after receiving information about
unresolved complaints and issues between condo unit owners, their boards and condo
associations. After delving into this area, we discovered that there have been many years of
condominium association problems that have affected numerous condo unit owners and residents
within the State of Florida. Our investigation exposed, from our perspective, severe weaknesses
within the current laws and regulations that govern condominiums, their boards and their
associations. Because the condo laws and regulations lack "teeth," board directors, management
companies and associations have become emboldened in their willful refusal to abide by and
honor existing laws in this area. They even engage in fraudulent activity which goes
unpunished.
This Grand Jury has set forth recommendations in this report that are designed to curb
that inappropriate behavior. We strongly believe that raising the bar on the possible
consequences for such behavior will serve as a deterrent. Accordingly, we have recommended
that the legislature make it a crime for directors and officers of the association to engage in
certain wilful, reckless or fraudulent acts. Similarly, we have asked the legislature to amend
other statutes to preclude directors and officers of condo associations from engaging in self-
dealings.
elfdealings. Finally, among other things, we have included recommendations that will empower the
DBPR to suspend or revoke licenses of LCAMs or condo property management companies that
engage in inappropriate behavior.
With these legislative changes, we will need a robust and energized agency to enforce the
provisions of the new laws and regulations. Based on our interactions with their employees, the
Department of Business and Professional Regulation seems ill-suited to carry out this mission.
To effectively address the condo owners' pleas for help, the Department will need investigators
who are trained and skilled at conducting criminal investigations. They will need the authority to
initiate such investigations if they receive information about wrong -doing or other fraudulent
activity occurring.
Notwithstanding the number of complaints from unit owners, for too long, we believe the
legislature, the DBPR and local law enforcement have failed to make this a priority. To address
�E:3
this ongoing problem, we will need focused and continuous coordination and cooperation
between and among our various stakeholders on the state and local level. By implementing these
recommendations and making this a top priority, we just might be able to finally respond to and
resolve the condo owners' pleas for help.
VI. RECOMMENDATIONS
As to access to official records of the association we recommend that:
• Florida Statute 718.111 (12) (c) be amended to provide that Directors and members of
the board or association who willfully and repeatedly fail to comply with their statutory
obligation to appropriately and timely respond to written requests for official records of
the association (snore than two (2) violations within a rolling twelve (12) month period)
shall be personally liable for payment of damages to the requesting unit owner(s);
• That Directors and members of the board or association who knowingly or intentionally
deface or destroy accounting records or fail to create or maintain such records that are
required by law shall be criminally liable for such conduct. We recommend that each
such act will constitute a Second Degree Misdemeanor for a first offense, and that any
subsequent offenses or violations will constitute a 1st degree misdemeanor;
• That any association, board director, management company or management company
employee who willfully, knowingly or intentionally refuses to release or otherwise
produce official association records, and such refusal is done to facilitate or cover-up
the commission of a crime, shall be criminally liable for such conduct. The violation
shall be classified as a 3.d degree felony;
• That management companies which sever their ties or terminate their contractual
agreements with condo associations must turn over all official records of the association
to the association within ten (10) business days. A management company that fails to
turn over the association's official records within that time -frame shall be fined at a rate
of $1, 000 per day for up to ten (10) days and then thereafter, shall be subject to a
mandatory license suspension until all records are turned over.
As to conflicts of interests for condo board directors and conflicts of interests for PMCs we
recommend that:
• The legislature amends Florida Statute 617.0832 to make the provisions of that statute
inapplicable to directors of condominium associations.
• The DBPR create a new rule that requires PMCs to provide notification and disclosure
to the Board and condo association residents of any financial dealings andlor interests
the PMC has with any company, corporation or entity being recommended to the
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Association Board by the PMC. Failure to provide such notice shall result in
cancellation of any contractual agreement entered into with the association without such
notification or disclosure;
• In any situation where a PMC is recommending that a condo association enter into a
contractual agreement with any company, corporation or other entity with which the
PMC is affiliated or has some other type interest or relationship, prior to voting on any
such contract, the Board of Directors far the association shall first be required to obtain
at least three (3) bids from unrelated companies, corporations or entities providing
those same services. Such information shall be provided to all unit owners at the board
meeting where the voting on said contract will take place.
As to condo association annual elections crud fraud connected thereto, ive recommend that:
• At least ninety (90) days before an election the association shall send out notices of
delinquent assessments to all affected unit owners;
• Any person or entity that engages in any fraudulent activity conducted in connection
with the election of board members for the association shall be subject to criminal
liability;
• Any director, LCAM, management company, notary, attorney or any other person who
engages in, or who conspires with another person to engage in fraudulent election
activity shall be subject to criminal charges classified as a 3rd degree felony;
• Any Board Director of a condo association who enters a plea of guilty or nolo
contendere, or who is found guilty of any such criminal violation or fraudulent conduct,
including election fraud or intentional destruction of official records of the association,
shall be permanently barred by the DBPR from serving on any other condo board in the
State of Florida;
• Any LCAM who enters a plea of guilty or nolo contendere, or who is found guilty of any
such criminal violation or other fraudulent conduct, shall be issued a mandatory license
suspension by the DBPR of no less than twelve (12) months for a first violation. For any
subsequent violation, the DBPR shall permanently revoke their license.
As to expanded powers for election monitors, ive recormnend that the DBPR amend its rules to
ensure that election monitors have the power and authority to:
1) Ensure the integrity oj'all ballots submitted;
2) Ensure the integrity of the process used at the Annual Election;
3) Confirm that all notice requirements and prerequisites were met in advance of the
Annual Election;
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4) Take possession of all envelopes, ballots and other election -related material;
S) Provide copies of all such documents to the law enforcement agency that has jurisdiction
over the location where the Annual Election was held;
6) Cancel and invalidate Annual Election results when there is a clear demonstration of
fraudulent activity;
7) Where fraud has occurred, order another election;
8) Attend and serve as election monitor far the "do -over" election;
9) Prepare and submit a detailed report of the events and findings and forward to law
enforcement and the DBPR;
10) Identify in that report any persons found to have engaged in fraudulent activity in
connection with the Annual Election;
11) Summon law enforcement to the Annual Election, if needed.
As to election monitors, we recommend that.
• The DBPR restore the certification process for election monitors;
• The training portion of the certification be modified to provide specialized training for
the expanded election monitor duties recommended above.
If the Bureau of Compliance's responsibilities are separated froin the DBPR we recommend
that:
• The investigative arra of the new department must have investigators who have training
and experience in basic investigative techniques (including criminal investigations);
• The new department must have the authodU to conduct criminal investigations;
• The new department investigators must have the authority to take sworn statements and
collect evidence;
• The new department investigators must be given the authority to initiate investigations
based upon their personal observations.
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NAME OF DEFENDANT
JOSE RAMON PRIETO
LEMAY DORVIGNI SULET
INDICTMENT
CHARGE RETURNED
First Degree Murder True Bill
First Degree Murder
Murder 1St Degree/With a Deadly
Weapon/ Attempt
Kidnapping With a Weapon, Firearm or
Aggravated Battery/Attempt
Burglary With Assault or Battery
Therein/While Armed
Robbery Using Deadly Weapon or
Firearm
Robbery Using Deadly Weapon or
Firearm True Bill
(A) DEMETRIUS MARQUIS SAUNDERS,
(B) DIAMANTE LAJUANE WARREN
First Degree Murder (A & B)
Leaving the Scene of Crash Involving
Death (A)
Reckless Driving / Damage to Property /
Person (A)
Vehicular Homicide/Reckless Manner (A)
Leaving Scene of an Accident / Property
Damage (A)
Driving Without License / While License
Suspended/Causing Death/Serious
Bodily Injury (A)
Grand Theft 3`d Degree / Vehicle (A)
Burglary / Unoccupied Dwelling (A)
Burglary / Unoccupied Dwelling (A)
Resisting an Officer Without
Violence (A) True Bill
(B) WILBER GRANDA, also known as LIL BRO
(C) JONATHAN STEVEN RICO, also known as ROCO and/or REEK and
(D) YSRAEL GRANDA, also known as IZZY
Murder 1St Degree/Conspiracy (B,C,D)
First Degree Murder (C&D)
Tamper/Wit/Vic/1F/I PBL (B,C,D)
Solicitation of 1St Degree Murder (B,C,D)
Tampering With or Fabricating
Physical Evidence (B&D)
Burglary With Assault or Battery
Therein/While Armed (C & D) True Bill
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INDICTMENT
NAME OF DEFENDANT CHARGE RETURNED
KENNETH GEORGE RICHARDSON
TYVONTAE J. ROBINSON
MICHAEL LIVINGSTON
First Degree Murder
Robbery Using Deadly Weapon
or Firearm
Firearm/Weapon/Ammunition
Possession by Convicted Felon
Or Delinquent
First Degree Murder
Murder 1St Degree/With a Deadly
Weapon/Attempt
First Degree Murder
Murder/Premeditated/Attempt/Deadly
Weapon or Aggravated Battery
DEVIN LEWIS First Degree Murder
Robbery Using Deadly Weapon or
Firearm
Firearm/Weapon/Ammunition/
Possession by Convicted Felon
or Delinquent
First Degree Murder
First Degree Murder
First Degree Murder
Murder First Degree/With a Deadly
Weapon / Attempt
Attempted Felony Murder With
Deadly Weapon
Burglary With Assault or Battery
Therein/While Armed
Child Abuse/Aggravated Great
Bodily Harm/Torture/Deadly Weapon
Child Abuse/Aggravated Great
Bodily Harm/Torture/Deadly Weapon
Firearm Weapon/Ammunition
Possession by Convicted Felon
or Delinquent
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True Bill
True Bill
True Bill
True Bill
True Bill
ACKNOWLEDGMENTS
On May 9th, 2016, nine months ago, twenty-one citizens representing the broad diversity
of our community, were selected to become the next Miami -Dade County Grand Jury. On that
day, all of us took an oath. We recognize that jury service is one of the highest duties of
citizenship and all of us participated in the administration of justice. Due to our commitment to
finalize our present investigation, our initial six-month commitment was extended for an
additional three months. Although this extension required substantial professional and personal
sacrifice, we are proud to have contributed to the judicial process.
None of us will ever be the same: We take from this experience the heartache and pain
caused by others and the hope that justice will be served for them and their families. We hope by
the duty we performed, it may help bring some closure to the families who were victims of many
senseless crimes. We now have a better knowledge, understanding and appreciation of the many
men and women who serve our communities, seeking equal justice for all.
We express our thanks to the following people who all carried out their duties with
professionalism and a friendly attitude:
• State Attorney Katherine Fernandez Rundle for her commitment and service to the
Miami -Dade County judicial system and her orientation lecture that set this Grand Jury
on the right path.
• Our presiding judge, the Honorable Peter R. Lopez, who continued in the same
professional footsteps as his predecessor, who recently retired, the Honorable Gisela
Cardonne Ely, who stressed the importance of serving on a grand jury and the
significance of being involved in our community.
• Chief Assistant State Attorney Don L. Horn, for his professionalism and enthusiasm,
dedication and support that made our job easier; the best of the best. Thank you, sir;
• Assistant State Attorney John Perikles, for his professionalism and enthusiasm,
dedication and support dealing with difficult cases and uncooperative witnesses;
• Rose Anne Dare, who skillfully took care of all administrative details in a friendly
manner and made our tasks easier to perform, always with a smile and a can -do attitude;
• Nelido Gil, our bailiff, who every day greeted us with a smile, made us laugh when
sometimes we wanted to cry, and made our days as jurors run as smoothly as possible.
His ability to keep us in good spirits was definitely appreciated by all;
34
e Court Reporter Fernando Subirats, for his professionalism and commitment;
o The witnesses and experts who came before us to present our cases and facilitate our
investigations by answering our questions and concerns.
We commenced an investigation into the many years of Condominium Association
problems that have affected numerous condominium owners/residents within the State of
Florida. This case exposed severe weaknesses within the current law as well as a continued lack
of coordination, cooperation and action within many cities, counties and state agencies within the
State of Florida. We hope that our recommendations will bring the needed attention to the
leaders of our cities, counties and the State of Florida to finally commit the needed resources and
personnel to fully resolve this ongoing nightmare for many.
ATTEST•
Lisette Montalvo
Clerk
Date; February 6, 2017
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Respectfully submitted,
)hn C. Lu vig 1, Foreperson
mi -Dade County Grand Jury
png Term 2016