Insurance Fraud! We All Pay the Price

 Last year the co-owners of a Chicago realty company that managed dozens of  condominium properties were charged with fraud for stealing more than $2  million in assessment payments between 2005 and 2008. They trio covered up  their fraud by creating false monthly financial reports for the accounts of  each property managed and used the money to pay off personal debt they had on a  real estate project.  

 Fraud and embezzlement in the workplace is on the rise. The Association of Fraud  Examiners (ACFE) estimates business losses of $400 billion per year—or about 6% of total annual revenue.  

 Sadly, when fraud is discovered in the context of community associations, or any  nonprofit, it usually takes shape as embezzlement over many years by a trusted  member or employee. Insurance companies that defend nonprofit clients from  fraud can be victimized themselves.  

 “Fraud happens quite a bit in condo associations,” says Marshall N. Dickler, a principal of Dickler Kahn Slowikoski & Zavell Ltd., in Arlington Heights. “The truth of the matter is that it’s everywhere. People are tempted and they’re human and sometimes there’s no rhyme or reason to it. There have been a number of property managers who  have actually gone to jail in Illinois the past couple of years. In most of  these cases, rogue property managers took thousands of dollars from association  accounts. An association we represent, the accountant actually came to us and  showed the books to us, and we went to the management company and insisted that  they refund the money and they did. They paid the money back, but the  management company ended up doing it again, but the second time they did it,  they folded and disappeared.”  

 On the other hand, notes Joel Davis, regional marketing director for Community  Association Underwriters in Hoffman Estates, community associations have been  known to perpetuate fraud.  


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