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Title: - Fraud Can Happen at Any Time

The Spilled Milk:

But, the president was not letting go of the transaction. We quickly came to realize that we had not interacted with anyone else from the association. Even the association’s attorney was not available to us. The attorney never responded to any e-mails or returned any calls. It was always the president that responded.

Two steps occurred that were the last straw which coalesced our suspicion. The first was that a Board Resolution document we had constructed to be executed by each board member did not come back to us as provided. The document we provided had all the Board members signing. This is valuable because each other Board member can see that all were engaged in affirming the same Resolutions. The executed Resolution came back to us broken into 5 separate documents that only one Board member was set up to sign on. We required a notary certification on every document with that certification stating that evidence of identity was reviewed by the Notary. The Notary certification was manipulated. It did not say that evidence of identity was reviewed. The certification language did not refer to the person that was signing. The certification was on a separate page from the Resolution and the Board member that was signing. In essence, the page that held the notary Certification had no connectivity to the other parts of the document and the signer of that document. The second item that was a last straw in raising suspicion was the setting up of deposit accounts. The association was to move its operating and reserve accounts to the bank prior to closing. The president provided us two $100 checks as starting funds to set up the accounts. The checks were drawn on his law firm’s account. Not his client’s fund trust account. Not from the association’s accounts. Highly inappropriate!

At this point, our attorney notified the association’s president that neither he nor the bank would interact with him any further. We would only interact with the association’s Board collectively and the Association’s attorney with the full Board copied on all communications. I tracked down the contact information of the other Board members. It had never been provided to us with the loan application which is a standard protocol for one of our loan applications. We had broken 2 of our normal protocols with this loan transaction. We normally have the full list of Board members with all their contact information with the loan application and we send them a letter expressing thanks for the loan application. We also have 2 parties as part of all communications with an association loan application. The list of problems such a minor step has cured and preempted immediately could be a subject for a 4 hour lecture.

With letting the president know that we would no longer interact with him exclusively and by notifying by letter the Board members about the status of the loan closing process, the loan closing stopped. I received a short cryptic note from the on-site manager indicating that the loan amount was under review by the association Board and that they were not going to pursue a loan at this time. We do not know what has happened with this transaction. But, something was clearly very wrong.


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