Hammocks receiver sues former HOA attorneys for $9M over allegedly aiding fraud

As four former Hammocks board members await trial over claims they defrauded the residential community from $2 million, civil lawsuits are taking aim at attorneys for allowing and aiding the alleged grift. 

David Gersten, the court-appointed receiver for the Hammocks Community Association, filed lawsuits against law firms and some of their partners in Miami-Dade Circuit Court, seeking $9 million in damages. 

The Hammocks, tucked in the western edges of Miami-Dade County, is home to more than 18,000 residents across 3,800 acres between Southwest 120th and 88th streets and between Southwest 147th and 162nd avenues.

In November, authorities arrested Marglli Gallego, her husband Jose Antonio Gonzalez, as well as former board members Myriam Rodgers, Yoleidis Lopez Garcia and Monica Isabel Ghilardi. The five are charged for their role in an alleged scheme that siphoned money from the association through bogus vendors, with much of the funds going to Gallego and Gonzalez, according to an arrest affidavit. All five have pleaded not guilty. 

Gersten was appointed receiver in a separate civil case filed last year over assessment hikes and other issues at the Hammocks. He revealed he sued former attorneys for the HOA and Gallego in one of the status reports he periodically files with the court. 

The suits mark the latest chapter for the Hammocks, though hardly the end of years of troubles. 

In other issues, the U.S. Attorney’s Office for the Southern District of Florida opened an investigation into whether the association –– under the guidance of the former board –– made misrepresentations on applications for Paycheck Protection Program funds, according to Gersten’s report to the court. 

The U.S. attorney’s office neither confirmed nor denied whether it is investigating. 

If indeed federal authorities are looking into potential PPP fraud, then it would add another layer to the multiple cases involving South Florida’s biggest HOA. 

Tangled web of lawsuits 

Gersten filed two lawsuits in May, one against law firm Rasco Klock Perez & Nieto and partner Hilton Napoleon II, and another against Elbert Radames Alfaro Berta, Alfaro & Fernandez and its attorney Yudany Fernandez.

In 2020, the association retained Rasco Klock and Napoleon to help with a Miami-Dade Police Department’s poking into the HOA. As a result, the law firm and Napoleon filed defamation lawsuits against law enforcement officers who were looking into Gallego. They also aimed to “silence dissent” by suing residents who were “frustrated” with the prior board and raised concerns about Gallego misappropriating funds, Gersten says in his complaint.

Napoleon called the claims against him “baseless,” adding that the alleged board theft took place before he was hired to represent the association. “They cannot point to one document, one email or anything to suggest that I knew what the prior board was doing,” he said. 

To review the recall signatures, he worked with an independent expert to “confirm that some of the recall ballots did not match the signatures of some of the homeowners,” Napoleon said. 

Before suing homeowners on behalf of the association, he was presented with documents that showed what the residents had said about the board was “slanderous,” he said. “They actually showed me documents that show that what the homeowners said was not accurate.” Plus, his lawsuit over investigators’ records request showed that prosecutors “cannot blindly ask for every single documentation that a corporation possesses because that could literally be millions and millions of documents,” Napoleon said.

In June, Gersten also sued Jauregui Law and its principal Sabino Jauregui, whom the association hired in 2020 to represent the HOA in criminal, administrative and government investigations. Yet, the firm also ignored a potential conflict of interest and also represented Gallego in the criminal charges against her, according to Gersten’s complaint. The law firm also fought against a subpoena for records by investigators. Gallego was first charged in 2021 with misappropriating $60,000 from the association. 

The firm’s “actions served solely to protect Gallego from criminal culpability,” Gersten’s suit says. “During this time, millions of dollars were misappropriated from the association.”

Jauregui Law and its principal accepted at least $475,000 in attorney fees from 2019 to last year.  

Also in June, Gersten sued Hermida Law Firm, Quintero Broche and Jose M. Quinon, who were Gallego’s criminal defense attorneys. 

In total, the law firms received $350,000 combined for representing Gallego, but the money came from the association’s coffers. 

Frank Quintero, of Quintero Broche, and Jose Quinon, separately told The Real Deal that the Hammocks HOA’s very own articles of incorporation say that the association is to pay for a board member’s legal representation. 

“It is our understanding that the board approved the payment of her defense fees to defend herself,” Frank Quintero said. “Both my firm and the firm of Jose Quinon as well as the Hermida Law Firm had and have at all times acted in good faith.”

Moreover, Quinon said the association is allowed to advance funds for Gallego’s legal representation. “We very much expect that at the end of the day, when the dust clears, that this lawsuit would have to be dismissed,” he said. 

Gersten, who has been HOA receiver since November, has been working with a team of attorneys and forensic accountants to investigate past issues at the Hammocks and make the association financially whole. 

This year, he also sued former board members who were not arrested but allegedly did nothing to stop the fraud outlined by investigators. 

In March, Gersten shepherded the Hammocks through a new board election to ensure transparency and safeguards against voter fraud. It is unclear when he will pass full control to the new board.