Thursday, February 11, 2010

Sand Lake Hills Homeowners Association And The RICO Act

I have decided to re-post on this blog a post that I had made on April 21st, 2009 at Sand Lake Hills Lawsuit. In part because I am too lazy to write something at the moment and because I am trying to increase awareness on the abuses of homeowners associations, and this post made for an interesting take on the actions of my favorite subject - Sand Lake Hills. Enjoy.

I was curious as to whether the Racketeer Influenced and Corrupt Organization (RICO) Act would be applicable to the Sand Lake Hills Homeowners Association, Inc., so I had decided to do some research.

According to the act, if a person or organization commit and show a pattern of "racketeering activity", which includes extortion, and by performing acts that are indictable under certain federal laws, including Mail Fraud, and to be more specific, § 1341 regarding "Frauds and Swindles", which states that "whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises" and who use the Postal Service as means of delivery.

Extortion can be defined as a criminal offense which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. The actual obtainment of money or property is not required to commit the offense. Making a threat of a lawsuit which refers to a requirement of a payment of money or property to halt future lawsuit is sufficient to commit the offense.

Considering the above, the Association had repeatedly used their newsletters to establish false pretenses that they were the "homeowner's association" and that they had legitimately amended their governing documents to allow them greater authority, including the ability to levy assessments against homeowners regardless of their affiliation with their corporation, as well as to print fraudulent information, such as the true reason why they did not hold their previous membership meeting at the library.

The Association has also used the mail as an instrument of collections to send their "invoices" and "demand" letters for their "assessments". Even when considering that the Association operates primarily intrastate, because the U.S. Constitution confers the postal powers upon the federal government, acts of mail fraud, have an inherent nexus with interstate commerce, as determined in United States v. Elliott, 89 F.3d 1360 (8th Cir. 1996)

The RICO Act is not designed for single offenses, but for acts of repeated wrongdoing. Because the Association had shown a continuing pattern of criminal activity, and used the mail in its attempt to obtain money from hundreds of homeowners over a period of a couple years (many who were not affiliated or were misled into becoming affiliated with their corporation), I believe that they would fall under the requirements outlined under the RICO act.

If one must look at the false pretenses used to obtain money, you could look at the pattern that had developed overtime, including the method of collecting money they had used prior to "mandating" sections and their subsequent actions.

A couple examples:

The Association had always been voluntary, yet every year the Association would mail invoices for membership fees. On each invoice contained an amount due and a reference number, as well as the word "invoice", all of which implies that the homeowner must pay the corporation for membership. The term "invoice" indicates money is owed.

They had also changed their name to eliminate the "Section Two" that followed Sand Lake Hills, which also implies that they are not the Association of just Section Two, but every section.

I had mentioned a while ago, the Board members had improperly notarized the Joinder and Consent forms used to accept the Amended and Restated Covenants.

They had denied entry to homeowners who are not members into their meetings (contrary to Florida law), yet threaten these same homeowners with legal action if they do not pay their assessments...

I would also think that having their volunteers canvas the neighborhood and tell those who did not wish to sign the joinder and consent forms that they would have to pay would constitute a threat and for those who folded under pressure and did sign, an act of coercion.

Consider the argument from so many of the HOA's proponents: "It's only 100 dollars a year." Obviously they had been misled into thinking their consent was nothing more than agreeing to a benign set of covenants with a cost no greater then the voluntary amount from before.

Facts had been purposely distorted to acquire the necessary signatures.

I think it would be easy to argue their intent.

For years they have been trying to raise money and painting those who do not want to join as not wanting to contribute their "fair share".

They ignored restrictions in the original covenants that outlined the amendment process yet they claim their document to be 100% legal.

They operated closed meetings in violation of Florida law and have been belligerent to those with opposing views who were allowed to attend those meetings.

They claim to be voluntary when their documents allow people to join but not leave (not to mention they have a Director for Mandatory Association and before they even "mandated" every section they listed every section in their amended covenants prior to even getting what they believed to be sufficient approval).

They had violated their by-laws when holding their annual elections.

And what I believe to be one of the more important problems:

They have breached their fiduciary duty with the homeowners of Sand Lake Hills. Considering their new covenants, as well as old, they require every homeowner to pay a maintenance assessment yet they are not treating each homeowner equally. They are placing the needs of the membership higher then the rest, even though under their new rules they require everyone to pay equally, for an alleged mutual benefit. And when it comes to accountability, they do not allow all homeowners a voice, permitting only membership to attend meetings, speak at meetings, and to have a vote, when they have the fiduciary duty to all homeowners under their proposed covenants, as well as the original covenants (keep in mind they have not "mandated" every section but they refuse entry to non-members from every section, and when delivering the amended covenants to be signed by everyone, they omitted non-members from the mailing list).

Their words and actions are very clear.


  1. Do you know how to rescind Joinder and Consent forms that were given out by the "HOA" for a vote and held by them in SAND LAKE HILLS?

  2. Does this not state that if you signed as a "member" and then to not recertify your not a member, and that if we all just don't recertify then the HOA is defunct?

    In order to maintain the high standards of the Subdivision and in order to supplement the enforcement provisions a s set forth herein in regard to any violations of these Covenants and Restrictions, the owners of the Lots in the Subdivision are urged to form a homeowners association, preferably in the form of a corporation not for profit organized and existing under the laws of the State of Florida. In order for such homeowners association to be entitled to invoke the powers of enforcement as herein granted to the homeowners association by these Covenants and Restrictions, said homeowners association shall consist of the owners of not less than twenty-five (2 5) lots in this Subdivision. Evidence of compliance with this percentage shall be by a membership roll signed by the owners of said Lots and recertified to within three (3) weeks of the close of each fiscal year adopted by the homeowners association, such recertification to be signed by said Lot owners. In the event the homeowners association ceases to have the required percentage of memberships at any time, such homeowners association shall
    lose its power and right of enforcement as granted hereunder until such time as the
    membership roll has increased to the owners of not less than twenty-five lots in this Subdivision. (Article II - paragraph 22 phases 2, 3 & 4 - paragraph 8 of phase C&R all other phases)

  3. I am not 100% certain how to rescind a Joinder and Consent form. I would assume that if the association did not file it with the county yet, you can request that your signed form be discarded. If it is already filed with the county, it may be recommended that an attorney take care of that for you, only because any request to remove your signature would probably be denied by the association and they would most likely attempt to collect assessments, fines, etc. despite the dispute...

    If it were me, I would send a certified letter, requesting that they disregard your joinder and consent form (regardless of what section), to the association and their lawyer, to show proof that you contacted them. I would then keep record of the communication in case the association ignores your request.

  4. As for the excerpt of the covenants you had posted, from my understanding, every year, the association for each section must recertify the membership rolls within 3 weeks of the close of each fiscal year. Upon recertification, if the owners of at least 25 lots in each section are members, then the association will have the authority to enforce the covenants and restrictions. If there are less then 25 signatures, the association would still exist, but lack the authority to enforce any of the C&Rs.

    The particular excerpt is interesting for a couple reasons. First, it specifies that the association must consist of members from that particular section. For a HOA to exist, it must be made up of homeowners of that particular section and to continue to have authority, the HOA must then maintain those members. The Sand Lake Hills HOA is really the HOA for Section 2, but it's existence violates this provision. The articles of incorporation for the HOA state that the HOA must consist of members from the geographic region of Section 2, but the board of directors have ignored this fact, and the board is a hodgepodge of property owners and residents (some who do not live in Sand Lake Hills). Since the covenants state that the HOA "shall consist of the owners," one can logically draw the conclusion that since the HOA consists of non-members (such as the president), then it is not the official HOA, and therefore lacks the authority to enforce the covenants.

    The second point of interest is that these covenants outline who can and cannot enforce the covenants. The HOA has insisted that they are the ones in charge but at the same time, the covenants state they cannot. It appears they are overreaching, but it also appears they don't care. Depending on if the association has been mandated, the association will chose whether or not to follow the C&Rs, and either way, it appears that they will leave the burden of proof on the homeowner, which can result in lots of legal costs.

    Also, since the covenants state that the "homeowners association shall consist of the owners of not less than twenty-five (2 5) lots in this Subdivision," I would also come to the conclusion that the HOA for each particular section can only consist of homeowners from that section.

  5. I would recommend contacting the Plaintiff's attorney, involving the current lawsuit against the SLHHOA, because he would be most familiar with the intricacies of the case.

    Also, considering the various other neighborhoods that have been corrupted by the hand of Larsen, I would believe that any opinion that holds true against SLHHOA would also hold true to such neighborhoods as Clubhouse Estates, Bay Lakes at Granada, and the various Williamsburg communities...

  6. you put a notarized document stating you rescind and revoke any and all signatures due to the fraud and failure to provide full disclosure to ____________________ homeowners association.

    sign with a notary and put in public records then send every board director a certified copy.

    another way is to do a petition to dissolve the HOA for the members are the ones that keep it going that is what they fail to realize.

  7. Interesting suggestions.

    Another shady aspect of this HOA - in their rewritten documents, they eliminated any options homeowners may have. The HOA was now the only one who could enforce covenants and restrictions, make changes, or do anything else.

    Of course, now that the judge ruled they acted illegally, we'll see where they go from here, although I have the impression the BOD lacks any understanding of the law, or their lawyer likes to stretch definitions to fit their needs...


Please share your thoughts and experiences in relation to this post. Remember to be respectful in your posting. Comments that that are deemed inappropriate will be deleted.