Kansas City Business Owner Sentenced for Embezzling $750,000 from Homeowners Associations
|U.S. Attorney’s Office October 25, 2012|
KANSAS CITY, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that the owner of a Kansas City, Missouri business was sentenced in federal court today for embezzling more than $750,000 from dozens of homeowners associations.
Dale Palmer, 54, of Kansas City, Missouri, was sentenced by U.S. District Judge Nanette K. Laughrey to 46 months in federal prison without parole. The court also ordered Palmer to pay $825,937 in restitution to the victim homeowners associations and their insurers.
Palmer, who pleaded guilty to mail fraud on Feb. 21, 2012, owned and operated Home Owner Association Services (HOAS), headquartered in Kansas City, Missouri. HOAS provided property management services for building and neighborhood homeowner associations and managed operating accounts for homeowner associations. It also performed administrative tasks, such as making deposits, paying expenses, and managing reserve accounts. HOAS operated in Missouri, Kansas, Wisconsin, and Illinois, with additional offices in Overland Park, Kansas; Westchester, Illinois; and other locations.
From July 2009 to March 2011, in order to keep expanding HOAS, and later to keep HOAS solvent and pay himself a salary for 20 months after his company should have become insolvent, Palmer secretly embezzled money from his clients’ accounts and used it to pay HOAS’ expenses. Palmer closed HOAS’ Kansas City office in March 2011 and absconded with over $751,302 missing from the accounts of 32 homeowner association clients.
Palmer admitted that from July 2009 to March 2011, his business experienced serious cash flow problems. Palmer explained that he was very poor at managing money for HOAS and could not resolve his cash flow issues. Instead, he moved funds from the homeowners associations’ accounts to hide that he was paying for HOAS’ expenses. He commingled the funds of each of the homeowner associations, even though he knew it was a crime to do so.
Palmer started preparing false statements for all of the homeowner associations in July 2009 and continued to prepare the false statements until HOAS closed in March 2011. Palmer never allowed the homeowner associations to see their bank statements. By the time HOAS closed, Palmer was aware that he embezzled hundreds of thousands of dollars from HOAS’ clients.
In the months leading up to March 2011, Palmer altered account statements that HOAS provided to the homeowner associations in order to make it appear that HOAS was financially sound, when in reality, it was not. When Palmer’s company collapsed, at least 32 homeowners associations suffered losses, including Wildwood West Seventh Plat Homeowners Association, Woodglen Estates Home Association, and Gascony Condominium Owners Association in Kansas City, Missouri; Liberty Run Homeowners Association in Liberty, Missouri; Twin Lakes Homes Association, Inc., in Gladstone, Missouri; Ward Park Place Homeowners Association in Missouri; The Manor Homes of Mission Condominium Association in Mission, Kansas; The Meadow Homeowners Association of Kansas City in Kansas City, Kansas; and Metcalf 56 Homes Association, Inc., in Shawnee Mission, Kansas.
When interviewed by federal agents, Palmer attributed the downfall of HOAS and the fraud to poor management and “stupidity.” Palmer explained that he had a large ego and thought that he could expand his business to five different cities. Palmer stated that the funds that he pulled out of the bank accounts were used for HOAS’ expenses or were placed into the accounts of other homeowner associations.
This case was prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by the FBI.