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Could HOA corruption happen here asks one Sun City blogger. If I were to paraphrase this blogger, the thought that there might be evidence of corruption in Sun City Anthem is ridiculous. This person goes on to suggest that we are fortunate to have an excellent system of checks and balances and we need only to remain vigilant. But, really, is that true? 

We are told that most everything takes place in open meetings. While true, isn’t the real danger the failure to disclose what happens behind closed doors on matters where there is no legal requirement to keep specific things confidential. Most might agree that the effort to keep what should be certain financial records of the association from public view a possible sign of corruption. A good example is Roz Berman’s and Jack Troia’s unwillingness to share the tightly held secret of why and how an established key metric for establishing Villa Neighborhood transition reserves was abruptly lowered at the board’s direction from 5,715 sf. to 3,865 sf. And while you are thinking about that, just where are the records that support the board’s decision? Incredibly, I'm led to believe there are no such records. The absence of any record documenting that crucial change could be considered another sign that corruption lies at the root cause of the board's decision-making process on this financial matter. 

Is it ever proper to withhold information that purports to accurately reflect the financial status of the association? I do not believe so but that’s exactly what’s been happening since 2007 insofar as Villa Neighborhood reserves are concerned. In fact, the problem is much more serious than the failure to disclose. It goes to whether our board officers have the authority to fabricate association financial data in pursuit of a political agenda that was specifically directed against the financial interests of the Villa owners to have an impartial accounting of the reserves due at the time of transition. 

Common sense tells me that the board does not have the authority to willfully fabricate financial data. While the wall of secrecy surrounding this issue is high, that fact should tell any inquirer that the stakes in maintaining such secrecy are indeed high. I believe it is possible that even the association’s legal counsel has been recruited to keep the state’s investigator at bay from learning what really happened. Is thwarting accountability in the name of protecting those who doctor financial records really the business of the association's legal counsel?

What are the facts? 

The facts surround the issue of needed Villa Neighborhood reserves at the time of change from developer control to homeowner control, or May 31, 2005. While seemingly ancient history, the 2008 board actually fabricated key reserve data for that transition period. The decision to falsify such records then continues in the most recent reserve records of the association and will of necessity corrupt the outcomes of the upcoming 2012 Reserve Study to be conducted under the auspices of President Jim Long. President Long will have a unique opportunity to either correct or support the fraudulent actions that were taken in 2008 that doctored key financial reserve data. 

A brief chronology of key events should help to put these reserve matters in perspective. Under Nevada law, the developer is required to conduct a reserve study at the time of transition. The purpose of the reserve study is to ascertain the developer’s financial obligations to the association and to deliver “a reserve account that contains the declarant’s share of the amounts then due.” Those amounts that are due from the developer are set forth in the transition reserve study.

In the table below, “RS” refers to “Reserve Study” and the “Villa size (sf.)” column refers to the RS reported size of one Villa building in square feet. The size of a Villa building was a key factor in determining the level of fully-funded reserves and the developer's obligations to the Villa owners. An almost 2,000 sf. reduction in the size of a Villa building that was ordered by the Dixon-Berman board can be expected to have a significant impact in lowering the level of transition reserves that are due from the developer.



Date of Event

Event or the Name of the Reserve Specialist

Villa size (sf.)


The 2001 RS

Diversified Facility Services (DFS)



Transition year RS 2005

That RS was rejected by agreement of the board & developer as inadequate



The 2006 RS




April 2007

Favil West negotiates a Neighborhoods Settlement Agreement with Pulte amounting to $270,000 in cash and hardscape for Villa reserves, using as a basis the 2006 RS, and stipulating that any future Villa Neighborhood claims on reserve monies owed shall be borne by the association.  



July 20, 2007

In a presentation to Villa owners and others Roz Berman creates a series of tables one of which,on Developer Transition, attempted to demonstrate that Villa owners were owed nothing more than the additional amounts collected from Pulte pursuant to Favil West settlement agreement. Unfortunately, Roz was unwilling to provide any documentation to support what amounted to her unsupported claims. That failed effort led the board's officers to a decision to order the “Look-Back” RS.



In late 2007, the board orders DFS to produce the so called 2005 “Look-Back” RS

The board directs DFS to change a key Villa metric from 5715 to 3865 but refuses to disclose why the change was made or to produce any data to support the change. That change resulted in lowering the amount of needed transition reserves to a level that just happened to demonstrate that no additional reserves were owed.



Apr. 24, 2008

Board accepts results of the “Look-Back” RS



The 2008 RS




The 2010 RS

Association Reserve Consultants



The 2012 RS

To be determined


  • Subsequent to the “Look-Back” RS, the size of a Villa building gets variously reported for some Neighborhoods as either “3,865” or “3,685” sf., reflecting a transposition error by the reserve specialist of the “86” in “3,865” to “68” in “3,685.”

Technically, there was no such thing as a "Look-Back" RS. It never existed in the field of reserve studies before SCA ordered DFS to produce one. A RS is intended to reflect current economic conditions for the purpose of projecting future reserve requirements. That reality did not deter the board or DFS from going back three years to 2005 for essentially one overriding purpose. That purpose was to deceive Villa owners by any means necessary into believing that the 2007 Settlement Agreement had met the developer's transition reserves obligations.

If letting a contract for an unnecessary so called "Look-Back" reserve study and doctoring the study's database and output for Villa reserves was called for to achieve their duplicitous purpose, key board officers thought that such an expenditure of association monies was justified. So, why then did the 2007 board order both the Neighborhood studies and the larger more costly association study? It would have been too obvious if the RS order was limited to the targeted Neighborhoods. While the 2006 RS was quite acceptable as a vehicle for negotiating with Pulte in the spring of 2007, that study somehow lost its negotiating appeal to the Dixon-Berman board. Why was that? Only by producing a doctored "Look-Back" RS would the then newly elected board be able to successfully eliminate the association's potential liability to the Villa owners that had been so well displayed by the 2006 RS.

The Fix Was In as Announced by Jack Troia in January 2008

At the January 2008 meeting of the RS task force headed by Jack Troia, he announced that the size of the Villa building was changed by the board from 5,715 sf. to 3,865 sf. and that there will be no further discussion on the matter and no questions about the change will be accepted. Needless to say, the Villa representatives on the task force did not contribute to that decision. Using the Task Force minutes, a circuitous attempt most likely by Roz Berman to give some credibility to the square footage reduction to 3,865 sf. that had implicated RMI’s Bruno Panek as the source of the change could not be substantiated.

How to Make a Million Dollar Shortfall Vanish

That the 2007-08 board had a huge problem with Villa transition reserves was evident by the results of the 2006 RS. Admittedly, that study was for the 12-month period following the 2005 transition year. The reported magnitude of the shortfall in Villa reserves was substantial, $1.3 million, for the period prior to the developer's payment under the 2007 Settlement Agreement. That Agreement, however, chopped off less than $300,000 of that shortfall, leaving an amount potentially owed of about $1,000,000, relying on the data from the 2006 RS. At least that was what DFS was telling the board in 2006. Clearly, some additional amount was owed that was more than what the developer had deposited at the time of transition in 2005, roughly $200,000, and was more than what the developer had agreed to pay in 2007, about $270,000, or just under a total of $500,000 for Villa reserves. To view a graph, data and calculations supporting that million dollar shortfall, Click here.

Clearly the 2006 RS demonstrated that something more was owed the Villa Neighborhood reserve accounts, but unanswered was how much more was owed at the time of transition. For example, did Pulte’s subsequent agreement in 2007 make the Villa Neighborhoods whole in terms of fully-funded transition reserves, as the 2007-08 board would later claim? To go from a potential shortfall in reserves of over $1,000,000 in 2006 to no shortfall whatsoever based on the 2005 "Look-Back" RS conducted in 2008 requires either a suspension of reality or someone that was essentially willing to cook the books to make that 2008 result come true. When the board’s July ’07 presentation of phoney and unverifiable reserve figures failed to convince Villa owners that no such shortfall existed, the board then chose a decidedly more devious path to accomplish their objectives.

Faced with a potential liability that was based on the one-sided terms of the Settlement Agreement, how did the 2007-08 board respond? For directors with a fiduciary responsibility, one might assume their first and only duty under the terms of the Agreement was to sit down and negotiate in good faith with representatives of the four Villa Neighborhoods. After all, the Villa owners had just been hit with an increase in CY 2007 in their special Villa assessments amounting to a total of $81,000, or an additional $500 per unit owner above the $1,500 they were paying in CY 2006. Future increases in Villa assessments were also planned by the Finance Committee, ironically to address the well known shortfall in Villa reserves. However, that "sit down" negotiating option was not viewed favorably by key board officers of the 2007-08 board.

Not wishing to recognize any potential liability to the Villa homeowners, let alone to returning the 2007 assessment increase, the board’s key officers Berman and Dixon first decided wow the Villa owners with lots of data in their July 2007 presentation. In that presentation, Roz Berman's well craftedtable purported to show the level of fully-funded reserves at the time of transition. On its face, that table demonstrate that no additional reserves were owed. Rather than satisfying the Villa owners, the Berman presentation was recognized by some for what it was, an unverifiable sham with unfounded claims about the level of fully-funded transition reserves.

When the Dixon-Berman board failed to come forward with any evidence to support their outrageous reserve claims, they soon began working on a much more devious plan, a plan I call Plan B. Plan B would raise questions of possible criminality since it involved the deliberate fabrication of association financial documents for the purpose of thwarting a fair accounting of transition reserves as provided by the terms of the Settlement Agreement. Unable to convince the Villa owners that nothing more in transition reserves was due, Plan B was soon in development.  

Sadly, Plan B entailed the fabrication of actual financial records of the association, four of the six reserve studies periodically ordered by the board from a Reserve Specialist. Compared to the "Developer Transition" table in the July '07 handout that purported to demonstrate that no additional reserve monies were owed, we now have the board engaged in doctoring official financial records of the association to accomplish what they were unable to accomplish in Berman's July presentation. While the initial act of creating a table with data to demonstrate an unsupported falsehood might be viewed as an error in judgment, the deliberate falsification of association financial records was a much more serious and deceitful act, one unexpected from those who would otherwise like to command our respect and trust.

Such fabricated data for the “Look-Back” RS would greatly impact the level of transition reserves due Villa owners. If Roz Berman and Jack Troia had done their homework, the “Look-Back” RS would yield a result that was favorable to the board’s undisclosed intentions, one that would establish that no additional reserve monies were owed to the Villa reserve accounts. Unless i did not understand what the board was up to, did not the willful falsification of Villa reserves financial data constitute an outright fraud on the Villa homeowners? Moreover, it's impossible to envisage that such fraudulent acts fell within the scope of allowable acts under the business judgment rule.  

As anticipated, Jack Troia's April 2008 report to the board on the results of the 2005 Look-Back RS disclosed that for each Villa Neighborhood the level of reserves as of May 31, 2005 was "overfunded"after taking into account the value of the 2007 Settlement Agreement. In stark contrast to a fully-funded level of $1.4 million based on the reported results of the 2006 RS, along with a million dollar shortfall, Jack Troia reported that the fully-funded level was actually $385,000 and the fund had no shortfall at all and was actually overfunded. That result left an unaccounted for million dollar discrepancy between what DFS had reported in 2006 and what DFS had reported in 2008 for the transition year 2005. The substantial reserves shortfall that had been depicted by the 2006 RS had simply vanished in the 2008 produced RS. One should not forget that those reserves simply vanished as a result of the board's fraudulent manipulation in 2007 of key financial reserve documents. In the end, the board was able to successfully demonstrate that the level of “fully-funded” Villa reserves required from the developer at transition was so far down that no reserves shortfall existed.

Looking at Jack Troia’s Neighborhoods Report on Villa reserves for 2005, there is no hint of the machinations that were required to achieve the board's fabricated result. When key board officers set out to defraud one group of homeowners by fabricating financial data, does the phrase “we are very fortunate to have an excellent system of checks and balances” really have any meaning insofar as Sun City Anthem governance is concerned?  Based on the wrongful acts deliberately committed by our board members, I don’t think so.

An Opportunity to Set Matters Straight 

The unanswered question is whether the current board will choose to continue or reject the decidedly wrongful practices that were initially adopted by the Mike Dixon and Roz Berman board and subsequent boards that had a vested stake in the same fraudulent outcomes. I would hope that the challenge and opportunity for our newly elected board to set matters straight will not elude them nor prove too burdensome for them to achieve. That opportunity will be facing the board soon with the upcoming 2012 RS on the horizon.


Ron Johnson 18 September 2011