Owners of a now-defunct Phoenix property management company are accused of conspiracy to commit money laundering in an indictment released on Tuesday.
The company, EPMI, Inc, formerly known as Eagle Property Management, represented about 40 homeowners associations across the Valley.
Named in the indictment are Harlow White, his wife Nancy, their daughters Rachel Ellerbrock and Kelsey Powell and her husband, Michael Powell.
According to the indictment, the company had full access to client bank accounts. Prosecutors accuse them of making $1.3 million dollars in unauthorized transfers from HOA client bank accounts to pay for "credit card payments, personal insurance, and other personal expenses. They're also accused of falsifying documents to "conceal the theft" from 2010 through 2014.
Condominium Associations Edge at Grayhawk and Mission de los Arroyos in Scottsdale HOAsued the company after audits of their finances.
Attorney Augustus Shaw represented Mission de los Arroyos and says, "we hired an auditor to go through all of their books talk to the bank receipts, things of that nature and the auditor did find that the association was missing a substantial amount of money."
Mission was awarded a nearly $75,000 judgment in 2015. Shaw says they haven't received payment. Edge also received a judgment of nearly $530,000. EPMI shutdown after filing bankruptcy in 2014.
Shaw says to deter fraud it's important for HOA boards of directors--particularly treasurers--to keep a close eye on the association's finances.
"The job of a treasurer is to ensure that the financial viability of the association remains intact," he says. "The treasurer can't simply rely on the management company, the treasurer has to go to the bank every quarter and look at financial statements."
Ellerbrock, and the Powells each plead guilty to one count of conspiracy to commit transactional money laundering according to court documents. They are awaiting sentencing and face up to $250,000 fine and 5 years in prison.
The Whites will be arraigned on October 11.
