Wild allegations at Miami homeowners association show why Florida needs HOA crackdown

In the long list of homeowner association horror stories, the one emerging from the Hammocks Community Association in Miami’s West Kendall suburbs is in a (criminal) class by itself.

It involves charges of racketeering, money laundering, fabricating evidence and using shell companies. A move to oust the board was thwarted by a fake bomb threat, and a recall election resulted in the board throwing out two-thirds of the ballots. A whopping $2 million in homeowners fees apparently was siphoned off.

This is gangster-style stuff. That’s not news to those whose homes fall under the Hammocks HOA, one of the biggest HOAs in Florida. After Miami-Dade prosecutors announced a series of charges this week, including against former HOA President Marglli Gallego, neighbors told the Miami Herald they felt vindicated. They had been fighting what they call the “Gallego Mafia” for years.

‘A CRIMINAL ENTERPRISE’

If even half of the allegations are true, this is a tale of suburban greed gone wild. The HOA was functioning, as Miami-Dade State Attorney Katherine Fernandez Rundle said in the press conference announcing multiple charges, as “a criminal enterprise.”

Gallego, her husband and three others were charged. Fernandez Rundle said the HOA took money from “hard-working families” and diverted it to themselves and associates. A detailed, 49-page arrest warrant lays it out: Basically, board members are accused of stealing at least $2 million of their neighbors’ maintenance fees, partly by writing HOA checks to phony companies that didn’t do the work. And apparently the financial abuse had been going on for years.

A judge on Thursday appointed a receiver to work with a provisional board until new elections can be held.

Stealing money from your neighbor is cold. But that wasn’t all. In an even more brazen move, association leaders this year jacked up monthly maintenance fees by an incredible 400% without explanation — perhaps because the HOA needed to pay for attorneys to defend board members against the homeowners who were suing them. How’s that for chutzpah?

The board hadn’t met in public in 4 1/2 years, meeting in secret since then, but still tried to block Fernandez Rundle’s office from investigating, going so far as filing a federal lawsuit against the State Attorney’s

Office to block enforcement of subpoenas. Wonder who is paying for that?

The Hammocks HOA is huge. It sprawls through the Kendall suburbs covering almost 4,000 acres and encompasses 18,000 people in 6,500 homes, townhouses and apartments. There was a lot of money coming in and, apparently, a lot of temptation.

But it doesn’t take a big HOA to misuse money or even steal it. How many more instances of questionable expenses or outright theft are occurring in smaller, less-prominent HOAs that haven’t gotten the attention the Hammocks is receiving?

MINI DICTATORSHIPS

Homeowners associations have a valid place in home ownership. They’re supposed to keep developments from becoming shabby or rundown, which is important to everyone’s quality of life and property values. But they’re notorious for escalating petty disputes into pitched battles — fining homeowners for planting an unapproved flower bed or parking their car in the wrong place. If there aren’t enough checks and balances on their power, they can turn into dictatorships. Or worse, as we have seen in the Hammocks.

As Don Kearns, a 28-year resident, former board president and a leader of the Justice for the Hammocks coalition, told the Herald, it’s time for the state to tighten up Florida Statute

720, governing HOAs. “Otherwise, it’s a Wild West free-forall,” he said. “When you’ve got unscrupulous characters running your community, 720 is a sieve.”

The state House member representing the Hammocks, Juan Carlos Porras, hasn’t even taken office yet — he’ll be sworn in next week — but the current turmoil hardly took him by surprise. During campaigning, he told the Editorial Board, he heard about the “misuse of power, the abuse, the negligence, the extortion” happening in under the HOA. He said he already has started working on ideas for legislation to tighten oversight of HOAs in Florida: “That is my top priority.”

Given the stunning breadth of allegations against the Hammocks HOA’s former leader, it should be.