Homeowner Assn. Claims $260,000 Taken From Fund : Investigation: Residents of a gated Orange community allege that a property management firm misappropriated fees. Law enforcement officials have not determined if there was any wrongdoing.

Authorities are investigating allegations that an Irvine-based property management company misappropriated hundreds of thousands of dollars in reserve funds from a homeowner association in Orange.

The Rocking Horse Ridge Homeowners Assn., representing a 286-home gated community, filed a report with police June 23, after $260,000 was discovered missing from the association’s reserve account, which is managed by the Balboa Management Co. in Irvine, said Irvine police investigator Mark Hoffman. Irvine police and the Orange County Sheriff’s Department are jointly conducting the investigation. According to Hoffman, between five and 40 other homeowner groups may have been affected. He declined to name the others.

Police have not yet determined if there was any wrongdoing by the company or any of its employees, said Hoffman, who described the investigation as “preliminary.”

Sheriff’s Department spokesman Lt. Richard Olson said the company is “is cooperating fully with investigators.”

The association has turned over records of canceled checks, bank statements and bank signature cards to the police.

Rocking Horse Ridge homeowners pay about $125 a month in association fees to Balboa Management. The money is used for security, landscaping and pool maintenance, and some went into a reserve account to pay for major repairs and improvements in the neighborhood.

According to a July report from a special Rocking Horse homeowner association audit and accounting committee, “financial irregularities” were evident dating “well back into 1989.” The most notable irregularity was $60,000 from September, 1989, according to the report. The committee also reported that no audit had been done in 1989 on association accounts.

“Current known discrepancies represent a loss to the association of $260,000,” the committee report concluded.

Balboa Management Co. owner Dennis Sellers said the association’s allegations “bother us greatly,” but referred all further questions to the company’s attorney, Victor Sherman. Sherman refused to comment.

Members of the Rocking Horse Ridge board of directors also declined to comment on the investigation, saying they were instructed by their attorney to keep silent.

Many Rocking Horse Ridge residents are irate that the board did not order an audit earlier, and that the money apparently was not insured by a fiduciary bond.

“The board was elected and is responsible for the way the association is run,” said Mike Nash, a homeowner in Rocking Horse Ridge. “It’s very difficult to check on what’s happening to your money.

“We just want our money back,” he said.