Hammocks receiver goes after HOA’s crime insurer, alleging failure to cover ex-board’s theft

The Hammocks receiver is going after the community’s crime insurer in a bid to recover funds allegedly siphoned from the homeowners association coffers by criminally charged ex-board members. 

David Gersten, the court-appointed receiver overseeing the HOA, filed a civil remedy notice of insurer violations against Philadelphia Indemnity Insurance Company to the Florida Department of Financial Services, public records show. 

The receiver and his team have been in communication with the insurer for nearly a year, providing all supporting documents requested by Philadelphia Indemnity’s investigator. But the carrier has neither made a determination whether the policy covers the alleged theft nor agreed to tender the policy’s full limit, according to Gersten’s status report filed to the court last week and the civil notice submitted to the state. 

The civil notice could open the door to the Hammocks collecting more than the policy’s $1 million limit. If Philadelphia Indemnity doesn’t pay the full policy amount in 60 days from the Sept. 28 civil filing, and a court determines the policy covers the claim, then the policy limit will be uncapped, according to the status report. 

Gersten also plans to sue Philadelphia Indemnity for breach of contract. The insurer’s parent company, Philadelphia Insurance Companies, didn’t immediately return requests for comment. 

The legal moves mark the latest push by Gersten to recoup funds allegedly pillaged from association coffers by former board president Marglli Gallego, three other ex-board members and Gallego’s husband, Jose Antonio Gonzalez. 

Last November, authorities arrested the five over their role in hiring allegedly bogus vendors, some led by Gonzalez, supposedly to maintain the 3,800-acre property in West Kendall. Association funds were used to pay the contractors, who did no work, with much of the money diverted mainly to Gallego and Gonzalez, according to an arrest affidavit. The other former board members charged are Myriam Rodgers, Yoleidis Lopez Garcia and Monica Isabel Ghilardi. 

All five have pleaded not guilty. 

The Hammocks, which is home to more than 6,500 homes, is South Florida’s biggest HOA. 

The Miami-Dade State Attorney’s office, which is overseeing the criminal investigation, outlined a roughly $2 million fraud at the time of the arrests. 

But Gersten and his team of forensic accountants who perused records and statements, determined that the misappropriation was much bigger. In recent months, the receiver found an additional $500,000 was deposited into accounts for “insider entities,” increasing the latest tabulation of over $3.4 million to nearly $4 million, according to the status report. 

“Most of this bank activity appears personal in nature and demonstrates that the parties/insiders/entities were not actual operating businesses,” Eric Thompson, part of Gersten’s legal team, wrote in the status report. “Instead, these parties/insiders/entities were merely used to funnel monies from the association to fraudulent purposes.” 

Gersten reported the loss from alleged theft to Philadelphia Indemnity on Nov. 18 of last year, a day after the court appointed him as Hammocks receiver, according to the civil notice. On Feb. 16, Gersten submitted proof of loss and all supporting documents to the insurer. 

Since then, the carrier’s investigator “has engaged in a protracted ‘evidence-gathering’ campaign that has included redundant requests for information and documents,” Gersten wrote in the civil notice.  

In response to the investigator’s records requests, Gersten and his receivership team provided supporting documents such as canceled checks, bank statements and explanatory charts on March 26, April 20 and May 2. The records provided showed that payments to “fake vendors,” as well as for personal services to ex-board members — such as private security to one of the former board member’s homes after she was arrested — and for their criminal defense fees totaled nearly $2 million, according to the civil notice. These tabs were accumulated during Philadelphia Indemnity’s coverage period of April of last year to April of this year. 

On June 8, Philadelphia Indemnity’s investigator again asked for additional documents, which the receiver claims were already provided, the notice says. 

Gersten’s civil filing against the insurer is part of his campaign on behalf of the Hammocks that has included lawsuits against former board members who were not arrested but allegedly allowed the alleged fraud to take place, as well as against former association attorneys and criminal defense lawyers. 

Three of the suits have been settled. In September, the association’s directors and officers’ insurers settled the claims against former non-arrested board members by tendering the full $2 million policy limit. This month, Gersten filed a motion to settle his claims against two former association law firms and one attorney after their insurer tendered the full $300,000 malpractice policy limit. Most recently, Gersten also filed a motion to settle his suit against ex-association law firm Jauregui Law and its principal Sabino Jauregui after their insurer agreed to tender the full $500,000 malpractice policy limit, court records show.  

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Gersten also hired a new Hammocks property management firm and took care of long deferred landscaping and other maintenance. As he and his team continue their forensic accounting, they found $190,000 collected from residents’ assessments and stored in a lockbox at Popular Bank, according to the status report. They used some of the funds to pay off a loan the ex-board had taken out from that bank and deposited the $133,500 balance into association accounts. 

The receivership‘s role is to set the Hammocks on the path to self-governance. While it shepherded the community through electing a new advisory board, Gersten plans to also oversee the next board election in February. According to the status report, he then will ask for the court’s permission to stay on a limited basis to complete fiduciary duties and other work.