Property Manager Accused of Embezzling : Crime: Investigators say Jim Fitzgerald took $340,000 from two homeowner associations in Orange County by opening a sham account and creating phony invoices.
The dancers at Captain Cream, a topless club in a Lake Forest shopping center, knew Jim Fitzgerald as a big spender. He could be seen at the club several days a week, dropping as much as $500 in a few hours on tips and drinks.
But that cash may have been the dues money of hundreds of Laguna Niguel homeowners, for whom Fitzgerald worked as the property manager of two homeowner associations, law enforcement investigators say.
Fitzgerald, who was arrested in the parking lot of Captain Cream’s in June, is in jail awaiting a preliminary hearing on charges that he embezzled about $340,000 in homeowner association funds while he was vice president of Seabreeze Management Co.
Fitzgerald, 45, says he is innocent and broke. He is represented by a public defender.
But sheriff’s investigator Donald Lambert says Fitzgerald stole the money and then spent the bulk of it on “wine, women and song.”
Since November, 1991, Fitzgerald had been funneling money out of the bank accounts of Camden Court Homeowners Assn., representing 188 townhomes, and the Niguel Ranch Homeowners Assn., which maintains slopes and greenbelts for a 1,200-unit community, according to sheriff’s investigators.
He is suspected of forging the names of association directors on bank signature cards he placed on file with the Bank of Newport, where the associations kept their reserve accounts. Then, unbeknown to the associations, he created bank accounts in their names at the Bank of Yorba Linda, according to court documents.
Fitzgerald transferred funds from the Bank of Newport to the Bank of Yorba Linda, where he put his own name on the signature cards so he could sign on the accounts and withdraw money for his personal use, including paying off credit cards, the district attorney alleges.
But nobody, including the auditor in his annual review, discovered anything was amiss until May 10, when Lisa Dale, the owner of Seabreeze, went to the Laguna Niguel branch of the Bank of Newport to apply for a car loan and noticed a $4,000 cashier’s check on the desk of the business accounts officer that was made out to the Camden Court Homeowners Assn.
She became suspicious when she was told that Fitzgerald had requested the check to pay vendors, especially because Fitzgerald was not assigned to handle the bank account and vendors were paid from other funds.
Anxious to get to the bottom of this, Dale said, she began reviewing the association’s financial records.
“Four employees and I took files to my house and did a review of the books, and indeed we saw several like transactions,” she said. “It was apparent that there indeed was a problem.
“At 1 a.m. I felt that I had irrefutable evidence a crime was committed and called the Orange County sheriff.”
The next day, Dale met with sheriff’s investigator Lambert.
“It was a stroke of luck the way she found out about it,” Lambert said. “But I think sooner or later, the auditor would have found out about it.”
One reason no one noticed that funds were missing, Lambert said, was that Fitzgerald had created phony invoices to look as if the money was used for valid expenditures.
Fitzgerald’s arrest has stung many who knew him.
“I felt like I was raped,” said Lester Garb, president of the Niguel Ranch Homeowners Assn.
Garb described Fitzgerald as having a “nice, jovial, ingratiating personality.”
The district attorney and others say, however, that the Laguna Niguel incident illustrates that homeowner associations and the management firms they hire are vulnerable.
Homeowner associations are governed by boards of directors elected from among the residents. Because the directors often have other full-time jobs and little management experience, they hire professional managers to help them.
Large sums of money are handled daily by this young and fast-growing form of local governance, which has responsibility nationwide for $5 billion stashed in reserve accounts for long-range expenses such as roofing, painting and emergency repairs, according to the Community Associations Institute.
“Because associations are a new concept and many people operating them have little or no business experience, they are an easy target for professional con artists,” said Paul Christiansen, a Laguna Niguel real estate broker.
Fitzgerald declined to be interviewed about the charges.
Investigator Lambert said only $1,000 was in Fitzgerald’s bank accounts when he was arrested. He “didn’t drive fancy cars, and he lived in an apartment in Aliso Viejo,” Niguel Ranch Assn. President Garb said.
But Lambert said Fitzgerald, the divorced father of a teen-age boy, had been on expensive yachting trips in the Caribbean and had spent lavishly on the dancers at Captain Cream.
“He would spend $200 to $500 a day on tips and drinks for them,” he said. “According to the girls, he liked to play like the big spender.”
If Fitzgerald is convicted, he could go to prison for up to 10 years.
Dale has promised to reimburse both homeowner associations for their loss, in part by using a $250,000 fidelity bond posted by her firm.
She said she is not convinced that all the missing money was spent and has hired a private investigator to look for it. She said the investigator will check into the possibility that stolen money was transferred out of state.
“I am trying to make a statement through the court system by getting as long a prison sentence as possible for Jim Fitzgerald, (one) that will discourage property managers anywhere from thinking this kind of crime pays,” Dale said.