Over a year after five people were charged with running a massive fraud at the Hammocks, the homeowners association is again embroiled in contention.
Court-appointed receiver David Gersten has been overseeing the HOA since the November 2022 arrests of four ex-board members and a fifth person. He and a team of attorneys and forensic accountants have worked to untangle a web of alleged financial fraud, sued non-criminally charged people over claims they aided the scheme, hired new HOA contractors and pursued collections from insurers.
Now, Gersten has a plan to wind down his receivership, retaining oversight over certain HOA affairs as a court-appointed monitor. His proposal has touched off a firestorm at the Hammocks, dividing homeowners at the West Kendall community that is home to more than 18,000 residents.
The Hammocks has about 5,500 single-family homes, townhomes and condos across 3,800 acres between Southwest 120th and 88th streets and between Southwest 147th and 162nd avenues. It’s one of Florida’s biggest HOAs.
While some homeowners support Gersten’s proposal to continue guiding the Hammocks as monitor, others have taken issue with this plan and the receivership’s costs.
Since taking the reins, the receiver has been working with a board of directors elected in April. But they have had less authority than they usually would and act as advisers to the receiver, including weighing in on how recouped funds should be spent and the types of committees the Hammocks should form.
The Hammocks will hold its next election on Feb. 29. In court filings, Gersten proposes that after the June meeting of the new advisory board, he would remain as receiver specifically to keep working on pending lawsuits and insurance claims he has brought on behalf of the HOA. For all other HOA affairs, he would act as monitor at least through year-end, according to Gersten’s court filings.
Separately, he already has court approval to remain as election monitor until the court “is satisfied that the association’s elections are fully protected and do not require outside oversight,” he wrote in the filings.
The proposed limited discharge of Gersten is rooted in his concern that otherwise, the Hammocks would fall “back down into a maelstrom of impropriety,” he wrote in filings, referring to the alleged mismanagement by the arrested board members.
The “modus operandi” of the ex-board was secret meetings, and it kept its “ironclad grip” on the HOA by “hijacking its elections,” while working with “insider” vendors and “in-house consultants” that played a role in the scheme, Gersten said in filings. Already, some on the current advisory board have exhibited behaviors reminiscent of the criminally charged board members, he said.
In December, Gersten removed Carlos Villalobos from his position as chair of the Governing Documents Committee, alleging he held secret meetings, and that he canceled a meeting against the receiver’s direction and without providing proper notice, according to court filings. Villalobos also is on the advisory board and is running for reelection.
Some on the advisory board already have called for the hiring of in-house legal and accounting consultants, instead of sticking with independent outside contractors, Gersten wrote in his filings. It’s unclear if this suggestion was due to “a sincere concern” over HOA costs, or is an attempt “to nefariously stage a coup to enrich their pocketbooks,” he added.
Either way, he wrote, in-house contractors were “calling cards” for the criminally charged board members. They leveraged their concerns about independent contractors and then hired in-house vendors, including a security provider that the ex-board used as its own “muscle” and “enforcer,” allowing the board members to conceal their alleged fraud, Gersten claims in filings.
“Any new advisory board members with a penchant for secrecy will need to be weeded out before the advisory board transitions into a full-fledged operating board,” Gersten wrote. “The receiver believes he is best able to assure the sanctity of the board and the association’s governance by remaining as a monitor to both advise the board and report to this court.”
Dissent grows
Not so fast, a group of Hammocks homeowners say.
For one, how would the “weeding out” process of advisory board members work, Hammocks homeowner Edward Uribe wrote in a court objection to the transition plan. Moreover, he added, “who gave the receiver such omnipotence that only he can save the association from itself.”
All current advisory board members are “honest” and “well-intended,” but also divided, with one faction supporting all of the receiver’s decisions, he wrote. The other bloc? They are “afraid of the receiver,” following his removal of one member from a committee, and the group still “votes along to get along,” Uribe wrote.
“The problem is the receiver and his autocratic, heavy handed, vindictive approach to consensus building,” he alleged in his court objection, pointing out how much narrative Gersten devoted to Villalobos’ suspension in court filings.
Uribe takes issue with Gersten’s oversight of the Hammocks, questioning why he reduced this year’s assessments when the property is in “disrepair” with “dirty/moldy” common area walls. And he brings up a longtime sticking point for the receiver: The costs he has charged the HOA.
So far, Miami-Dade Circuit Court Judge Beatrice Butchko, who is presiding over the case in which the receiver was appointed, has approved more than $2.5 million in fees to Gersten and the law firm for which he is partner, Gordon Rees Scully Mansukhani; the receiver’s counsel at Damian | Valori | Culmo; outside counsel and advisory committee counsel at four law firms; a forensic accountant; and a technical consultant, according to records.
Gersten “boastingly” points out that his work has led to nearly $2.9 million in collections for the HOA, but omits to mention his legal fees, Uribe alleged.
Since Uribe’s Feb.5 objection filing, the receiver’s work has led to additional collections for the HOA, with recovered funds now nearly $3.9 million, according to Gersten’s status report filed this month. He also charged an additional $638,876 in fees for work done from Oct. 1 to Dec. 31. If the judge approves those fees, payments to the receiver and his team would reach nearly $3.2 million.
“It is abundantly clear that this court believes we, as an association, are incapable of managing ourselves, and only he [Gersten] can save us,” Uribe wrote in his objection. Yet, when it comes to the “exorbitant” legal fees, the HOA “is more than capable.”
Uribe calls for the discharge of the receiver after the election.
Uribe didn’t return a request for comment. Gersten, through his attorneys at Damian | Valori, declined to comment.
Separately, over 70 residents sent Butchko a Jan. 1 letter echoing some of Uribe’s points. In it, they say they are “alarmed” by Gersten remaining as election monitor, call for an “unbiased external monitor” of the election that the receiver may work with, and argue that Gersten’s narrative in his court filings prematurely convicts future board members of secrecy.
“The receiver has referred to his work in the last election in the Hammocks as the fairest
election the community has ever seen,” the homeowners wrote. “This sentiment ignores the decades of volunteers that have run the association without any issues of impropriety.”
Some of the legal fees they have been billed are for administrative work that the property manager and not lawyers should be doing, the homeowners added. They also take issue with Gersten’s proposal to craft a Hammocks Homeowners Bill of Rights, which he says is intended to beef up oversight over the HOA after state lawmakers failed to go far enough in new legislation regulating associations.
But the Bill of Rights requires approval from either a third or 51 percent of homeowners, the residents say in their letter.
They also again take issue with Gersten’s claims about Villalobos, arguing they amount to “public humiliation and exaggerated accusations.” Gersten has refused to view evidence Villalobos has offered to refute the claims against him, the residents say.
According to Sept. 19 advisory board meeting minutes Villalobos provided to The Real Deal, he disclosed that at one point the Governing Documents Committee held weekly meetings not broadcasted on Zoom and only for committee members to advance the committee’s work. But he pointed out that the committee cannot make any final decisions, and all of its recommendations and discussions held at these meetings were then relayed to the advisory board, receiver and Hammocks residents.
In a statement Villalobos sent to TRD, he said that the committees are regularly scheduled to meet monthly for roughly an hour. “This limitation makes any advancement challenging, as it limits discussion time and the protocol of it all includes the presence of lawyers (whose presence is quite costly), who can restrict the conversation,” he said in the statement.
“I can categorically deny that we never had a ‘secret’ meeting after receiving the first violation,” he added.
Villalobos also alleges “disparate treatment,” arguing that the receiver “unfairly” cited the Governing Documents Committee cancellation, which was done with less than two days’ notice, as other committees have canceled meetings two hours in advance but never faced repercussions.
Ball is in judge’s court
One Hammocks homeowner has an entirely different take on the opposition against the receiver.
Outside attorneys are coming into the community and fomenting discontent over the receiver’s fees in an effort to replace Gersten and represent the Hammocks as counsel, alleged the homeowner, who spoke on the condition of anonymity. This was the impetus for Uribe’s objection to the transition plan, the homeowner further alleged, adding that in-fighting among residents is not in the best interest of the HOA.
“I have been approached, too, [by outside attorneys] and I said, ‘no,’” to supporting opposition to Gersten, the homeowner told TRD. “It’s a battle for the money the receiver is making.”
The homeowner sent a letter to Butchko calling for the judge to allow Gersten to continue guiding the Hammocks. His opponents are “making us believe this legal counsel is concerned about our finances, when the reality is that they are after the Hammocks account,” the homeowner wrote in the letter.
Butchko, the judge in the receivership case, already approved in December Gersten’s plan to remain as election monitor until further notice. On Feb. 22, the judge will consider the remainder of his transition plan.
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