Home group’s board battles

But beyond the serene scene, civil war is under way in the homeowners association board. Battles are swirling around dissident director Robert Frank, a 68-year-old retired Air Force colonel.

While Frank has been demanding a detailed review of association financial records, the broader issue is the way the Real Estate Division has handled its investigation into 18 alleged legal violations by Frank.

Mike Dixon, past-president of the board, last year filed a 110-page complaint, accusing Frank of several legal violations. Frank and his attorney, Robert Maddox, say the allegations are groundless and lack merit, but they were frustrated in their attempts over the last 14 months to get the Real Estate Division to either dismiss the complaints or give him a hearing.

After the Review-Journal began looking into the issue, the Nevada Real Estate division sent a Nov. 5 letter to Frank, stating that the case was closed and warning that the matter was confidential.

Maddox said he and Frank have no obligation to keep the dismissal secret. The state was supposed to keep the investigation confidential and did not, Maddox said.

Along the way, Maddox said, the division has violated Frank’s constitutional right to “due process” under the law.

“The Division of Real Estate has totally mishandled this thing,” Maddox said. “This whole thing is so phony that we would get Bob Frank cleared if we could ever get in front of a decision-making body.”

Elisabeth Shurtleff, a spokeswoman for the division, declined comment, saying state law makes investigations into homeowners association complaints confidential.

State Sen. Mike Schneider, D-Las Vegas, said he was unhappy with the state division’s response — although the dismissal had not been disclosed at that time.

“Are they just ignoring this or what?” he said. “It just boggles my mind. I’m disappointed in the Real Estate Division.”

Schneider said he is concerned about a pattern of persistent delays by the division and division ombudsman Lindsay Waite in resolving homeowners association issues.

The Legislature wanted the ombudsman to resolve homeowners association issues before parties hire attorneys and spend thousands of dollars to fight.

“People just aren’t getting fast action from the ombudsman’s office, fast resolution of their problems,” Schneider said.

Shurtleff supplied a copy of the September report that says 529 intervention affidavits have been processed since the Ombudsman’s Conference Program was created in August 2006.

Conferences have been held in 193 cases. Of those, 92, or 47.7 percent, were resolved.

Schneider, who has pushed through homeowners association reform legislation since 1997, said he has filed a bill draft request to deal with state oversight of homeowners associations in next year’s session.

Meanwhile, Frank is grappling with governance issues in his homeowners association.

Frank says he wants to give residents in the 7,000 homes at Sun City Anthem more value for their dues. He demands an independent, detailed review of finances and often opposes the board majority on financial issues.

So far, the association director said he’s been frustrated in trying to achieve his goals and has been the target of retaliation from other board members.

Frank grew up on his grandparents’ dairy farm outside of Norman, Okla. He worked while attending Oklahoma University and joined the Air Force after graduation. He served in Saigon, now Ho Chi Minh City, in 1969 during the Vietnam War, commanding a team that supplied the Pentagon with battle-scene films and photos.

Later, he was assigned to making aircraft parts available overnight to Air Force bases in Europe during the Cold War.

The idea was to use a concept developed by Federal Express so bases could share parts for fighters and keep more planes airborne if war broke out with the Soviet Union.

The Air Force bought 18 small turboprop airplanes that could deliver parts from one Air Force facility to another overnight.

The system relied on one of the first military uses of the Internet.

During his military career, he added a master’s of business administration degree from Auburn University to his undergraduate degree in business from Oklahoma University. He graduated from the Air War College and the Air Command and Staff College.

“In my Air Force career, the number one thing I distinguished myself on was as a problem solver,” Frank said. “It was fun, but it was also rewarding. Once you give me a job, by God, I’m going to do it.”

After retiring from the Air Force, he served as chief scientist and project leader for electronic commerce at Lawrence Livermore National Laboratory and as a program director at Control Data Corp. He and his wife later moved to Sun City Anthem.

In May 2007, Frank and three others ran as a slate and won election to the association board. Dixon, one of the four people who ran, however, became one of Frank’s adversaries on the board.

Dixon declined to discuss the dispute, saying: “I don’t think it’s appropriate for me to comment, honestly.”

Because of Dixon’s allegations, though, Frank, who was serving as the board’s vice president, was stripped of his position. He remains a board director.

Frank said the board refused to let him defend himself. He said the complaints were retaliation for questioning board decisions on several financial matters, in particular his insistence on having an independent accountant conduct a detailed forensic audit of the financial records that Pulte Homes submitted when it turned the community over to the association in 2005.

For about six months, the board maintained its own financial records, he said. Then, RMI was hired and started new books without trying to review the past financial records, which were in shambles, Frank said.

Any business would insist on a forensic audit before buying another business, Frank said.

“Every homeowners association is in fact buying the business from the developer,” he said.

Bob Sansing, a former association board member, said the board has an audit yearly. But Frank said the accountant conducting the audit is Gary Lein, who previously worked for Del Webb Corp. and Pulte before the association took over the community.

Also, Frank said Lein performs a relatively cursory financial audit, not a detailed forensic audit.

Frank said former Internal Revenue Service employees fear the association may have incurred $1 million to $2 million in income tax liabilities, because the board keeps excessive amounts of surplus income from dues, somewhere between $3.7 million and $4 million.

Sansing argued that businesses commonly keep a reserve for three months of expenses. Frank disagreed, saying the surplus exceeds that sum.

Frank also complained that the board didn’t insist that Pulte pay $1.375 million owed to the association in 2005. Sansing, however, said the $1.375 million was based on an unenforceable agreement that was made by handshake without any written documentation and that couldn’t be legally enforced. Frank said Sansing was one of the directors who accepted the deal without a written agreement.

Pulte now is using most of the $1.375 million to make a new recreation center energy-efficient. Money left over, which amounts to $180,000 in cash, will be paid to the association, Sansing said. However, Frank said Pulte paid no interest on the $1.375 million over the last three years.

“I really can’t comment (on issues raised by Frank),” said Rosalyn Berman, association board president, “because it is under investigation. This is not going to be played out in the newspaper.”

Although he doesn’t know the details of policy disagreements at Sun City Anthem, Schneider said homeowner boards should require developers to turn over reserve money at the time of the changeover from developer to association.

Schneider said having an independent audit of finances at the same time “seems only logical, seems only prudent.”

Frank argues that Dixon’s other allegations also lack merit. For example, Dixon claims Frank broke a contract with the homeowners association management company “by giving work direction to RMI (management) employees,” according to papers supplied by Frank. RMI manages the community for the association.

Specifically, Dixon argues that Frank criticized management company employees’ performance. Frank, however, counters that it is normal to either praise or criticize workers for their performance.

Dixon also said there had been allegations that Frank had been “threatening other board members with public retribution and retaliation for making decisions with which he disagrees.” Frank said that was an “invalid claim” and said it “is occasionally appropriate to remind fellow directors of the potential consequences of our making poor business decisions.”

The board’s insurer hired Joseph Garin to defend Frank against the allegations, and Frank also hired Maddox as his personal attorney.

The division initially refused to give Frank a copy of the 110 pages of complaints lodged by Dixon, providing only a “vague” summary, Maddox said. Yet, the division insisted that Frank come in for mediation. Frank refused, and insisted the division provide papers detailing the allegations, he and his attorney said.

In January, Dixon told the board that an investigator planned to file a formal complaint against Frank, Maddox said.

The investigator violated legal provisions calling for confidential treatment of investigations in conveying the information to Dixon, Maddox said. The division never did file a complaint against Frank, he said.

“Bob Frank has been left in limbo,” Maddox said. “It’s a travesty the way this agency handled this whole thing. The Legislature needs to do something about this. We’ve begged and pleaded with the leader of the real estate division, and we’ve been completely ignored.”