Protecting Your Community: What HOA Boards Need to Know About Embezzlement

When residents contribute monthly dues, they trust their HOA to manage those funds responsibly. Unfortunately, internal embezzlement in homeowners associations (HOAs) is on the rise—and the damage it causes goes far beyond the financial.

From depleted reserves to shattered community trust, the consequences of financial misconduct can linger for years. For HOA board members and property managers, knowing the warning signs—and taking steps to prevent fraud—can protect your community and its long-term stability.

A Disturbing Trend: Recent Cases of HOA Embezzlement

In recent years, several high-profile cases involving HOA communities across the U.S. have demonstrated the potential severity of internal theft. These cases include:

• Burlingame Ranch I Condominiums (Aspen, Colorado): Elizabeth Stewart, who served as bookkeeper for the 84-unit community, confessed to embezzling $183,000 of HOA funds between 2023 and 2024. Fortunately, the HOA board negotiated a deal with Stewart, and she agreed to reimburse the community with a cashier’s check for just over $200,000.
• Cedarbend HOA (Utah): In early 2025, Blake Cozzens, owner of Stress Free Management Company, was arrested on 10 felony counts after investigators uncovered up to $1.9 million in misappropriated HOA funds. Cozzens allegedly moved funds into personal accounts while serving as property manager during the HOA’s developer phase—without board oversight or co-signers on the accounts. The case highlights the risks HOAs face during transition periods and the importance of transparency in banking access.
• Hammocks Community Association (Miami, Florida): In 2022, multiple current and former board members were charged with embezzling more than $2 million.The scheme involved issuing payments to companies for services not rendered, with funds laundered back to the perpetrators.
• Traditions HOA (Aurora, Colorado): Kim Bacon, owner of the community’s property management firm, diverted nearly $700,000 in HOA funds for personal expenses, including the purchase of a high-end vehicle and luxury goods. A judge ordered Bacon and her company to pay over $2 million in restitution to the community.

These cases reveal a troubling pattern: when checks and balances are weak or nonexistent, it becomes easier for individuals in positions of trust to take advantage.

What Should You Do If You Suspect Embezzlement?

If you suspect that your community’s funds are being misused, it’s critical to act promptly and with discretion. Here are some key steps to take:

• Gather and Review Documentation: Collect financial reports, bank statements, invoices, and meeting minutes that may help identify inconsistencies.
• Limit Access Immediately: Secure financial systems, change passwords, and restrict access to accounts to prevent further losses.
• Notify Other Board Members: Bring your concerns to a majority of the board in a confidential manner.
• Engage a Forensic Accountant: Professionals can help identify irregularities and provide evidence for potential legal action.
• Notify Your Insurance Carrier: Most HOA insurance policies include fidelity bond coverage and Directors & Officers (D&O) insurance. If the investigation supports a good faith belief that funds were misappropriated, you may have a duty to notify the insurer. Know that many policies require notice within 30–60 days of discovery of a loss. To avoid denial of coverage, HOAs should notify their insurer as soon as a loss is reasonably suspected—not just when it’s confirmed. Most fidelity insurance policies define “discovery of loss” as the point at which a reasonable person would suspect that a loss may have occurred, even if the details are not yet known.
• Contact Legal Counsel: Depending on the severity, criminal charges or civil lawsuits may be necessary. Options for legal recourse may include breach of fiduciary duty claims, derivative actions on behalf of the HOA, and criminal complaint filed with law enforcement.

Preventing Embezzlement: Financial Safeguards Every HOA Should Implement

While cases like those mentioned above may be alarming for all residents of HOA communities, the good news is that embezzlement is preventable with the right systems and support in place. One of the first steps is to create barriers to opportunity for fraud, such as by doing the following:

• Require two signatures on checks from reserve accounts
• Require dual approval on checks exceeding a specific threshold (e.g., $5,000)
• Adopt a board Code of Conduct or Ethics Policy that reinforces fiduciary duty
• Engage an independent accounting firm to prepare or review financials monthly
• Schedule periodic audits every 1–3 years to ensure compliance and detect red flags

At Clear View HOA Financial, we implement a variety of measures to help boards minimize the risk of financial misconduct, including:

• Separation of Duties: We use a team-based accounting approach, ensuring that no single individual has end-to-end control of financial transactions.
• Monthly Financial Reviews: Each client’s books are reviewed by a dedicated account manager and a second analyst for accuracy, transparency, and early detection of inconsistencies.
• Secure Technology: With 24/7 access to your financial records via a secure online portal, board members can monitor transactions in real time—thereby enhancing oversight and accountability.
• Annual Audit Coordination: We simplify audit preparation with organized financial records and CPA-ready reporting, helping your HOA stay compliant and confident.
• Fidelity Insurance: Clear View is insured up to $1,000,000 and hosts data in SSAE-16 certified facilities, providing another layer of financial protection.

With over 30 years of experience, Clear View HOA Financial is more than a bookkeeping firm—we’re a trusted partner dedicated to the long-term financial health of your community. Founded in Telluride, Colorado and serving destination markets across the state and beyond, we understand the unique needs of HOA boards and self-managed associations. Our clients receive personalized service, transparent reporting, and proactive support that helps prevent problems before they start.

If You Suspect Fraud—Or Want to Prevent It—We’re Here to Help

Financial misconduct has no place in your community. Whether you need help cleaning up your books, strengthening internal controls, or simply ensuring that you’re on the right path, Clear View HOA Financial is ready to support your board with expert guidance and reliable service. Contact us today to request a quote or get in touch with our team!