Sunday, April 3, 2016

Exposing Fraud at a California POA

This letter was sent to the CA State Board of Equalization

Dear Board:

Please open an investigation into an entity known as Association Management Services and its registered agent, Nicholas Mitchell. I've gathered some evidence that points to an overwhelmingly obvious situation of tax fraud, embezzlement, and misappropriation of funds happening at a POA I accidentally became a member of when buying a lot from a county tax sale.

Background: When I bought a small parcel in a way-out-in-the-boonies place in 2014, I paid all the back/overdue taxes on it to Siskiyou County and was thus deeded title to the land. However. Shortly thereafter, I suddenly found myself assaulted with demands for POA payments (POA fees going back to 2013) from an entity known as "Association Management Services", operating from PO Box 307 in Weed, CA.

Aside from the fact I didn't know that by buying land I'd be bullied into paying some company annual dues and fees on the land I already have legal title to (Siskiyou County did not disclose this information to me when I purchased the lot), something just seemed off about the original invoice he sent me in 2014.  A $50 "transfer fee" tacked on...  POA fees being racked up before title is even legally transferred... other weirdness.

A small bit of research, and I discover something odd... this "company" demanding payment is actually just one person: one person named Nicholas Mitchell. I was not able to determine the legal organization of his business entity “Association Management Services,” in order to determine how to file complaints for invoicing mistakes; but my research did uncover many interesting things. Things that, when taken all together, point to not only misappropriation of funds, but also almost certainly, mail fraud and tax fraud.

Nicholas Mitchell is the Registered Agent of Association Management Services … however, he's also the registered agent of MSPOA, Inc. (source), and at LEAST two other HOAs.

This seems like a lot of HOAs and POAs to "manage," doesn't it? Mt. Shasta Vista alone describes itself as: "Some 1,640 far flung, mostly juniper and sage parcels averaging 2.5 acres each." So if we look at MSVPOA and Siskiyou Highlands Property Owners Association and Timberline Court Homeowners Association, there's something that doesn't sit quite right in terms of magnitude and ability to manage when you're just one person. My intuitive hackles detected a probable pattern of abuse and fraud at a rather large scale.... I bet his Realtor(TM) buddies are involved somehow...

143 Main Street vs PO Box 307 Weed, CA 96094

Mitchell is clearly trying to be a "smart" criminal. He's registered various business entities (listed below) to cover his tracks; some show up as a physical address and some show up as the PO Box.  All of them seem to operate – in one way or another -- out of a real estate agency. So let's look at all of these businesses in the context that he "manages" them, such that they can feed each other, maximizing his ability to embezzle ... "cooking the books" to minimize actual expense while maximizing reported expense.

NOTE: website URLs can be accessed on my website link @ end of letter.

(1)  "Mount Shasta Vista Property Owners Association"
File Number:    C0495803

(2) "Siskiyou Lake Highlands" POA, Inc.
File Number:      C1848778   

(3)  "Timberline Court Homeowners Association"
File Number:    C1930623

(4) "Elite Real Estate Group" Specializes in creating foreclosures, marketing foreclosures, collecting fees on foreclosed parcels/properties when they are resold or rented.  This company stands to benefit immensely if Mitchell's proposal to enact aggressive "foreclose" on POA fees in arrears gets passed.   (we're not going to link to this website from here, but it is "Get My Home Now . com" (without spaces))

(5) "Association Management Services"   The shadiest of them all in terms of legal entity, this appears to be Nicholas Mitchell's personal consulting business, how he collects his "salary" from MSVPOA?   

(6)  "Rental Management Services"  source    2 employees, eh?

(7) "Alpine Association Management"  (source (8) The "Wooly Sheep Inc" (source #1, source #2)  Not sure what this is... but if it's attached to PO Box 307, it is a definite IRS flag.

(9) "Siskiyou Lake Highlands Mutual Water Co" (source #1, source #2).

(10)  "Siskiyou Lake Highlands Property Owners Association" (source).

Yes. That's 10.

As I am sure your office is aware: "Post Office Expenses" are such a common tax deduction for businesses that most auditors wouldn't think twice about them being legitimate. However, given this setup, it's clear that there is only one P.O. Box funnelling numerous legal entities. One address for rent and lease expenses, too… are each of these POAs responsible for 1/10th of the agency's ACTUAL expense, or are all of the POA members being told theirs is the only “Association” being managed, and thus requiring full bill being footed by each of them?

Many times have I requested the financial statements of the POA I paid dues to to check the numbers myself; however at this point, Nick Mitchell is completely ignoring my communications.  

(As a heads up, I have been quite vocal in my discoveries (posting them on by blog) during my numerous attempts to get my concerns resolved… so I am slightly worried this might have given Nick Mitchell and his Realtor buddies time to destroy evidence, shuffle funds, fabricate receipts, etc. I am writing your office as a last resort).

In any case, it's clear that he is mixing up all these legal entities in one PO Box, that means there should be just exactly one PO Box bill being paid to our most wonderful United States Postal Service.  This also means that whatever "Postal Expense" is recorded on the legal books of each of these 10 entities (some of which are supposed non-profits) is indeed NOT TRACEABLE and is thus being FALSIFIED in records to the cities, states, and federal government --- to both the public and to members. Fraud indeed. Little markers that point to putrid, rotten corruption.

I am also concerned with his role in spreading misinformation regarding his inability to be “fired” when communicating with property owners.  

According to what they are touting to members Nick Mitchell has "bulletproof" job security… (NOTE: this information is not deemed factual; it is simply information MSPOA, Inc. wants parcel owners to believe; it is available on  here the ~33rd paragraph.) :
If we ever folded, the Association would not only face the ignominy of having failed to work together to preserve over 1500 parcel owners’ common interests, but have insult added to injury by paying some disinterested professional — often a bill-by-the-hour attorney, bankruptcy trustee or accountant — to take over current volunteer board decisions that could leave members voiceless in home front matters now taken for granted. All in addition to the salary already paid our professional manager, who’d stay on.
This is so wrong it should be criminal... the association folds, but he gets to keep his salary AND gets to decide which one of his Real Estate buddies will "profit" from the association folding? Or even  threatening to fold, as the case may be?

Is it coincidence that the REALTOR agency he works at specializes in the footwork needed to start foreclosing properties? There are plenty of people out there who make a buck on threats alone. How often does your office audit real estate companies that do this kind of terrible thing?

Clearly Nick Mitchell the "consultant" is abusing whatever power of attorney he has, using FUD to promote his and his cronies' highly unethical agenda which includes:   
  • Imposing (what may be illegal) transfer fees that benefit no one but him and his companies, personally
  • Accelerating the pace at which properties can be "foreclosed" upon for lack of paying these fees (which appear to start accumulating before a parcel owner even has legal title)... snowballing them before a parcel owner even has a chance to be aware they exist.
  • Aggressively adding collection costs to a parcel owner's invoice at random intervals -- possibly dependent upon how much vengeance he has toward an individual entity.  He clearly does not like me and all my questions.
  • Deliberately denying parcel owners a neutral channel of grievance for his (and his company's) invoicing mistakes or intentional inflations. 
  • Continually refusing to provide clear and open book accounting to the parcel owners regarding use of their fees and funds.
  • Probable mail fraud and tax fraud.
  • Misrepresenting real estate expenses across multiple legal entities (only a gut feeling since I've been unable to audit the financial statements myself)
As a final note, regarding my latest invoice from Nick Mitchell's "Association Management Services"... I moved in October of last year, and paid for mail forwarding.  However, I never received these invoices they are claiming I was sent. I am certain they were not sent.

Last year at the members' meeting, the manager had a "brilliant idea” to help the association.. that plan is to start aggressively "foreclosing" on parcels, adding a weekly fee to parcel owners who have overdue invoices.  Absolutely disgusting. 

Real estate agents are by far the most sleazy, maleficence-intentioned people in existence. There seems to be no despicable thing they won't do to extort a few thousand dollars here and a few more there... it adds up so quickly. In my observation, REALTORS and their agents are by far the most deliberately tax-evading “professionals”, continually abusing the spirit of the law.  It is criminal what they do, gleefully marking up their "services" beyond what is fair and reasonable, forcing people to take out bigger loans to give them lump sum payments. 

Yet somehow, some way, they continually manage to pervert the system... over and over and over again.  This is wrong. I'm petitioning for MAXIMUM JAIL TIME for Nicholas Mitchell and for each and every individual who conspiring as part of his criminal scheme to defraud landowners. 

L.S. Cook, MBA

Note:  Comments on this story disabled.  To participate in the discussion or to learn how to take action as a citizen taxpayer, POA, or litigant in a class action suit, please see:  which is where we're collecting facts, research and sources.  If you know of other POAs implementing similar schemes, please follow a similar path:  gather evidence, find others victimized in the similar way and report the facts when you contact the Attorney General or the tax fraud reporting entity of your state.