Questions Raised RE: Marina Hills Audited Financials/Property Management Company Behavior

Questions Raised RE: Marina Hills Audited Financials/Property Management Company Behavior

Marina Hills and Coto de Caza use same property management company.

April 27, 2007

Hans Strupat, a dissident member of the Marina Hills homeowners association (MHPCA) board of directors has raised questions about the audited financials prepared by independent auditor Robert A. Owens.

In a letter to Mr. Owens published in the SaveMarinaHills.org website, Mr. Strupat writes: " ....often, I am the only director who does not immediately and completely understand the matter to be decided upon. In fact, I am the only board member who has not yet approved your report. Before I can approve your report I need to understand it". Mr. Strupat then outlines a number of questions including questions raised because of the differences in accounting methods used by the the MHPCA and Mr. Ownes, making it nearly impossible to verify whether the audit report is acceptable or not.

Mr. Strupat also outlines issues with the MHPCA property management company, Keystone Pacific as follows:

" I also want to make you aware of the following facts, that you, as auditor, might be interested in. In August 2002 the MHPCA and the management company Keystone Pacific entered into an agreement, that among other things contractually specified the monthly compensation, along with a calculated yearly increase of that compensation, specifically an increase tied to a particular edition of the CPI as reported by the US Department of Labor.

In 2004, and 2005 Keystone side-stepped the agreed-upon compensation and presented the directors with a compensation plan over and above the compensation agreed in the 2002 contract. The then-directors violated the 2002 negotiated compensation plan and paid Keystone more than the CPI would have warranted. On top of that Keystone accidentally increased their own compensation during 2004 and 2005 even higher than the 5% the then-directors had (in violation of the 2002 contract) conceded, and certainly much higher than the 2.6% CPI increase would have warranted. Both these facts were discovered in the October/November 2006 timeframe. As a result, and after some considerable discussion, Keystone returned $3,472.00 excess fees for the 2004, 2005 accidental overcharge. This was reflected in a lower December 2006 management fee. However, as of this date Keystone has not yet agreed to lower the monthly compensation to the level that was negotiated in the 2002 contract, thus every month Keystone takes more money from the MHPCA than was agreed upon. As a result, the accumulated balance, owed by Keystone to the MHPCA, as of December 31, 2006 is $9,136.

The balance owed increases every month. Keystone's monthly charges to the MHPCA are 26% higher than in 2002"

Following up on allegations of diversion of funds with the CZ Master Association, we have written auditor Schonwit & Associates, but have not from them.











Is anyone on the CZ Board minding the store? This letter (from Mr. Strupat to independent auditor Robert Owners) is several more reasons why Varo and Mezger should not be re-elected. Joe Morabito

A Coto Discussion participant writes in part: "Most of what you cite as malfeasance constitutes nothing more than differences in policy. In this most recent example, I fail to see how an alleged issue in Marina Hills has anything to do with Coto. Yes, we have the same Association Manager, but the connection ends there unless you have any additional information"

.......You mean like Keystone “accidentally” overpaying the private security company, then not doing anything reasonable to prevent something like this from happening? Or how about supporting the multimillion dollar firing of Securitas without due diligence? Or what about the meddling of their employees in the 2006 elections? Or what about a “typographical error” that took two years to “correct”, which can have an impact on 2007 elections? Or what about blaming a tickler file for road certification expiration…….and there is plenty more. Those who do not see a connection, I have a Brooklyn bridge for sale! - Buzz



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