PUBLISHED ON: April 10, 2020
This article is designed to give boards of directors and boards of managers object lessons in how not to act in running their cooperatives and condominiums. these are actual incidents. The first two examples involve domineering presidents of boards and should be a warning to all directors.
A King with Passive Counselors
A co-op, which had not consulted with its general counsel for years, had a nine-member board that was run by the president and two directors. The other six directors not only had no involvement in operating the co-op, but were happily indifferent to co-op issues. When a shareholder became a new member of the board, he requested and was denied access to the co-op’s books and records. After an investigation, it was discovered that the annual financial statements had not been prepared by a CPA, that the board had almost no records concerning corporate activities, and that there were no board meeting minutes since there had been very few meetings. Claimed repairs were unsupported by any invoices or payment records, and when questioned about certain repairs, such as the roof, the president advised that the board had simply paid a local handyman, “Joe,” in cash. There were no receipts for the claimed cash payments. The co-op had very little money in its bank account.....