BOSTON (CBS) – The trustees of a South Boston condo association are scrambling to pay the bills after they say a former property manager disappeared with an estimated $200,000 of funds.
The Channel View Condominium Trust has now filed a lawsuit in an effort to recoup the missing money and Boston police tell the WBZ I-Team they are also investigating.
As high-rise residential construction sprouts up around the Boston area, real estate legal experts say details of the financial dilemma can serve as a lesson for other condo associations.
Along West Third Street, there is plenty of evidence of neglected maintenance at the 18-unit Channel View building: rotted wood, peeling trim and missing exterior lights.
“This is all stuff that should’ve been done and stuff that we had set aside money to do,” trustee Andrey Lyalko told the I-Team.
For the previous ten years, Jean Kong and her business XLT Property Management had overseen the finances for the condo association.
However, when basic maintenance started falling through the cracks, trustees decided it was time for a new management company to take charge.
“There were a lot of red flags,” Lyalko said.
Those red flags soon turned to panic. The new management company was hired to begin in April, but trustees say Kong had control of the association’s bank accounts and kept stalling about transferring the money.
Prior to the management change, the Channel View Trust had sold two underground parking spots for about $135,000. According to court documents, those funds should have been deposited into a reserve account, bringing the balance to an estimated $200,000.
Emails provided to the I-Team show some of the delays trustees experienced. In one exchange, Kong said she could not get a ride to the bank in Connecticut. In another, she told trustees that she had a bad reaction to a new medication.
“It was just weeks and weeks turning into months of excuses, injuries and illnesses,” trustee and condo unit owner Nicole Corcoran explained. “We couldn’t get any straight answers from her, so then we got really concerned.”
According to the lawsuit, Kong’s last communication was in late May when she wrote, “I hope to have all the remaining files and funds turned over with the next 2-3 days and resolve the outstanding issues as soon as possible.”
When Kong stopped communicating, the trustees decided to sue her in Suffolk Superior Court.
The huge hole in the budget has trustees feeling the heat from condo owners who paid their dues.
“People had been paying more than their fair share to cover expenses,” Lyalko explained. “To tell them it was all for nothing and the extra fees they paid actually contributed to us losing the money…that’s a tough thing to have a conversation about.”
Speaking generally, real estate attorney Jordana Roubicek Greenman said cases of mishandled condo association funds can easily happen if trustees and residents are not vigilant.
“If you’re a bad actor, it might be easy to get away with something like this if people are not asking questions and checking to see where the money is going,” the attorney said.
The I-Team found several recent examples around the Boston area:
- A property manager who stole $95,000 from a complex in Lowell
- A Waltham woman who admitted to embezzling $350,000
- A mother and son, facing allegations of ripping off a Leominster condo association of $175,000
Greenman said there are a number of safeguards condo associations can implement, including: always having access to financial records; requiring more than one signature to approve purchases; and making sure the insurance policy covers losses due to embezzlement.
“If the correct protections are in place, and if you ask enough questions, this should not happen,” Greenman said.
Kong did not respond to phone calls or email inquiries from the I-Team. When approached outside her Newton home in September, the former property manager got in her car and drove away without answering any questions.
Following that exchange, Kong sent an email that indicated WBZ would receive a statement from her attorney. To date, that still has not occurred.
Court records also show that she has not filed any response to the lawsuit. Trustees are currently trying to win a judgement so they can access the bank accounts and recoup any funds that are still available.
But as more time passes, they are not feeling much optimism.
“We put our trust in her as our management company and she just blindsided us with this,” Corcoran expressed.