Under Nevada law, Homeowners Associations (HOA) Fraud is defined as misconduct committed by managers or officers of an HOA or common interest community. This encompasses embezzlement, bribery, kickbacks or rigged elections, all of which can lead to both civil claims and criminal prosecution.
Below is a summary of HOA-related crimes in Nevada, their penalties, and ways to fight the charges. Scroll down for more information.
Definition
Many Nevadans live in housing complexes that are “common interest communities.” Residents pay monthly dues – called “assessments or association fees” – for the maintenance of common areas such as clubhouses. Each common interest community is governed by a homeowners association (HOA) or a condominium association (COA), which oversees the budget and upkeep of the property.
HOA board members typically aren’t paid. But otherwise HOAs are like mini-governments: Board members are community residents, they’re elected, they vote on spending, and there’s a president. And like government, HOAs are frequently fraught with allegations of corruption and white-collar crimes including embezzlement, rigging elections, and bribery:
HOA crime of embezzlement
The Nevada crime of embezzlement is when people intentionally take property for themselves that was entrusted to them by someone else. In the context of HOA Fraud, embezzlement usually involves a board member funneling member dues to a personal bank account.
Example: Jean is an HOA board member in Henderson who recently lost her job. She secretly diverts some HOA funds to pay off her student loans that month. If Jean is caught, the police can book her at the Henderson Detention Center for embezzlement. Jean will probably be convicted because the HOA entrusted her with access to the money and she intentionally took the money for her own benefit.
Note that Jean wouldn’t be criminally liable if the HOA had loaned her the money and she simply forgot to pay it back. Embezzlement requires the defendant to intentionally deprive the owner of the property. Innocently neglecting to return property would not count as criminal.
The penalties for embezzling HOA funds turn on the amount stolen.
The penalties for embezzlement in Nevada depend on the value of the property or the amount of money taken. Embezzling property worth less than $250 is a misdemeanor carrying a maximum punishment of:
- $1,000 in fines and/or 6 months in jail, and
- restitution
Meanwhile embezzling property worth $250 to less than $2,500 is a category C felony carrying a maximum punishment of:
- 5 years in Nevada State Prison and maybe $10,000, and
- restitution
Finally, if the property embezzled amounts to $2,500 or higher, it’s a category B felony carrying a maximum punishment of:
- 10 years in prison and maybe $10,000, and
- restitution
Note that separate misdemeanor-level acts of embezzlement may be charged as a felony if the amount embezzled within a six-month period is $250 or more.
HOA crime of rigging elections (NRS 116.31107)
An HOA board member is a very powerful position because it carries voting power on major decisions. Consequently, people may try to rig the elections to ensure a candidate takes office who agrees with their opinions on how to spend money or which contractors to hire. But it’s a crime in Nevada to intentionally alter the true outcome of an HOA election by either:
- changing a voter’s ballot so that the ballot does not reflect the voter’s true ballot
- forging a voter’s ballot
- fraudulently casting a vote for himself or herself or for another person that the person is not authorized to cast
- rejecting, failing to count, destroying, defacing or otherwise invalidating the valid ballot of another voter
- submitting a counterfeit ballot
Fraudulently interfering with HOA elections is a category D felony carrying a maximum penalty of 4 years in prison and maybe $5,000 in fines.
Note that HOA election fraud may also comprise forgery, which is the fraudulent falsifying of documents. Depending on the case, forgery can be a category C felony carrying up to 5 years in prison and maybe a $10,000 fine plus restitution. (NRS 205.090)
Also, note that defendants who use mail or electronic communications to help carry out HOA voting fraud in Nevada may face additional charges for mail fraud and wire fraud. They both carry a sentence of up to twenty (20) years in federal prison, a fine, or both.
The most common defense to HOA fraud charges is that the defendant lacked intent to defraud.
HOA crimes of kickbacks and steering contracts
Recently Las Vegas Review-Journal headlines have been filled with court cases involving HOA members allegedly receiving “kickbacks” for “steering contracts” to certain companies.
Example: Tony is on the HOA Board of Spanish Trails, which is in the midst of deciding which company to hire for major renovations. Tony’s brother is a contractor, who consistently receives bad reviews and is overpriced. Tony “steers” the other board members to hire him anyway. Once the brother receives the contract, he gives Tony a ten percent “kickback” of the payment.
Tony’s action of accepting the kickback for steering the contract may qualify as the Nevada crime of HOA bribery. Under NRS 116.31189 it’s illegal to bribe an HOA member . . . or for an HOA member to solicit a bribe . . . in exchange for using his/her authority in a certain way.
HOA bribery is a category D felony carrying up to four years in prison and maybe $5,000 in fines.
Defenses
The primary defense to nearly all HOA fraud-related criminal charges in Nevada is that the defendant had no intent to defraud. In other words, a defendant may not be found guilty of HOA fraud unless the court finds that he/she meant to act dishonestly.
Therefore if the defense attorney can show that the defendant’s actions were the result of an honest misunderstanding, misinformation, accident or clerical error, then criminal charges should not stand. It’s not uncommon for HOA members to make an innocent mistake while dealing with complex financial issues outside their expertise.
The other primary defense to any criminal case is that the prosecution failed to prove the defendant’s guilt beyond a reasonable doubt. As long as the defense attorney can demonstrate that the government lacks sufficient evidence to sustain a guilty verdict, then the defendant should not be held criminally liable.
Call our law firm for legal advice. Our Las Vegas fraud lawyers offer consultations.
If you’ve been arrested for “HOA Fraud” in Nevada, contact our Las Vegas criminal defense attorneys to discuss your case. It may be possible to negotiate the charges down to reduced offenses or even a full dismissal so your record stays clean.
In California? See our article on California HOA Fraud Laws.