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October 23, 2014

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J. Patrick Coolican:

Don’t question your HOA or you might get arrested

Image

Steve Marcus

Sun City Anthem homeowners Robert Frank, left, and Timothy Stebbins pose outside Anthem Center Wednesday, March 28, 2012. Frank and Stebbins accused their home owners association of keeping members’ dues in violation of IRS rules. The pair were arrested by Henderson Police in 2010 for filing a false report but the charges were recently dropped.

J. Patrick Coolican

J. Patrick Coolican

Don’t question your homeowners association because Henderson Police might arrest you.

Here’s the story: Robert Frank and Tim Stebbins probably cared too much about the finances of their homeowners association, Sun City Anthem. Frank was first a resident agitator and then a board member. Stebbins was just a concerned resident.

Frank and Stebbins believed the board was piling up excess reserves — more than $3 million — when that money should have been returned to homeowners. Not returning it placed the money at risk of IRS tax liability, they insisted.

Frank and Stebbins built their case and then sought advice from friends in the legal community to avoid a boomerang lawsuit from the HOA board. They were advised to bring the issue to local law enforcement, meaning Henderson Police. Bad advice.

Frank and Stebbins accused two board members of “forgery” — essentially knowingly signing a false statement — which was probably also imprudent. According to a police affidavit, Frank told the investigator a “flagrantly false” board resolution related to the surplus was “used to deceive the community membership and government agencies concerning the improper disposition of millions of dollars of overcharged/surplus homeowner assessments.”

After an investigation, Henderson Police exonerated the board members and then arrested … Frank and Stebbins.

Huh?

Yes, they were arrested in 2010 for filing a “false report of a crime.”

Henderson Police determined the board members didn’t knowingly sign false documents and so couldn’t be accused of forgery. Moreover, police said Frank and Stebbins had to have known their allegation was false and so should be prosecuted for filing a false police report.

Meanwhile, an IRS audit vindicated the claim of Frank and Stebbins that Sun City Anthem owes the U.S. Treasury more than $1 million for not returning it to the homeowners.

An administrative appeal to the IRS was denied, but negotiations with the government to find a resolution are ongoing, according to current HOA board President Jim Long. The tax liability is roughly $1.35 million, he said.

Regardless, at least for now, it seems Frank and Stebbins were right that Sun City faced a tax liability by not returning the excess dues of homeowners.

Attorneys for Frank and Stebbins successfully had the venue of the case changed because a member of the HOA board was also a substitute Henderson judge.

So, North Las Vegas City Attorney Jeffrey Barr prosecuted the case, until recently dropping it.

Through a spokeswoman, Barr sent me a brief statement: “It was in the interest of justice that the North Las Vegas city attorney decide not to move forward with this case.”

Thankfully, this puts an end to it.

Frank is a 72-year-old retired Air Force Colonel who said he’d never had a speeding ticket before this ordeal.

Stebbins is a 73-year-old retired salesman of analytical instrumentation and laboratory robotics.

Frank said when the pair were arrested they were stripped to undergarments and left in handcuffs for four hours while other alleged criminals were processed. “And for what? To scare a couple old guys?” he exclaimed, suddenly choked with emotion.

There are good reasons we have laws against filing false police reports, which waste law enforcement resources and can besmirch the good name of innocent persons. And I can see ignoring Frank and Stebbins or sending them off to the IRS to make their complaint. But prosecuting them? This seems to be a curious use of government resources.

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  1. This is a case where the two homeowners damaged the HOA potentially by pushing their issue in the wrong venue. This large tax claim by the IRS could have been avoided They should have been in the Nevada Real Estate Division arguing their issue under Nevada Revised Statute 116. Egos certainly prevailed, and the Henderson police department appears to have over reacted. Time to cool down and get collected everyone.

  2. HOAs have far too much power. No one should ever get arrested for inquiring into their HOAs proceedings.

  3. This whole sittuation could have been solved quickly and easily if only someone had "stood thier ground" and started a good old fashion gun fight. Then the police would have no reason the get involved.

  4. Can't fight the mob.

  5. I hear that the IRS audit was performed by a rookie auditor and that there's complex law involved. I also hear that a just handful of shrill folks in Sun City Anthem occupy much attention and generate much expense for the rest of us. So there's another side to all this, Mr. Coolican. It's not quite the David-versus-Goliath story you make it out to be. Overall, the community works well in spite of a few who find evil and corruption under every rock.

  6. Ok, so Henderson is the land of political crime corruption. Almost as bad as Pahrump..

    But look at it this way... At least they weren't arrested by Metro. Henderson cops just kick the life out of you and say you were resisting arrest. Metro would have just shot them and called it justifiable self defense against two dangerous criminals fleeing the scene.

  7. It sounds like it should have been handled as a civil matter from the get go. If they didn't have direct evidence of a crime why did they file a report?

    I also think Henderson over did it but of course this is Henderson so boneheadedness abounds.

  8. Genius comment from Ron Nelson.

  9. Sounds like the prosecutors have too much budget and not enough discretion.

  10. Get with the program, Coolican:

    1. You assume that it is a function of a police force to investigate crime. In Henderson, the function of the police is to: (A) protect the local Illuminati and (B) get rid of the riffraff.

    2. Henderson PD was just doing their job. Those 2 elderly retired guys were riffraff who were being vexing and annoying to the local upstanding citizens. Hence, they needed arresting.

  11. The two gentlemen should have never been arrested. False police report PLEASE. The state controls the HOA's with management company's. The state controls the management company's with HR116 laws. The state tells you how much money has to be in your reserve account, what the HOA can and cannot do. Most of the time if you are having trouble with your HOA, it could be your management company. If so get a new one, if your HOA does not have a management company, FOR YOUR SAFTY GET ONE!!! The state adds new laws every year. An HOA Board cannot keep up with them.

  12. If these guys would have just left it at the facts they know (IRS tax), all would have been fine. But as is typical at meetings, people engage their mouths BEFORE they engage their brains. The other side of me is shocked.....corruption......in Henderson, Say It Ain't So...... To set the record straight, with the exception of the older well to do gated communities, the HOA was nothing but the makings of horror stories in other states. But when half of California migrated here from 1999-2005, then came the HOA in full dress. What a wonderful idea, pay a group you give full control over then spend all the time fighting them. We were just fine smokin' in casinos AND bars, livin in neighborhoods that might have the neighbor work on a car occasionally, or maybe decide to have a blue house. Expressions of our individuality and personal freedoms, then came the outsiders, driving our prices up and taking away that made Nevada the last frontier. Do away with the HOAs, Rally the Hoards (yea yea......i know...wrong ethnicity) and take back Nevada. This used to be the ONE PLACE where you could choose the vice and practice it (minds OUT of the gutter.....pleeze).

  13. Response Part 1

    @Patrick: Your headline says it all. If you have an illiterate bunch running your HOA, and a management company which is both aggressive and incompetent, the smartest thing to do is shut up and sell your house.

    @Houstonjac: Perhaps you haven't noticed, the Nevada Real Estate Division is a "captive regulator" controlled by people who profit off the existence of HOA's. NRED is slow and biased. Their jurisdiction needs to be taken away and put where it constitutionally belongs, in the courts.

    @BChap: Everyone should thank you for the warning.

    @BrianLV: Sad to inform you, the Nevada Legislature, under the tutelage of lame duck State Senator Schneider, by statute took away homeowners' right to go to court when the Board of Directors of their HOA is acting wrongfully or breaking state or Federal law.

    @lericgoodman: Hard to tell if you are being sarcastic or serious. Please clarify.

    @RobRoney: Right on. Dating way back 10 years ago, my family's HOA manager and accountant were warning our HOA Board about this issue, and our HOA complied. I am willing to bet that the Sun City HOAs lawyers and accountants have sent the miscreant Directors letters warning them the IRS fine was going to happen and that it was possible that the HOA would lose any fight. Sadly, with moron laymen running HOA's they don't see behind the professional's words and advice. A "possible fine" gives the morons hope and keeps them paying those hourly fees to HOA lawyers and accountants to defend what a neutral tax expert would tell the HOA Board is a waste of time, in terms of appeals or attempts at rationalization. Long ago, I worked as a law clerk at the U.S. Tax Court, where taxpayers appeal IRS decisions and fines. Too many times, I saw taxpayers being raped economically by their tax professionals who were pursuing totally unmeritorious legal theories.

    @Aaronboy. Sorry to tell you you're wrong. Under the taxation power vested in the Federal government under the U.S. Constitution and under the supremacy clause of the U.S. Constitution, any laws or regulations adopted by a state or state agency which are inconsistent with or contradictory to Federal law (IRS Code, Regulations and cases) ARE INVALID AND IRRELEVANT. See my comments to RobRoney and BrianLV above.

  14. Response Part 2:

    @Xtman: While your comment is entertaining, it's far closer to reality that some big local Nevada land developers saw the structuring of CC&Rs, land annexation provisions, and HOA management contracts as a way to insure a lifetime of huge cash flow in management fees after all of their residential land was sold. Many national homebuilders use HOA's and CC&Rs in Nevada to keep big developments looking green and fancy to promote the sales of homes, especially to mid-westerners who aren't quite used to desert landscapes. California's HOA laws are well written and its appellate court opinions how that California courts have no hesitated to enforce all sorts of due process, equal protection and fiduciary duty principles against crazy or self-interested Directors and managers. The LA County DA even sent one Executive VP of an HOA management company to prison for embezzling an HOA's insurance proceeds after the Northridge earthquake...not that such an event will ever happen in Nevada in my lifetime.

  15. I read the comments and can readily tell who are Board members or who are managers or making money from HOAs and who are the victims (the homeowners).

    These two brave men saw many of there fellow neighbors being fleeced by an arrogant Board one of who stated at a Board meeting " we are the Board and we can do anything". Well the IRS stated NO you can't!

    Bob Frank was not thrown off the Board. He ran for re-election and was smeared and lost the election. If one sees corruption do you just close your eyes and walk away? These to men said NO.

    Remember Col. Bob Frank was defending us while he was in the Air Force. He is still defending his fellow homeowners.

    Interesting fact that the same CPA who got Sun City Anthem into trouble with the IRS is the Same Account that brought the IRS a calling to Sun City Summerlin and they wound up having to pay the IRS $15,000.00 for violating IRS regulations.

    These HOAs are piggy banks for those who have sticky fingers or are just power hungry or enjoy bullying others.

    Remember the 86 year old SCA resident the Board went after because she refused to take down a BOARD APPROVED 2 foot high metal fence atop her APPROVED BLOCK walls in order to keep the coyotes out?

    Just know it all bullies hiding as board members showing how tough they can be.

    The Office of the Ombudsman was alerted by Frank & Stebbins and they said in essence "go away". This State Office was created to HELP homeowners. What a disgrace they are. They always have a reason to dismiss the complaint or claim that it was "unsubstantiated".

    Hopefully this article lets the sunshine on the cockroaches. The problem is there are so many other cockroaches out there.

  16. I'd like to see these two guys sue the department for false arrest and win.

  17. It's important to "follow-the-money" and ask basic questions, like "who's getting paid or laid?"

    But, then, when the alleged crime is just asking a question - well, welcome to George Orwell's Anthem!

    I wonder who I can ask "Where are the HOA's and Management companies that have no serious complaints against them?" I'd be willing to bet there is NOT a single one that has a clean record!

    The more and more I talk with long-time Nevadans, the more I'm hearing do your own research, trust no one, and don't go near a Management Company or HOA! GEESHE, what's a law abiding citizen that just wants to live in peace to do?

  18. Could the powers that be, meaning the HOA Industry Management Companies, HOA Attorneys, Accountants & the CAI been trying to send Frank & Stebbins and others a message?
    Open your mouth, question the almighty board or their professional "advisers" and they will GET YOU!
    Assembly Bill AB 448 which passed 42 to 0 in the Assembly would have gone a long way to curb HOA Board powers and return some rights to Owners. Unfortunately one State Senator killed that BILL.
    Guess the HOA Industry was a big contributor to that Senators campaigns.
    If MORE honest people stood up and shouted and let their State Legislators know that these abuses MUST BE STOPPED maybe then Justice will return.
    2013 is just around the corner & both side are gearing up for another round of changes to NRS 116 the Statute that governs this madness called HOAs.
    For horror stories, names and facts about abuses against homeowners by BULLY BOARDS and dishonest managers go to www.hoacorruption.com.

  19. All that nonsense about using the wrong venue is just a smoke screen. There is no right venue for fighting HOA corruption. These creeps have infiltrated EVERYTHING. They are experts at using the legal system to terrorize you. In my case, I paid the fine and then went public with my story, and I'm getting SUED for exercising my first amendment right to speak out against an injustice. That's the way these creeps work. They use the system to bully you into silence. Whether it's crooked cops, prosecutors, judges, ombudsmen, arbitrators, mediators, it doesn't matter where you go. They have connections everywhere, and they will get you, and then you are CAUGHT and TRAPPED in a nightmare that never ends. My story is here: http://www.universitycresthoa.com.

  20. For those who have an interest in learning about the rest of the details on this bizarre case, check out Ronald Johnson's web site article titled "The Untold Story" at:
    www.scaview.org/pages/Today%27sAnthView....

  21. I have been asked by those curious about the full history of this fiasco by the City of Henderson to point to some of the online records of this case. Included at the below site are such documents as (1) the original police report submitted to Henderson Police in 2009, (2) the summary of the arrest warrant in 2010, (3) records of the compelling motions to dismiss in 2011 which were summarily disregarded by the North Las Vegas special prosecutor, and many other items of evidence. It may appear to those reading such records that some Sun City Anthem Members probably did willfully submit false information to the Henderson Police Department. But, it certainly was not Frank and Stebbins. One has to wonder if the true perpetrators of the crime of submitted false information to the Police will be arrested, and if justice will ever be served.
    See:
    http://www.anthemvoice.org/arrest.html
    in addition to:
    http://www.scaview.org/pages/Today%27sAn...