Saturday, July 23, 2016

WHERE'S YOUR HOA'S WALLET? - Let's ask a Banker

From: John Sellers 
Sent: Friday, July 22, 2016 9:15 PM 
To: Craig Huntington at Alliance Association Bank (chuntington@allianceassociationbank.com)
Dear Mr. Huntington

As one of the leading lights in the Arizona HOA Banking scene, and nationwide, I’d like to invite you to visit a new web site dedicated to all Arizona HOA members – click on www.arizonahoa.blogspot.com
In doing this, as an ex banker myself, see attached HERE, I’m very concerned about some of the basic banking practices with HOA’s and have some questions for you and your bank Western Alliance Bank/Alliance Association Bank.
MONEY LAUNDERING
With respect to simple bank account operating procedures, based on what I’ve seen in one of my own HOA’s, but many others, many HOA Board Members do not even know who they bank with. The account holder therefore has ZERO relationship with the bank. As you know banking is supposed to be based on relationships. The relationship practically in my experience is with the Management Companies. They select the banks and are often the sole signatory. In which case, having written Money Laundering Procedures myself, there is no doubt in my mind this contravenes the spirit and the letter of the Patriot Act. Anyone familiar with anti-money laundering knows that it’s the point of entry into the banking system by opening new accounts by which money laundering is fundamentally controlled.  This relies on Customer Identification Procedures (“CIP”), see HERE  Otherwise known as - “know your client”. This is compounded by the practices in the Crossings HOA in Prescott with Amcor where even the most basic banking principles seem to have been “overlooked”. See my email below of July 12 seeking records. This is even further compounded by:
In the case of Amcor, the Management Company, one of their senior employees, Robin Thomas lied under oath and the owner, Dennis May, also lied to me about hiring a CPA.
Anti-money laundering procedures cannot be delegated to non-depositary institutions, and certainly not to HOA Management Companies whose basic skill sets are designed for running landscaping services, and frankly, sometimes that proves challenging for them. 
Hardly the kind of people one should trust with money. 
DIRECT DEBIT TRANSFERS VIA THE ACH
I was involved in the early days of the ACH where in the 80’s at Chase we introduced Exxon to the system for retail gasoline receipts. I’m very aware of some of the fundamental ACH limitations and extremely concerned that the direct debit authorities in the hands of HOA management companies means there’s no proper chain of custody for these very sensitive documents powers of attorney in effect.
With an estimated $100Billion+ of payments going through HOA’s nationally, this is a recipe for disaster, especially in the hands of very bad actors. HOA Management Companies are not licensed for ANYTHING let alone as surrogate Depositary Institutions.
As can be seen from my later email of July 20 below, it appears suddenly that the Crossings HOA has changed banks from Arizona Biltmore Bank to Metro Phoenix Bank, the latter being a CAI member. As I point out, it’s possible the moneys touched by HOA Attorneys in their collection practices might also be subject to anti-money laundering procedures. See attached HERE The largest HOA Attorney firm in the world, Carpenter Hazelwood, is acting in various capacities for the Crossings. Most HOA Attorneys seem to be debt collectors also. Being a global firm, I expect them to respond in some way. I will know more when they and The Crossings satisfy my records requests in the coming 10 days
What policies does your bank have in place to protect against this?
As a CAI member, what policies do you think CAI ought to recommend on basic banking?
Finally, I have a question directed at you, rather than just your Bank. Under your leadership at CAB, a division of First National Bank of Arizona, the FDIC injected $862million in 2008 to rescue that bank which had over $1billion of HOA deposits. See the attached extract FDIC press release HERE   I know in the case of another bank, Desert Hills, that deposits harvested by a Management Company, HOAMCO, also ended up as loans to the owner of the Management Company by way of Deeds of Trust. Questions:
  1. Why were the UNINSURED DEPOSITORS of FNBA also made whole in that exceptional case – see the FDIC announcement attached?
  2. How many owners of Management Companies benefitted from personal loans in return for harvesting deposits?
  3. After attracting $1Billion of HOA deposits, and lending only $75 million to HOA’s, where did the remaining $925 million go? See your advertising attached HERE for 2007.
  4. How does someone whose only credentials include running Las Vegas Nightclubs, Property Management, and a CAI member, get to be President of a Bank. See your own cv attached HERE

All the above is more extensively set out on the blog which we’d invite you to visit – www.arizonahoa.blogspot.com
Look forward to your response.

Regards
On behalf of the Arizona Homeowners Forum
www.arizonahoa.blogspot.com
jas@arizonahomeowners.net
Cc: 
FDIC
Jeffrey A. Sandell, Arizona  State Bar No. 020658
Bob J. Rogers, Texas State Bar No.  17163400
MULLIN HOARD & BROWN(Counsel for FDIC)
John M. Brown, Texas State Bar No. 03142500
Anthony  W. Kirkwood,  Texas  State Bar No. 24032508
Senator David Farnsworth, Chair Arizona Senate Standing Committee-Financial Institutions
Robert D. Charlton, Superintendent Arizona Department of Financial Institutions
Arizona Bankers Association
American Bankers Association
Janet Estep, President NACHA – The Electronic Payments Association
William Schooch, President Wespay
Western Alliance Bank
Alliance Bank of Arizona
Biltmore Bank of Arizona
Metro Phoenix Bank
Arizona Bar Association – Steven Little
CAI Arizona Bank Members

*******************************************************

From: John Sellers [mailto:jasellers123@gmail.com] 
Sent: Wednesday, July 20, 2016 6:45 PM
To: 'Robin Thomas' <rthomas@amcorprop.com>
Cc: 'Josh Bolen' <josh.bolen@carpenterhazlewood.com>; 'Lydia A. Peirce Linsmeier' <Lydia.Linsmeier@carpenterhazlewood.com>; rendicott@biltmorebankaz.com; jbyrd@biltmorebankaz.com; awhite@biltmorebankaz.com; mmorano@metrophoenixbank.com; shaggard@metrophoenixbank.com; MARK REECE CPA <mark@markreececpa.com>; agerard@azbankers.org; wridenou@fclaw. com; bbernste@aba.com; jsigmund@aba.com ; jhall@aba.com ; mtownsend@aba.com ; phickman@azbankers.org; sgrano@aba.com ; skillian@azbankers.org; tkleinlein@azbankers.org; Sorkin, Jeffrey A <Jeffrey.Sorkin@Chubb.com>; Fareed Bailey <FBailey@azleg.gov>; Steve Little <Steve.Little@staff.azbar.org>; scott@carpenterhazlewood.com; Robert D. Charlton <rcharlton@azdfi.gov>; curtis@carpenterhazelwood.com; Bob Rogers <brogers@fdic.gov>; 'Dennis May' <d_may@amcorprop.com>; Monty & Kellier Moshier # 33 <Monty.Moshier@erau.edu>; Robert & Sandra Kilpatrick # 62 <daybyday441@msn.com>; Roger & Dena Paeselt # 34 <azlandscape101@gmail.com>; Roger & Dena Paeselt # 34 <paeselt@cableone.net>; Tim Greseth <jgreseth@hotmail.com>
Subject: Fax/Email to AMCOR - Bank Account Details; The Crossings Records Requests; and Money Laundering

Ms. Thomas (AMCOR Management)
From the check we received today in respect of our OAH Judgement against the Crossings, I note the Crossing HOA has either a new or an additional bank. I was expecting a check from Arizona Biltmore Bank. Instead I received one from Metro Phoenix Bank. See attached
You’ve seen my earlier records request of last week attached, highlighting my concern over the Crossings’s bank, Arizona Biltmore Bank, you, and the Association, not complying with the Patriot Act in respect of proper procedures to combat money laundering. 
My concern only deepens that the practice of HOA Management Companies, acting as wholesale deposit gatherers for certain banks from HOA’s, violates at least the spirit of the Patriot Act. KNOW YOUR CLIENT. Unlicensed HOA Management Companies acting as the “CIP” interface for banks on behalf of the ultimate account beneficiary, is unacceptable. I may not be an attorney, but there’s little in banking I haven’t encountered, including writing anti-Money Laundering Procedures in London. And I do understand the fundamental role of deposit taking institutions. See my cv attached. Not only are HOA Management Companies not licensed, for anything, especially handling money, but in Amcor’s case: 
1. You proved with the multiple flip flop over the Crossings 2014 Tax accounts that you could not tell the difference between a debit or credit and a pretzel.  
2. Furthermore, according to documentation we’ve provided you, and testimony planned for an upcoming OAH hearing, you purgered yourself as a witness, under oath, at an OAH Hearing in 2007
3. You furthermore misrepresented yourself to me as a paralegal when you’re not supervised by any attorney. 
4. Your President, Dennis May, the seeming sole signatory on the Crossings Bank accounts, lied to me in his emails stating that a CPA had NOT been hired, when it clearly had, months previously.  
In addition to outstanding records requests, please therefore supply me with copies of the following Association records:
1. Any and all account closing documentation, if any, with respect to the closing of the Biltmore account to include any related communications by and with any party.
2. Board Resolutions or minutes approving that account closing, if any.
3. All account opening documentation, Board Resolutions or Meeting Minutes authorizing the opening of the Metro Phoenix account.
4. All authorities and agreements for direct debiting arrangements with either bank in respect of member’s payments of assessments to the Association. Note, this is not to include copies of the authorities from members.
5. Any indemnities with any party in respect of negligence of any kind in respect of losses caused by misuse/mishandling of those direct debit authorities.
6. Copies of any amendments, other than those requested previously, to your Management Contract.
7. Copies of the agreements between Carpenter Hazelwood and the Association in respect of collection services performed by them as a debt collector. By definition these are obviously not client attorney privileged. We are also not seeking bad debtor information. In particular, any arrangements in regards to escrow agreements, automatic deduction of fees, wherein they act in the collection of funds, either as intermediary or otherwise, for the Association. In this, Carpenter Hazelwood may potentially fall within the definition of “touching” money, as outlined in the guidance and documentation attached on Money Laundering specifically designed for attorneys. 
Records supply
The records are meant to be supplied electronically or at the HOA’s principal place of business. As the only signatory on the Bank accounts is Mr. May, located per the check in Scottsdale, we do not have to travel to Prescott to obtain the records. If so you will be in default. However, on this occasion, without waiving that default, if I end up walking personally to Prescott to collect these records, I will. Furthermore, the Association has a substantial credit balance in my favor as you never debited my account for the April requests. Please ensure also the HOA accounts for June are posted. For your convenience you may consider this request, and the two outstanding requests, as one for the purpose of setting the 10 days clock. i.e., starting tomorrow for those prior requests and this.

Mr. Bolen
1. Thanks for your email below. I'm a bit short of cash this month so I was looking forward to cashing the check. Unfortunately, until I get some assurance that you, AMCOR, and the Association, are not making payments to us from improperly documented accounts, I’m a bit stuck.
2. According to Mr. Ekmark, Carpenter Hazelwood is the largest HOA Attorney firm in the world. See attached. So being global, I'm sure you share my concern over money laundering. Any attorney firm with a global reach like yours knows the risks and I'm sure you, and Scottie, and others in your firm, lose sleep over it. I know I would.
3. Please comment on the attached procedures specifically designed for attorneys. If indeed you are touching money, in any way, via debt collection, you are by definition involved. Kindly comment.
4. In your debt collection practice, how do your segregate the moneys, and with which bank. Technically, you’re not obliged to answer that, but in the interests of transparency, I hope you will.
5. I’m sure with all this money sloshing around, unless the banking procedures are followed to a “t”, it’s not clear to me whose hands really are on the money.
Hope you are well

Biltmore Bank of Arizona/Metro Phoenix Bank
Any information you felt comfortable with regarding the validity of the Association accounts with you, and compliance with the Patriot Act, would be appreciated, because I could really use the money.

John Sellers
6231 East Mark Way Unit 12
Cave Creek
Arizona 85331
Tel: 928 310 8220
jasellers123@gmail.com