“It can have a relapse”: Judge cautions against quick end to Hammocks receivership

The Hammocks still is at a crossroads over the future leadership of the homeowners association, including over the extent of power the receiver should retain. 

At a two-plus-hour court hearing on Thursday, homeowners aired their grievances against HOA receiver David Gersten, mostly over the fees Gersten and his team have charged to the HOA. Residents who support Gersten countered that the opposition is rooted in outside attorneys seeking to get the receiver out of the way and scoop up contracts with the HOA. 

Miami-Dade Circuit Judge Beatrice Butchko didn’t issue an official order on Gersten’s transition plan at the hearing. But her comments in court hinted that she shares the receiver’s view that if he is discharged too soon, the HOA could devolve back into mismanagement and fraud. 

The Hammocks, a 3,800-acre community in West Kendall that’s home to roughly 18,000 residents, is one of Florida’s biggest HOAs. In November 2022, four ex-board members and a fifth person were arrested on charges they ran a massive fraud scheme that diverted assessments to their own pockets. Gersten, appointed as receiver by the court after the arrests, and his team of attorneys and forensic accountants have been overseeing Hammocks affairs. 

“The way I view this association is akin to an entity with a disease. A horrible, horrible disease. It had a cancer,” Butchko said. “And it’s in remission. And it can have a relapse. I’d like the wheels to be moving in a positive direction under the monitorship of the receiver.”

In Gersten’s power transition plan, he proposes that he remain as receiver only to resolve lawsuits and insurance claims he has filed on behalf of the HOA. For all other affairs, he would remain as court-appointed monitor, starting from June at least through year-end. Separately, Butchko already has approved Gersten to remain as election monitor until the court “is satisfied that the association’s elections are fully protected and do not require outside oversight,” according to court records. 

A major sticking point has been the receiver’s charges to the HOA. So far, Butchko has approved more than $2.5 million in payments to the receiver and his team, and is yet to decide on a request for another $638,876, which would bring the total to $3.2 million. 

“At least 70 percent or 80 percent of the people we have been talking [to] have been sharing their concerns about the legal expenses,” Hammocks homeowner Carlos Villalobos said at the hearing, adding that Gersten’s attorney team has been charging for administrative work. “We were charged $300 for a screenshot of a map taken from Google. … The Hammocks has sold cars to [used car dealerships] Carvana and CarMax. There are pages and pages of charges to sell those cars.”

“In a perfect world, could a paralegal have done that? Yeah, but I would not have felt comfortable. I don’t know about the map,” Butchko said, though she reiterated her confidence in Gersten and his team. “I just trust the judgment of these people.” 

Melanie Damian, an attorney representing Gersten, had been mum about the opposition in the past, but laid out the receiver’s position at the hearing. 

When the receiver was first appointed, he and his team had to fire about 50 HOA employees and all vendors because they “couldn’t trust” that they weren’t involved in the alleged fraud, Damian said. Before new staff and vendors were hired, the receiver and his attorneys had to handle administrative tasks themselves, including selling excess HOA property such as cars, in a push to recoup as much money as they could for the Hammocks. 

“I physically went to sell the cars, and it took way longer than I expected. I spent hours on a Saturday,” she said. 

Damian also defended the rest of the receiver’s charges: For perspective, the Hammocks spent $2.6 million for attorneys in 11 months in 2022 during the rule of the criminally charged board, meaning money was allegedly siphoned out of HOA accounts during that time, she said. Out of the $3.2 million the receiver and his team have charged the HOA, $372,000 was for forensic accountants that had to untangle the web of fund transfers by some former board members across over 50 bank accounts and credit cards. Another $60,000 was for the receiver to set up a hotline for residents.

Gersten and his attorneys also charged $500,000 to pursue a criminal liability insurance claim, and to sue former HOA attorneys and vendors, such as security guards and accountants, over allegations they were in cahoots with the criminally charged board members, Damian said. That litigation has led to settlements recouping nearly $3.9 million for the Hammocks. 

Now that the forensic accountants’ work is finished, and Gersten has hired a property manager and other contractors for the HOA, the receivership’s charges to the Hammocks should drop, Damian said. 

Homeowner Don Kearns, a current Hammocks advisory board member, called on the judge to approve Gersten’s transition plan. 

“Much of the so-called controversy I believe is fueled by a lawyer who I believe is in constant contact with dissenting board members, because I was approached early on [by an outside attorney] asking to dissolve the receivership,” he said. “The oath I took was to support [residents] and not the ambition of a lawyer. The vast majority of homeowners are happy with the progress.”

Other homeowners have echoed Kearns’ comment that attorneys not involved with the receivership are approaching residents and offering to do Gersten’s work for less.

“We are not crooks,” homeowner Villalobos said at the hearing. “You can rest assured this is a completely different group.”

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The receiver’s opponents’ other gripes have been with mismanagement of the property, arguing that landscaping, sidewalks, pools and common areas remain in disrepair. Damian said the receiver has hired, and still is hiring, contractors to repair the property. 

Butchko did take one suggestion a homeowner made at the hearing: to retain an additional election monitor who would work with Gersten and possibly continue to oversee electrons once Gersten is discharged. Still, she added, that would be another cost for the HOA. 

“That external agency can monitor elections in the future,” homeowner Todd Botner said. 

Though the Hammocks now has a board, elected in April, it hasn’t had full autonomy as HOA boards do, but has been working in an advisory capacity to the receiver. The HOA will hold its next board election on Feb. 29.