The HOA managed a reserve fund, money collected from dues to cover major community expenses, roof repairs on common areas, repaving the entrance road, that kind of thing. The reserve fund was supposed to hold around $180,000 based on the association's own budget documents. When Randolph had asked to see a current accounting two months earlier, Delores had told him the fund was under review and provided no documentation. That was odd. I asked Beverly what it would take to compel a full financial disclosure.
She said, "Any two board members can formally request an audit under North Carolina HOA statutes. If Randolph and Patricia submit that request in writing, Delores has to comply, or the board can vote to remove her as president." I spent a Saturday afternoon at Randolph's kitchen table, his wife bringing out sweet tea that tasted like summer and sugarcane, going through what we knew and what we needed. Randolph was methodical, careful, a former bank branch manager. He understood financial records.
"She's been running this HOA like a personal fiefdom," he said, "but fiefdoms have ledgers and ledgers have lies." He and Patricia submitted the written audit request the following Monday. Delores called an emergency board meeting for that Thursday. At the meeting, which I attended as a homeowner, which is my right under the CC&Rs. She announced that the audit request was procedurally improper and subject to review.
She tabled it. She controlled the agenda, the chair, and the room temperature, all three of which she kept uncomfortably high. But the request was now in writing, officially submitted, officially tabled without resolution. And that meant, under North Carolina statute, that the homeowners themselves could escalate to the county and if necessary to the courts. We were 3 months into this fight.
The lawsuit was still grinding through motions. The audit was blocked. The survey stakes had been pulled and replaced. My wall stood, repaired and solid, the new mortar now weathering to match the old. And none of us yet knew what was actually hiding in that reserve fund.
The answer came from a plumber, not metaphorically, an actual plumber, a guy named Dusty, who did the HOA's common area maintenance work and had been sending invoices to the association for 3 years. He called Randolph in early May because his last four invoices, totaling $11,200, had gone unpaid. He'd been patient. He was done being patient. Randolph got Dusty's invoices and compared them against the HOA financial records Delores had shared with the board, the sanitized summary version she distributed at meetings.
The invoices weren't in the records. The payments, supposedly made, didn't appear in any bank documentation Dusty had received. So where had the money gone? Beverly subpoenaed the HOA's actual bank account records as part of our escalating legal action. What came back was a set of documents that Beverly described on the phone as a slow-motion train wreck.
The HOA reserve fund didn't hold $180,000. It held $23,000. Over a period of roughly 2 years, approximately $157,000 had been transferred out, not in large lump sums that would trigger obvious flags, but in steady withdrawals of $3,000 to $8,000. Most of them authorized by the account's sole signatory, Delores Hartwell. The transfers went to what was listed as management and administrative fees for a company called Cedarbrook Property Services LLC, which was not a real company.