Business Owner Sentenced for Embezzling from Homeowners Associations

OCT 29, 2012 11:51am ET

 The owner of a Kansas City, Mo.-based business was sentenced to 46 months in prison without parole for embezzling more than $750,000 from dozens of homeowners associations.

Dale Palmer owned and operated Home Owner Association Services, which provided property management services for building and neighborhood homeowner associations. The business also performed administrative tasks, such as making deposits, paying expenses and managing reserve accounts for HOAs.

From July 2009 to March 2011, the U.S. attorney’s office for the Western District of Missouri said Palmer secretly embezzled money from his clients’ accounts to pay HOAS’ expenses in order to keep expanding the business and to pay for the defendants’ salary for 20 months after his company should have become insolvent.

Palmer closed HOAS in March 2011 and fled with over $751,000 missing from the accounts of 32 homeowner association clients.

HOAS operated in Missouri, Kansas, Wisconsin, and Illinois, with additional offices in Overland Park, Kansas, Westchester, Ill. and other locations.

In court, Palmer admitted that HOAS experienced serious cash flow problems and was “very poor” at managing his cash flow issue. To perform the scam, he moved funds from the homeowners associations' accounts to hide that he was paying for HOAS' expenses.

Palmer began preparing false statements for all of his homeowner association clients in July 2009 until the business closed, court documents said. Also, he never allowed the homeowner associations to see their bank statements and by the time HOAS closed, Palmer knew that he embezzled hundreds of thousands of dollars from his clients.

In the months leading up to HOAS’ closure, Palmer altered account statements that he provided to the homeowner associations in order to make it appear that HOAS was financially sound, when in reality, it was not.

The defendant told federal agents that the fraudulent scam and the eventual downfall of HOAS happened due to poor management and “stupidity.” Palmer explained that he had a large ego and thought that he could expand his business to five different cities. Palmer stated that the funds that he pulled out of the bank accounts were used for HOAS' expenses or were placed into the accounts of other homeowner associations.

When Palmer's company collapsed, at least 32 homeowners associations suffered losses, including Wildwood West Seventh Plat Homeowners Association, Woodglen Estates Home Association, and Gascony Condominium Owners Association in Kansas City, Mo.; Liberty Run Homeowners Association in Liberty, Mo; Twin Lakes Homes Association, Inc., in Gladstone, Mo; Ward Park Place Homeowners Association in Mo; The Manor Homes of Mission Condominium Association in Mission, Kansas; The Meadow Homeowners Association of Kansas City in Kansas City, Kansas; and Metcalf 56 Homes Association, Inc., in Shawnee Mission, Kansas.

Federal court ordered Palmer to pay approximately $826,000 in restitution to the victim homeowners associations and their insurers.