LAS VEGAS (KTNV) — With nearly 3000 homeowners associations in Nevada, chances are you live in a community governed by an HOA. That comes with a monthly pricetag paid by every homeowner that's supposed to support common areas and community amenities. But 13 Investigates discovered HOA board members sometimes use community money in questionable ways, and that suspicion led to this latest addition to our HOA Hall of Shame.
PART 1: Homeowners question $20,000 plus petty cash budget
As a former corrections officer, Samuel Covelli knows a thing or two about accountability for those who do wrong. That's part of why he went on a mission to suss out his suspicions that things were amiss with his HOA board. What he found raised lots of questions about possible misuse of homeowners' money.
"The first thing that came to my mind was, what are you hiding?" he said.
Red flag number one for Four Winds homeowner Covelli was a series of petty cash expenditures by his HOA board that were anything but petty; more than $80,000 in just over three years without any receipts provided to support the spending when Covelli asked for proof.
"So, that's like asking the cat, 'Where'd the canary go?'" said Las Vegas attorney Bruce Flammey.
Flammey specializes in HOA law and knows from experience that not all HOA boards operate on the up and up.
In Four Winds, an outside audit found balance sheets were not reconciled monthly, not all payments made from the operating checking account had invoices or statements to back them up, and HOA meetings were not held at times when homeowners could attend. Covelli combed through the Four Winds audits and zeroed in on specific expenses he as a homeowner felt were not quite right.
"When you saw those dollar figures, what was your reaction?" 13 Investigates reporter Darcy Spears asked.
"It shocked me!" Covelli said.
He's talking about mileage reimbursements to Four Winds HOA board President Jerry Shaner. According to the audit, the HOA paid Shaner $8,300 in 2019, $5,655 in 2020 and $6,572 in 2021.
Doing the math using the 2019 IRS mileage reimbursement rate of 58 cents per mile, that comes to 14,310 miles Shaner claims he drove for HOA business in just 2019 alone.
"My question would be, what are you doing and where are you going?" Flammey asks.
Shaner wouldn't answer any of our questions, deferring to the board's attorney who did not return our calls or emails.
In an attempt to get answers himself, Covelli followed the steps he learned in classes conducted by the Nevada Real Estate Division (NRED).
He sent Attempt to Resolve letters to his HOA, then filed multiple complaints with the state.
Three complaints were closed because the division found there were no statutory or code violations. At least two are still under review.
"There's there have to be guardrails for this somewhere," Covelli said.
Four Winds consists of 169 homes on just over 37 acres, a footprint that's just a bit smaller than a typical high school campus such as nearby Arbor View High School. Each homeowner pays $105 a month in dues.
"That's real high for this community based on the 'common elements' as they call them," Covelli said.
"What are they?" Spears asked.
"A couple of shade...little pavilion type buildings in the park. And the park itself," Covelli said.
"Do you have a pool?" Spears asked.
"No," Covelli said.
"Do you have a clubhouse?" Spears asked.
"No," Covelli said.
"Do you have walking trails?" Spears asked.
"No. We have the park," Covelli said.
At that park, we found something that we've never seen in all the years of our HOA Hall of Shame reporting. At Four Winds, homeowners' money was used to purchase a plaque with an entire paragraph dedicated to the board president--thanking him for doing all of the things that, as president, he's supposed to be doing.
"It's ridiculous!" said retired Chicago police officer Frank Rodriguez, a former Four Winds board member. He said he voted against the plaque, which he recalls costing about $1,000. But the other board members approved it.
Now that he's off the board, he's just another homeowner seeking accountability for how the HOA does business and spends the community's money.
When he requested the minutes and audio recording of the May 2023 general board meeting, he was sent a recording of the executive session instead.
"And I was shocked to hear what I heard," Rodriquez said.
"Yeah, he's his little jelly-butt-buddy." That's the voice of board president Shaner, making a derogatory and homophobic slur about Covelli and Rodriguez. "You know what jelly-butt-buddy means in the Navy?" An unknown voice is heard saying, "I have a good idea" followed by laughter.
The recording also reveals board members and Community Association Manager Jason Kelly talking about how to respond to homeowners' requests to see financial records.
"So what I've been doing, I've been trying to slow down the process. So it's like, alright, if we're required to respond in 21 days, they're getting a response on day 21."
"I just want the basic documents," Covelli said. "Can't get those without a fight."
He also can't get information about a community storage shed, even though he and the other Four Winds homeowners helped pay for it.
"Tile roof stuccoed shed, with a garage door and a very nice security fence around it, and cameras. And a $5,600 split air conditioner unit," Covelli said.
"What is supposedly in there?" Spears asked.
"Parts, is what I was told," Covelli said. "Parts. Pieces. Parts."
He asked for an inventory nearly two years ago but never got one. He and other homeowners have also been denied access to look inside the shed. But they're still being asked to fund it.
"The current budget proposes $3,500 to paint the shed," Covelli said.
$3,500 to paint 350 square feet, which is more than Covelli paid to paint his entire house.
"The last time when we painted this one was $3,300," Covelli said.
Covelli believes the board is afraid he's going to run for election in order to shine a light on their spending.
Shaner made the following comment during that executive session:
"Well, we can let the homeowners know that he's... that he's the one causing a bunch of... and get the word out. He won't get re-elected. He won't get elected. That's what I don't want."
And the Community Association Manager Jason Kelly talks about a previous election when Covelli lost his bid to be on the board:
"I was just trying to think, I was like, Oh! I got the ballots. I know who voted for him. But it was a secret ballot once they, once they're separated. I can't, I can't find out."
"Well, I like to know who voted," Shaner said.
We reached out to find out why the Nevada Real Estate Division sees nothing wrong with a five-figure petty cash budget and a board president being reimbursed nearly $20,000 for gas money.
They provided the following statement:
"The CIC Ombudsman’s office reviews complaints to determine if there is a violation of either Nevada law governing HOA’s or a violation of the HOA’s governing documents. If the matter of the complaint is not addressed by either of those, the Ombudsman’s office does not have legal jurisdiction to investigate and will close the complaint.
"As to justification, it would be incumbent upon the board or their community association manager to address this question as the body that oversees the association’s finances and compliance with the law/CCR’s. If anything, this potentially reveals a gap in their own internal rules and regulations.
"Unit owners can request a special meeting to address any matter affecting the association. NRS 1163108(2) specifies that a vote of at least 10% of unit owners is required, but the association’s CCR’s might specify a lower threshold of unit owners to hold such a meeting. It should be noted, however, that the board is not required to attend a special meeting scheduled because of a petition by the unit owners. In this case, no action by the board can be taken as it is not a board meeting. Ultimately, the board itself can chose to attend the board meeting to act upon recommendations put forth by unit owners or, it may adopt rules and regulations on behalf of the association without the vote of unit owners (NRS 116.31065)."
