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Charles River Park Condos and other high rise condos

Embezzlement in the Condo Association World

Many will remember the high profile case of Andrew Kissel, who elaborately embezzled $3.9 million while serving as the treasurer of a high-end condo association in Manhattan during the late 1990s and early 2000s. His sad story ended in a much-covered homicide. However, embezzlement in the world of condo association often takes a less sinister appearance. Just as recently as 2010, Edward M. Richards, a 55-year-old native of Brockton, MA stole over $100,000 by simply not paying bills. Eventually, other condo members realized money was missing and Richards confessed to 4 years of embezzlement in his kitchen.

Most Boston high rise condo buildings already have Fidelity Bond insurance in place, but many small condo associations in two- to four-unit buildings don’t.

If you haven’t yet added the Fidelity Bond insurance to your Boston luxury condo building association, it’s best to get in touch with your insurance agent and put that policy in place.

How to Protect Your Association

  • Always have more than one person responsible for finances
  • Require double signatures on checking accounts
  • Have a committee to reconcile expenses monthly

Implementing these practices will go a long way toward protecting your association and its members from potential loss.

Condo Fidelity Bond Coverage

Simply put, fidelity insurance protects the condo association from employee theft. The policy is normally equal to the number of funds accessible or controlled by the board. Because budgets can change annually, it is important that this coverage is reviewed at least once a year. Fidelity coverage is not automatically included in an association’s master policy, so it is imperative that the board check with their insurance provider to ensure they are properly covered.

Important Provisions

There are variations between policies but the following provisions should be considered by the association.

  • Must be an employee theft: if the person who is stealing is not being compensated for their actual role, their theft will only be covered if an endorsement has been added to the policy.
  • The loss must be related to theft: this means there must be intent on the part of the person who stole the funds. If the funds were lost due to errors or omissions, but the person did not intentionally steal them, coverage will often not apply.
  • Must be a covered item: be sure you are aware of what exactly your policy covers. It may cover cash but not other assets. It’s important to make sure you have proper coverage for your particular association