Wednesday, July 5, 2017

What happens to a Homeowners Association as it totters financially is fascinating.

In the case of the Crossings at Willow Creek, recent hearings in Yavapai County Superior Court confirmed that there is no bankruptcy alternative. That’s because a Homeowners Association is a corporation in name only. The members are on the hook for everything as it’s really a partnership.

We as property owners have scheduled a Member’s meeting on July 17 at 5:00 at the Community Room at 1235 E. Gurley St., Prescott to appoint a Board, without which Judge Mackey is almost certainly likely to appoint a receiver soon. This would be analogous to a mentally ill person with millions in the bank having their bank accounts run down by attorneys and other parasites.

Carpenter Hazelwood, who resigned as attorneys for the HOA last year, triggered this by arguing for a receiver to be appointed when faced with records requests pursuant to a simple AZDRE Order.

It’s already acknowledged properties in the Crossings are worthless because they can’t be sold. What then could homeowners be responsible for above that? Can their property values go negative?

Remember there is no insurance for the HOA now. Under a worst-case scenario, the liabilities to the HOA, and then the members, could easily amount to $20mm or more, especially if an accident takes place in the wash. That’s $250,000 each lot. So yes, property values could go negative.

It takes a lot of dot connecting to figure out what is involved here and we have been doing that for almost 10 yrs. So ahead of the meeting, I will be taking the dots one by one daily to make things clearer. This will be done via the blog at We’ll also have the documents pertinent to the case available soon via links posted there

A couple of points
  • The Meeting is technically members only but some contractors with construction deposits are welcome
  • Any member wishing to appoint an agent, especially an attorney, must have that approved ahead of time by us.
  • Out of town Press will be welcome but need to be accredited first. Please do that by email to
  • There is a current investigation underway by Detective Brazell, Badge #350, at the Prescott Police. If you have relevant information to give to him you would not wish to share with us, his number is (928) 777-1925
  • Conversations with him leave me totally confident the meeting will be safe and not masked by threats as has previously occurred.

Feel free to post questions or comments on the blog as it will not be censored except for totally outlandish comments

A mere selection of issues to be addressed daily will include:

  • Why could the City of Prescott file bankruptcy over this?
  • Why are the US Supreme Court 9th Circuit Rulings in the Kayanne Riley case so relevant?
  • Why there will be no Big Chino without fixing the Crossings – properly?
  • Why was the subdivision ever built in a floodplain anyway at the intersection of all the City’s water mains, including those for the Big Chino, Major Sewers, a main road, and a wash carrying more water than the Colorado River in flood -10,000cft/sec+
  • Is Carpenter Hazlewood looking to collect fees or did something happen with a recent foreclosure they would like to cover up?
  • Why is Chubb Insurance engaged with high powered attorneys? -
  • What is the role of Metro Phoenix Bank here? 
  • Where is Justin Scott? 
  • Where is Kathleen Yamauchi?
  • Why did the Board, Attorneys and Management Company all resign on the same day?
  • Who jumped ship first and why?
  • And a lot more dots!

 John Sellers

Monday, May 15, 2017

Where are the proceeds of sale of Lot 52 in The Crossings

From: John Sellers []
Sent: Sunday, May 14, 2017 12:51 PM
Cc: Paul O. Mittelstadt <>; Robert B. Zelms <>;; MARK REECE CPA <>;;;; Steve Little <>; CHPhoenix <>
Subject: Foreclosure Moneys in respect of Lot 52

Ms. Linsmeier
As you seem to be the source of all truth and bright light these days at Carpenter Hazlewood, I have a question for you on the Crossings which is not within the purview of the action the subject of the June 5th Hearing in Yavapai Superior Court.
Based on information and belief:
  1. Carpenter Hazlewood acted as debt collector in the matter of alleged outstanding’s and foreclosure with respect to lot 52. See attached.
  2. The owner at that time only became aware of the sale of that property long after the foreclosure sale took place. Parenthetically, for some reason, service by mail was made to an address in California, rather than their address in Chino Valley.
  3. Whether or not ANY outstanding’s were actually due, the sales proceeds of $25,500 on Sept 15, 2015 were well in excess of the purported claim of $11,672.
  4. I can find no record of the proceeds of that sale going into the accounts of the HOA with either First Biltmore or MetroPhoenix Bank
  5. No proceeds of the sales price in excess of the amounts claimed were ever paid to the Evans
  6. The lot in question is now listed only 18 months later at $149,500. Consequently this is quite a blow to the Evans
  7. As you know your ex founding Partner Mr. Wood was found to be in egregious violation of ethics having diverted moneys for his own use. See the appalling details at this link leading to his disbarment. -
  8. I would in no way presume your firm is acting in a similar fashion but I hope you don’t mind me at least inquiring as to:
    1. Where the moneys from that foreclosure sale might be?
    2. Were all the applicable records for that foreclosure transferred to the Associations new legal counsel – Manning & Kass? This would of course include even client-attorney privileged documents
    3. Why is the lien on the Evans private residence still in place?
Messrs. Mittelstadt/Zelms
As the Associations new attorneys, this is a supplementary records request to that previously made. Please supply copies of:
  1. Carpenter Hazelwood’s Retainer Agreement for collection services with the Crossings
  2. All records not subject to client attorney privilege with regards to the foreclosure of Lot 52
  3. Any and all bank account records containing new or modified banking arrangements for the Association
  4. The current signature cards on the Associations bank account(s)
CC: Manning Kass – New Attorneys for The Crossings
Yavapai County Sheriffs Dept
Prescott Police Department
Chubb as Insurers for The Crossings
Arizona Bar Association
Scott Carpenter & Josh Bolen by Fax
The Crossings at Willow Creek Blog

John Sellers

Monday, April 17, 2017

FDIC Insurance, or not, on Mutual of Omaha HOA Bank Deposits

The exchanges below were with the General Counsel for Mutual of Omaha Bank.
Unfortunately in subsequent conversations with the FDIC, they seem reluctant at this stage to get into specifics. When asked how/when we would know if the FDIC insurance applies to deposits via HOA Management Companies, they said - "when a claim is made" - in other words when the horse has bolted.
It would have been very easy for Mutual of Omaha to have honored the subpoena to testify at the OAH Hearing on bank records and explain all this. But strangely they let Carpenter Hazlewood, who were not representing them, object. During the course of that proceeding, Carpenter Hazlewood intentionally misrepresented certain facts to the Judge. In the absence of any response from them, we are simply left with the conclusion Carpenter Hazlewood lied. For details click HERE

My conclusion
The only way you can be sure the FDIC insurance flows through is to ensure the bank has the Association's Tax EIN in its records and at least one Board member is an account signatory
Trumps recent Executive Order this week suggests a totally different attitude taking shape with this administration on bank failures. This will manifest itself later in the year as the transition takes effect.

Letter to Gene Twellman, Chief Counsel for Mutual of Omaha Bank

After our phone conversation Friday about your LETTER, I did consult the FDIC videos which are pretty basic. They get nowhere near the specific response the FDIC gave us in response to a specific HOIA related inquiry.
We have different views on whether the FDIC coverage applies to deposits held with you. As your bank has $5billion of HOA deposits, that is hardly inconsequential. As little of that is actually lent back to HOAs, but into largely property loans, you are what I consider to be an FDIC insured investment trust.
We also have different versions of the facts which are:
  1. None of your account documentation identifies the fiduciary relationship between the Mgmt Co and the depositor, as required by the FDIC, even when the account opening document does provide for that. See ATTACHED
  2. At no point have we ever been supplied with account documentation that shows any linkage between and HOA’s EIN # and a deposit with you. See same package.
  3. Furthermore Ms. Ryan’s letter ATTACHED also had a number of glaring items such as
    1. She does not appear to know the true legal status of the HOA be it a Condominium or Planned Community.
    2. So what SIC code applies…that for an HOA, Condominium or …a Management Company?
In the absence of any further proof, I conclude still your accounts do not meet the FDIC requirements
However what we think is academic. It’s what the FDIC thinks. To that end I’ve copied the FDIC with a view to setting up a conference call to discuss. Of course they don’t deal with the Patriot Act issues but let’s take one issue at a time
I presume you are acting in good faith as we are. I therefore assume you are not setting the stage for a defamation suit which is protected by the truth and Arizona’s anti-SLAPP statute anyway. I also will respect any individual, except a government official, who requests to be taken off our emailing list. I also would like to be proved wrong on this. Except Wells Fargo thought it had procedures but they were not being implemented.
Finally you mentioned the fact that all First National Bank of Arizona deposits were paid out in 2008 pursuant to the FDIC’s $862mm contribution. That’s true but that raises further questions:
  1. I have never seen uninsured depositors paid out – Why were they treated that way with First National Bank of Arizona?
  2. We have a new Sheriff in town in Washington. I personally doubt Too Big To Fail will survive two Trump terms. So my question is - are you assuming it’s business as usual in Washington and they would play by the old rules in future bank failures?
  3. If I am correct - of what value are your assurances? 
Calvin Troup
Senior Consumer Affairs Specialist
Federal Deposit Insurance Corporation
AHF Blog

John Sellers
6231 East Mark Way, Unit 12
Cave Creek

Arizona 85331

Wednesday, March 22, 2017

FDIC Insurance on Mutual of Omaha HOA Deposits

From: John Sellers []
Sent: Wednesday, March 22, 2017 12:11 PM
To: Eugene Twellman <>
Cc: Mutual of Omaha Bankers
Subject: FDIC Insurance on Mutual of Omaha HOA Deposits

Mr. Twellman
Our last communication was with regards to the attendance at the recent OAH Hearing of Belinda Chavira. Remarkably the objection to her subpoena came not from you, but from Carpenter Hazlewood. Quite why our HOA’s insurer would pay for that has yet to be determined.
The results of the Hearing will be available in a few weeks as Carpenter Hazlewood threw a Hail Mary at the end of the Hearing asking for the chance to clarify what a “record” is.
Regardless of that, some remarkable information was obtained:
  1. Mr. Vasquez of Trestle Management confirmed under oath that read only user names and passwords for ALL HOA members are available for Mutual of Omaha Bank Accounts.
  2. He also testified that Trestle are NOT acting in a Fiduciary Capacity with regards to the HOA’s Bank Account with you. Click HERE for the audio extract
    • This is despite the fact that your account documentation provides an option for the party involved to be designated as a fiduciary.
  3. The FDIC’s written position appears very clear to us in response to a specific inquiry. Click HERE
  4. No such designation is shown. In fact it’s not clear from the bank statement account title whether the account is 50/50 Trestle/HOA or what? Click HERE
  5. Not only that, but a Management Company is not Schwab. There is a huge difference as you will know between a mere Agent and a Fiduciary
  6. Furthermore, no signature cards for the HOAs account apparently exist. This is despite the fact we have those signature cards from other HOA’s. Click HERE
  7. In that case though the TAX EIN in your bank records is that of the Management Company – NOT THE HOA
  8. We are reliably informed by other banks of the importance of the HOA’s EIN in your records for FDIC insurance to flow through.
A few questions:
  1. Given all the above, are deposits with you properly insured in the name of the HOA?
  2. Why did not your attached letter resigning not show the true legal status of your “depositor”? Click HERE
  3. What SIC code are you using for HOA deposits?
  4. You benefitted from $862mm of FDIC moneys in acquiring CAB. That included bailing out uninsured depositors as well. You now have $4billion of HOA deposits. Are you assuming a repeat of 2008 in 2017 should your extensive real estate portfolio turn sour?

CC: AHF Blog
John Sellers
6231 East Mark Way, Unit 12
Cave Creek
Arizona 85331
Tel: 928 310 8220

Tuesday, March 14, 2017

HOA User Names and Passwords on a read only basis

It seems from the number of bank account user names and passwords on a read only basis arriving from Carpenter Hazlewood, that this is not so uncommon after all. What this allows you to do is look at an HOA bank account but not transact.
I now have 6 different banks who have easily done this

Saturday, March 11, 2017

Who's insuring your HOAs wallet?

The last of three OAH cases on books and records took place this week. In all cases, the books and records at issue were copies of:

  • The user names and passwords for HOA bank accounts for members on a read only basis
  • The signature cards held by the bank for those accounts.
Banks involved include US Bank, Alliance and Mutual of Omaha. The FDIC has clearly stated, IN WRITING, that for their deposit insurance to flow through the Management Company to the HOA, as beneficiary, the nature of the FIDUCIARY RELATIONSHIP must be clearly identified in the documentation. Banks in the industry have confirmed that the FDIC also tracks with Tax Identification numbers. In most cases, only the Tax ID of the Management Company shows. Rarely the HOA. If these records do not exist, an additional FDIC requirement is not satisfied.

Trestle Management testified under oath this week that they do NOT have a FIDUCIARY RELATIONSHIP with the HOA. You can access the FULL HEARING AUDIO but for the critical 20 second testimony extract, click HERE

Only the FDIC can resolve this. However for HOA's looking to move their accounts to two banks knowledgeable in HOA's, and doing it right, just email

Thursday, March 2, 2017

You have to laugh

How to Resign from your HOA Board

The best letter yet when you want to resign from your HOA board. Not that we want you to resign, but if you must, do it with a smile.

I resigned when things got tough. Today, I wish I hadn't but at the time it seemed right. We adocates have to learn to stay even when its tough.

Dear Mr. President and Members of our Board,

Although it has been an intoxicating experience to serve as your Trustee, I regrettably must submit my resignation before I have a nervous breakdown.

When I ran for office, I didn't realize I would actually have to come to secret board meetings and second your every motion to go after members who refused to live by your rules. You know, the ones we keep voting on and don't ask members what they want? The duties listed for Trustees forgot to mention we would be fining neighbors for planting tulips instead of begonias, parking in front of their own homes, and opening their garage doors for more than 15 minutes at a time. Of course I realize we don't have to fine our friends and can grant waivers for those who kiss our ass, but I am not comfortable with selective enforcement and find it distasteful to remove the toilet paper adorning my house so frequently.

When Martha sat on the curb and cried after we completed the non judicial foreclosure, I had a difficult time explaining to the deputy that it was because she refused to get rid of the cat after her husband died. I did change my email as you suggested with the death threats pouring in but considering your mother-in-law down the block from you, has had two cats for the last 10 years, it was hard to explain to Martha and her neighbors why hers was not grandfathered in too.

When the members came in mass with pitch forks after we assessed them for the new golf course, I wondered why you found it so problematic to actually put the notion to a vote. I realize it will increase property values with a golf course in the area, but how high can property values go since we have mostly double-wides in this subdivision? Having the attorney write and explain how members would be charged with ultra vires if they continued to harass the board regarding the new golf course worked. Now our neighbors are forming a coalition to petition the board for recall.

My resignation is effective immediately. I will always remember my term in office with some affection as it led to having Martha take up residence in my back room. She is quite the chef and I'm afraid my culinary druthers are now spoiled. I am off to locate the guy with the petition and I assure you, none of the alligators released in the pond in the common area are mine and none of the kittens left on your front porch came from Martha's cat.

With Warmest Regards,

Your Faithfull Volunteer

Monday, February 20, 2017

Transparency in HOAs

Many people don't realize that the legislators were and have been extremely keen to apply the same principles of open governance to HOA's as to regular government.
To dispel any doubts on this, just click HERE and listed to a short debate in 20011 by the House on Bill 2609. Its enlightening.

Monday, February 13, 2017

HOA Attorneys and HOA Insurers

We had two hearings down at the Office of Administrative Hearings this week. The issue was access by homeowners to HOA bank accounts on a read only basis. So that any homeowner can log in, check things out, but not transact. Whatever the result, there was no doubting that’s feasible. We were not allowed to bring it into evidence, but even CAI advertises this as good practice for fraud prevention. Nor did the bankers turn up. Click HERE
The two cases couldn’t have been different. Six hours of slogging it out with TWO Carpenter Hazlewood attorneys. The usual allegations. Except this time, banks are feeling so “harassed”, they’re closing bank accounts because of “regulators”. The shocking thing of course, the bill for Grayhawk must have run up mightily. All over a $500 filing fee, even though Curtis Ekmark seemed to have forgotten that’s the only award the Judge can order to the prevailing Petitioner.
In the second case, no attorneys for either side, no big deal. Except for FirstService’s attorney –  for a witness, John Kemper, who as Arizona President, seemed not to know much about anything. Although they did drop their objection to the subpoena on the grounds they’re in a foreign country – Salt River Reservation. The Vintage at Grayhawk Board having done their utmost to get records out of FirstService, I dropped that petition, foregoing the filing fee.
But not before I thought I saw the penny drop with the Judge – you mean you don’t have any Board Members signing on the bank accounts?
Finally, in Grayhawk’s case, it was the insurers paying. My guess - $35,000.
See the letter below to the insurers

Dear (HOA Insurer – see LIST)                                                                                                                       February 13, 2017
I am part of an Arizona homeowners group exposing serious risks to the financial system because of financial malpractice in the HOA industry. But we are also fighting legal terrorism on homeowners by their HOA’s via their attorneys if they dare ask questions, especially about money. See the list in Attachment 1.
You are financing much of this.  In 2007 legislators instigated an Administrative Law process via the Office of Administrative Hearings (“OAH”) designed to prevent disputes over garbage cans escalating, leading to $hundreds of thousands of legal bills in Superior Court, and occasionally foreclosures.
Arizona Superior Court data has confirmed that Court actions since 2007 involving HOA’s and these attorneys numbered 16,744 compared to 150 at the OAH. It also indicates 90% of these stem from HOA’s. So much for Alternative Dispute Resolution. Lawsuits and debt collection, see Attachment 2, are major sources of revenue for these attorneys. The other is defending OAH and other cases paid for by you.
My wife and I are members of 4 HOA’s and big believers in using the administrative process. We have had 5 prior OAH cases, all of which involved transparency issues. The first case we won was constitutionally challenged in Superior Court in 2008 by HOA attorneys. Thanks to the then Senator O’Halleran, the HOA blinked, and withdrew its appeal. Ekmark & Ekmark then “resigned” leaving the HOA to fight for reimbursement from CNA of almost $40,000 of legal fees fighting a simple records request.
Standard practice for these attorneys is to intervene with you on the HOA’s behalf. See a recent case in Attachment 3. They argue this is the start of a lawsuit because an unfavorable Administrative decision compromises a subsequent Superior Court appeal by the Administrative ruling. BUT AN ADMINISTRATIVE HEARING IS NOT AN “ACTION”. The claim is simply enforcement of regulations with the maximum cost being a $500 filing fee. Note this may become abundantly explicit pursuant to two bills, SB-1289 & SB-1072, the latter part of a national constitutional group’s efforts to reinforce the separation of powers. See Attachment 4. The goal being to uncouple completely the OAH process and Superior Court so that any appeal would be close to a nuevo trial. Consequently, the need to defend an Administrative proceeding disappears, if it ever existed anyway. As insurers, you might ask to be notified of such proceedings but, properly worded, you would not be obliged to defend something where you cannot recover attorney’s costs. Please support these bills.
Furthermore, as a banker and risk manager, and with your significant risk to the HOA industry, I would be remiss if I did not alert you to one of the biggest financials swamps I’ve seen working on Wall Street. This affects the 68 million of American homeowners who pay $75billion annually to a totally unregulated group of players – HOA Management Companies acting as shadow banks. See more below.
We’d welcome a dialogue.
John Sellers
$1BILLION was needed from taxpayers via the FDIC in two Arizona HOA banks in 2008. Future risks include:
1.       Failures by certain banks to respect the Patriot Act anti-Money Laundering regulations as Management Co.’s harvest HOA deposits as unlicensed intermediaries create a shadow banking stem. The banks have no idea in most cases who the owners of the deposits are.
2.       FDIC insurance may also not be flowing through to HOA Deposits because Mgmt Cos, acting as mere agents rather than as fiduciaries, do not meet the FDIC’s requirements as stated to us, regardless of the deposit amount.
3.       Management Companies are accepting direct debit authorities from members in their name. This evokes serious risks to the $27 Trillion ACH payment system, in a worst case by ISIS intrusion.
Nationally, this raises the risk of a repeat of 2008.
This is all documented on my personal blog at
We have obtained banking records covering possibly 1,000 Arizona HOA’s. We personally also have three OAH hearings in the coming weeks over the denial of basic banking records. 6 senior HOA Bank Executives and 3 CFO’s of Mgmt Co.’s. have been subpoenaed to testify. For full details click HERE

1.       The Arizona legislators enabled the OAH process for simple no frills resolution of disputes.
2.       AZDRE and the OAH are part of the Executive Branch. As such, the separation of powers applies:
3.       Numerous consequences follow:
·         The first Amendment kicks in.
·         The petition documentation does not say “Complaint” which would apply to a lawsuit.
·         It says “Petition” as in the “right to petition government”.
·         Anti-SLAPP protections therefore apply.
·         OAH Administrative Law Judges are part of the Executive Branch and not subject to Judicial Branch procedures or discipline in any way.
·         The Arizona Rules of Civil Procedure do not apply, as would be the case in Superior Court.
·         No damages can be awarded.
·         No attorney’s fees can be awarded by the OAH. The Arizona Appeals Court has said so- TWICE
·   Semple vs Tri-City Drywall ruling that an Administrative Hearing was not an “Action”.
·   Brown vs Terravita.

·         If one attempts to enforce an administrative order in Superior Court they will not accept it with a formal complaint being filed.

Saturday, February 4, 2017

To Kill or Not to Kill All the (HOA) Lawyers? That Is the Question

There have been 16,744 LAWSUITS between HOA’S and homeowners in Arizona since 2007 with 90% of them being initiated by Associations. In the same period by comparison, there have been only 150 cases heard before the Office of Administrative Hearings under the now direction of the Arizona Dept of Real Estate.   This is appalling. Think of the cost and trauma

Arizona Senate Bill 1289 simply confirms what we know already. There is, by existing case precedent, no provision for attorney’s fees to be awarded at the Office of the Administrative Hearings for HOA disputes. But that does not prevent HOA attorneys intimidating by claiming them. Hence this bill for abundant clarity. Or prevent CAI, relying mistakenly on the Magna Carta, to argue that “frivolous OAH claims” by homeowners hurt HOA’s by increasing assessments. When in fact insurers are paying, but being misled into defending OAH cases by describing an administrative Hearing as “litigation” – when it most certainly is not. This is all about attorney’s fees.

For a video of the debate where this bill passed the first committee this week overwhelmingly, click HERE     ABC News also lent its support. Click HERE
To also learn how FirstService is hiding on the Salt River Reservation to avoid a subpoena to testify before the OAH, and how their big city attorneys phreaked out with claims of defamation when compared with Enron, click HERE.
More Shakespeare anyone?
See below details for insomniacs

From: John Sellers []
Sent: Friday, February 3, 2017 1:07 PM
To: Senator Kavanagh -
Cc:  Bill Sponsors; Senate Government Committee
Subject: SB 1289 HOA Administrative Hearings Attorney's Fees

Dear Senator Kavanagh
Thank you for allowing me to speak yesterday.
In reviewing the video, two brief comments if I may.
  1. I did a bad job of explaining the insurance linkage. The point is that insurers are being induced into defending cases unnecessarily by being persuaded that an OAH Hearing is litigation when I think we all agree it’s not. See the ATTACHED recently obtained via Carpenter Hazlewood on one of the three OAH cases we have pending. Another of their attorneys in another subdivision we own in is amusingly still claiming these records are privileged.
  2. Your comment about “hotshot attorneys”, innocently I know, does a grave disservice to 19 brave firefighters. They are really debt collectors dressed up as attorneys. See ATTACHED. I’m a member of CAI and was told they are looking at hiring Fennemore Craig rather than any of their CAI attorney members. What does that tell us?  

I’m sure they will disabuse me if I misspoke
Kathe Barnes, Jason Barraza, Kayte Comes, Kevin DeMenna, Ryan DeMenna, Mary Jo Edel, Carolyn, Jeff Sandquist, Vicki Sears, Adrianne Speas, Mark Wade.

John Sellers
Dear Senator Kavanagh
Copies: Senate Government Committee & SB 1289 Sponsors
As a member of the Arizona Homeowners Coalition, I wanted to register strong support of this bill and look forward to testifying personally on Wednesday.
  1. My wife and I are big believers in using the administrative process. But we had to win the first anti-SLAPP case in California in 2004 to preserve those rights after being sued for petitioning the Contractors Licensing Board over a crooked contractor
  2. We are members of four HOA’s
  3. We have had 5 prior OAH cases and, with one exception, our experience has been good
  4. All our cases have involved transparency issues – no disputes over garbage can colors
  5. The first OAH case we won was constitutionally challenged in Superior Court in 2008 by HOA attorneys. Thanks to the then Senator O’Halleran, the HOA blinked, and withdrew its appeal
  6. Others were not so lucky
  7. We currently have an AZDRE Default Order over HOA books and records.
  8. But our attorneys are now having to enforce this in Yavapai Superior Court, because AZDRE does not have the powers itself to enforce its own orders
  9. There are serious financial issues looming in Arizona HOA’s which could lead to another real estate crisis. See our letter today to Governor Ducey HERE on this, highlighting failures to respect Patriot Act anti-Money Laundering regulations, potential we believe for terrorist incursion into the money transfer system, and possible unavailability of FDIC insurance for HOA deposits.  This is all documented on my personal blog at
  10. Our Coalition team members have painstakingly obtained basic banking records which might cover as many as 1,000 Arizona HOA’s
  11. We are involved in three new OAH cases set in the coming weeks over the denial of some of these basic records.
  12. Pursuant to subpoenas issued, we hope to cross examine 6 senior HOA Bank Executives and 3 CFO’s of major Management Co.’s. Click HERE Taped testimony will be available to the FDIC.  
  13. This option is only available because of the AZDRE/OAH system
  1. We just completed last week our compilation of Public Rule 123 Records requests for bulk data by the three Arizona Superior Court systems
  2. The numbers are staggering
  3. Statewide there were at least 16,744 Superior Court cases since 2007 involving HOA’s and members. Click HERE
  4. For court records where plaintiffs and defendants were distinguishable, HOA’s as plaintiffs outnumbered homeowners 9 to 1
  5. In a similar period, there were 150 cases at the OAH where HOA attorneys continue to intimidate by asking for attorney’s fees
  6. So who’s filing frivolous lawsuits???
  7. So this system need improving
  8. Getting these Public Records from Superior Court has been like pulling teeth, as there is no Ombudsman for the Judicial Branch, which, unlike the OAH, which has been a model of transparency
  1. OAH Hearings are not LAWSUITS. That’s a boogeyman invented by attorneys
  2. The Arizona legislators wanted separation in enabling the whole OAH process for simple no frills resolution of piddling disputes without federalizing them
  3. AZDRE and the OAH are part of the Executive Branch. As such, the separation of powers under the US Constitution applies
  4. Numerous consequences flow from that
    • The First Amendment kicks in
    • The petition documentation does not say “Complaint” which would apply to a lawsuit.
    • It says “Petition”, as in the “right to petition government”, one of the fundamental and oldest five tenets of the First Amendment.
    • Anti-SLAPP protections therefore apply
    • OAH Administrative Law Judges, being part of the Executive Branch, are therefore not subject to Judicial Branch procedures.
    • The Arizona Rules of Civil Procedure do not apply as would be the case in Superior Court with a lawsuit
    • The Superior Court will not even recognize the case number of an administrative ruling for enforcement purposes.  
  5. No damages can be awarded.
  6. No attorney’s fees can be awarded by the OAH
  7. WHY?
  8. The Arizona Appeals Court has said so - TWICE
    •  Once in the Semple vs Tri-City Drywall case which decided that an Administrative Hearing was not an “Action” (or a lawsuit) and therefore no attorney’s fees could be awarded.
    • Again in the Appeals Court last year in Brown vs Terravita
  9. This does not prevent HOA attorney firms intimidating by claiming them, even though they know they can never be awarded.
  1. The typical tactic of HOA attorneys is to scare the insurers and Boards with the bogey of a “lawsuit”
  2. Based on amassing case documents, these attorneys are mostly legal terrorists and debt collectors posing as attorneys. See our submission to the Arizona debt collectors Association HERE
  3. Even CAI Central Arizona will not use these attorneys as recently discovered, even though they are Board members of CAI
  4. The HOA attorneys argue an unfavorable OAH result against a homeowner might induce them to appeal
  5. The result – if you don’t defend the OAH case now, you compromise the eventual appeal Superior Court proceeding
  6. So, thousands are being spent financed by insurers probably trying to do the right thing
  7. Estimates of $29,000 per OAH case
  8. HENCE - Our approach to the INSURERS. Click HERE
Pass the bill to enhance the role of the OAH in simple dispute resolution procedures
Please also consider some suggested amendments supported by our Coalition:
  1. Extend Arizona’s anti-SLAPP protection to homeowners petitioning their Boards. Click HERE for text
  2. Add enforcement rights to give AZDRE the option to enforce its own orders. Click HERE for text
  3. Amend ARS 14-1371 to allow the Ombudsman’s Office to intervene with HOA’s but only for transparency issues. Click HERE

John Sellers

Tuesday, January 31, 2017

Fritz on steroids

From: John Sellers [mailto:] 
Sent: Tuesday, January 31, 2017 2:27 PM
To: 'Tully, Stephen W.' <>
Subject: RE: John Kemper Subpoena

Mr. Tully
No confusion at all as I take it that this also constitutes a refusal of waiver of service by Mr. Rakusin. And yes, today’s date is indeed the 31st of January
With regards to our conversation on “defamation”, and so our memories do not dim:
  1. As I heard it, you had not yet read my email when we spoke but saw fit to reference “criminal enterprises”. I would suggest you consult a good criminal attorney to learn the nuances of that
  2. If you would like some expert witnesses on Enron, I can provide quite a few. As any lawsuit might involve me, I guess I would be wasting my time applying (???).
  3. I misspelt the name of the blog. Our correspondence is there at
  4. Please check it out and use your efforts to mitigate any damages you feel might be appropriate. If you feel anything is truly defamatory, I would certainly want to know to correct it
  5. As to the “issues” you said I might have, I am under a bit of stress at the moment. We have a new puppy arriving on Thursday and our current attack dog is playing up a little bit. I think he knows somethings up
  6. Other “issues” I suppose could include ensuring that FirstService, with its banks, is complying with the Patriot Act, not running a shadow banking business, properly protecting ACH direct debit authorities from ISIS incursion, and it is not functioning as general partner via “substantive consolidation in bankruptcy” with the HOA’s it “manages”
  7. Please also confirm that FirstService did indeed receive the required 90-day minimum notice of a potential derivative suit which was faxed to Mr. Kemper
Please also let me know how much the witness fee of $12/day plus transport comes to for Mr. Kemper.
John Sellers
From: Tully, Stephen W. []
Sent: Tuesday, January 31, 2017 2:03 PM
To: John Sellers ( <>
Subject: John Kemper Subpoena
Mr. Sellers, 
I have been authorized by Mr. Kemper to accept the service of your subpoena on his behalf.  I am not authorized to accept the subpoena of Mr. Rakusin.  So there is no confusion. The  date of the acceptance would be today January 31, 2017.  Please confirm your agreement.
Stephen W. Tully
Hinshaw & Culbertson LLP
From: John Sellers []
Sent: Tuesday, January 31, 2017 10:54 AM
Cc: See below
Subject: Is First Service hiding out on the RESERVATION?

Mr. Tully
You have not returned my phone call of last night to see if you would agree a waiver of service on Mr. Kemper of First Service for an OAH Hearing. See attached. I would like to ask you one more time before we serve him at home. This we obviously prefer not to do. To avoid that, see our earlier fax confirmation of Jan 16, 2017 sent to Mr. Kemper & FirstService in-house risk management in Laguna Beach over 10 days ago requesting a waiver. No response was received. 
As you correctly point out in your letter attached, SRP is an independent sovereign nation, a deservedly proud one, and I certainly understand their need for that respect. Even though you may be TECHNICALLY within your rights, you are clearly using that to make service as Statutory Agent quite difficult. It's an appalling commercial decision.
As an international banker with considerable experience in cross border flows, I'm shocked at the ramifications of your actions. Not all of which will be obvious at first blush. I'm sure I've missed a few.
  1. FirstService manage 255 HOA's in the Phoenix/Scottsdale area. See attached. Mr. Kemper is statutory agent for all of those and they are reimbursed for that under their Management Agreement
  2. Is First Service seriously trying to use independent nation status to prevent legitimate service on all those HOA's?
  3. Is that the reason they're there?
  4. FirstService is a totally unlicensed firm. Yet we estimate they manage $100million HOA cash in Arizona alone. As much as $3billion nationally which dwarfs their own extremely modest cash
  5. See my analysis of them by clicking IS FIRST SERVICE REALLY A BANK?
  6. They have a negative tangible net worth with a lot of secured debt. They look like Enron on steroids and I have personal experience of that
  7. What happens if they "disappear"?
  8. Would Homeowners be allowed to cross over Pima Rd to collect records and bank details?
  9. How would the AG's Office investigate fraud which is rampant in HOA's

CAB (now Mutual of Omaha Bank) has a branch I believe on the reservation. They just emailed me two days ago bragging they have now amassed over $4billion of HOA deposits from their own recent publicity. That's 75% of all their deposits I think
See our LETTER YESTERDAY TO GOVERNOR DUCEY where they talk about this
  1. What happens if they run into trouble and need the odd $1billion as happened to then in 2008.?

Our HOA at Vintage is still trying to recover $430,000 of cash from FirstService held at US Bank after they abruptly resigned some months ago after refusing to answer some simple banking questions. I would have no problem if that money were in the tribes hands. But it's in the hands of a private company on the reservation. FirstService is functioning as a shadow bank
  1. Could that money be safer in Panama or some other offshore bank Centre?
  2. Can you run a money management business on tribal lands?
  3. Under whose ambit would a bank operating in a sovereign nation be regulated?
  4. Would they be still subject to the Patriot Act?

I could go on but won't because, as much experience as I have in these matters with tax, exchange controls, I know there are ramifications I've missed
Kindly respond so we might avoid disturbing Mr Kemper at home

John Sellers
6231 East Mark Way, Unit 12
Cave Creek
Arizona 85331
Tel: 928 310 8220

Salt River Pima-Maricopa Indian Community
Sondra Acedo                    Court Administrator                              
Kierstin Anderson            Managing Attorney                                       
Kent Andrews                   Assistant Community Manager         
David Antone                    Tribal Council Member                        
Carla Banuelos                  Assistant Community Manager                       
Michael Dallas                   Tribal Council Member                        
Brian Garza                         Assistant Court Administrator               
Martin Harvier                   Vice President                                         
Jenelle Howard                 Tribal Council Members                                   
Lena Jackson                      Assistant Community Manager           
Archie Kashoya                 Tribal Council Member                                     
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Michael Wright                 Attorney                                                    
From: Hoffmann, Trish []
Sent: Monday, January 30, 2017 4:13 PM
Cc: Tully, Stephen W. <>
Subject: Subpoena of John Kemper

Attached is a letter of today's date from Stephen Tully.  Please contact Mr. Tully at the direct dial number in the letter or at the email address above if you have any questions.

Trish Hoffmann
Hinshaw & Culbertson LLP
2375 East Camelback Road, Suite 750, Phoenix, AZ, 85016
Tel: 602-383-6006 | Fax: 602-631-4404 |

Hinshaw & Culbertson LLP is an Illinois registered limited liability partnership that has elected to be governed by the Illinois Uniform Partnership Act (1997).

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