Warrant: Property Manager Stole $150K

So that’s where all that Beechwood Gardens rent money went.

For two years, according to an arrest warrant affidavit, money orders, cash deposits, and checks from at least 38 tenants regularly ended up in the hands of the landlord’s property manager. Or former property manager.

After a two-year-investigation, police have arrested a 45-year-old Hamden woman for allegedly embezzling almost $150,000 from the tenants and landlords of the subsidized low-income housing complex on Whalley Avenue.

The arrest represents the culmination of over two years of investigatory work that a detective with the department’s financial crimes unit put into figuring out exactly how $146,894 in rent payments went missing from the ledgers of the owners of Beechwood Gardens, an 88-unit complex of brick townhouses bounded by Whalley Avenue, Pendleton Street, Hubinger Street, and Eldert Street.

A report written by the detective, Richard LaRock, details how, from 2014 to 2016, the alleged fraud redirected cash deposits, money orders, and checks from at least 38 tenants away from the bank account of the complex’s owners, VestA Corporation.

Cops found that roughly $13,000 of those rent payments made by money order or check ended up directly in the former property manager’s bank account. They also found another $123,826 in cash receipts for payments that Beechwood Gardens tenants thought were going towards rent, but never ended up in the landlord’s bank account.

Meanwhile, the complex (now being rebuilt) was running down.

City police have charged that former property manager, who worked at Beechwood Gardens from 2013 until when she was fired in August 2016, with first-degree larceny. Her bond is set at $25,000.

Superior Court Judge Philip Scarpellino continued the case until Feb. 28 when it came up in his groundfloor court room at 121 Elm St. on Monday morning. The arrestee has not yet entered a plea; in a conversation with the Independent in 2016, she denied the accusations but declined further comment.

The Investigation Begins

The case dates back to Oct. 5, 2016, when city police detectives Thomas Glynn and Christina Altieri received a report of fraud and forgery from Chuck Moran, the executive vice president of VestA, and Cheryl Colbath, VestA’s regional manager. VestA assumed ownership of the 88-unit Whalley Avenue housing complex following the 2011 death of the apartments’ previous owner, Wendell Harp.

“Moran and Colbath both had approached a tenant (unnamed) about their unpaid rent; according to the books,” LaRock writes in the report, which appears in the case’s court file. ​“The tenant told them they had paid their rent. Moran and Colbath investigated the matter.”

That internal investigation led the landlords to the former property manager, whom they had fired in August.

Moran and Colbath told the police that the property manager ​“had been taking tenants rent money for her own personal use, as well as making out checks to herself. Moran and Colbath estimated the amount of money stolen before she was fired at $100,000.00.” The VestA owners also said they believed the property manager had been forging leases and moving tenants into apartments that the landlords believed to be vacant, and then keeping those tenants’ rent money for herself.

Moran and Colbath had been hearing from tenants, as had New Haven Legal Assistance Association attorney Amy Marx, who proceeded to convince management to waive the technically unpaid rents. (Click here to read a 2016 story featuring interviews with the tenants and the company.)

LaRock writes that he was not able to find evidence of the property manager writing out tenant or landlord checks to herself. However, he did find falsified leases and plenty of cash deposits that tenants thought they were paying for rent that went instead into the property manager’s bank accounts.

“It’s Too Much And It’s Over”

LaRock and then-Sgt. Elisa Tuozzoli (now a retired lieutenant) then met with Moran and Colbath at the police headquarters at 1 Union Ave. on Oct. 11, 2016. The VestA owners brought in four file folders of information documenting which Beechwood Gardens tenants they believed were swindled by the former property manager.

“Mr. Moran reported that Beechwood Gardens has 88 total units,” LaRock writes, ​“and he discovered that residents within 31 of those units had issues with their rent payments not being applied to their monthly lease payment.”

Moran told the police that VestA had first become suspicious of the resident rent accounts receivable in mid-August 2016. When the owners became certain that the funds had been misappropriated, they fired the property manager on Aug. 31, 2016.

After firing the property manager, Moran and Colbath said, VestA spent the next few weeks meeting with current residents and inspecting all apartments thought to be vacant. ​“In at least one case,” LaRock says that Moran and Colbath reported to the police, ​“we found a unit thought to be vacant, occupied and claiming to have paid rent to” the property manager.

After reviewing the accounts receivable ledger, working with residents to secure copies of rent receipts when possible, and reviewing bank reconciliations, the VestA owners determined that no cash deposits had been made to the Beechwood Gardens bank account over the previous two years.

“The majority of the documentation from residents relative to the unaccounted payments ($119,266 of $132,939) were in cash,” Moran and Colbath told the police. And all of the receipts provided by tenants to VestA had been signed by the property manager.

Colbath then told the police about what had happened on Aug. 31, 2016, when she fired the property manager.

“I told [the property manager] that there were many issues and told her that the payment agreements she sent me don’t have the correct balances on them,” Colbath said, ​“and it looked like she signed them herself. I showed her the letters ​‘from the attorney’ and said that that was our letterhead and that no attorney would send out those letters, and pointed out that Attorney was spelled wrong.”

“After the call,” Colbath continued, the property manager ​“asked me if we could work something out, I said no, it’s too much and it’s over. She then asked if she could work for free. I told her no, and she finished packing up her belongs and left.”

Tenants Testify

On Jan. 31, 2017, LaRock and Det. Rob Clark visited the apartment complex at 572 Whalley Ave. to interview tenants whom VestA had identified as having been defrauded by the property manager. They spoke with around a dozen people, all of whom described paying rents directly to the property manager and being blindsided by notices from the landlord that they were somehow behind on rent.

One tenant, Wendy Hoyle, told the police that she had moved into Beechwood Gardens in 2014, and that she mainly paid her rent via money order, but sometimes via cash. The property manager provided Hoyle with receipts for all of the rent payments she made except for those from August and September 2016. In August 2016, Hoyle received a ​“payment agreement” letter in the mail that referenced overdue rent charges in the amount of $2,025. That agreement had two signatures, one by the property manager and the other supposedly by Hoyle, though Hoyle denied signing the letter. ​“After viewing her signature versus the signature on the letter,” the report reads, ​“it’s clear they are not one in the same.”

Another tenant, Trenda Lucky, said she would often drop off cash payments for rent at the Beechwood Property office at 572 Whalley Ave. ​“When cash payments were made,” the report reads, ​“which Lucky said were ​‘many’ she would go into the property office and give [the property manager] the cash directly. She said [the property manager] would in turn give her receipts for the cash payments.”

Yet another tenant, Nitza Diaz, told the police that she had moved into Beechwood Gardens in mid-August 2016. She didn’t move into the apartment at the beginning of the month because the property manager had told her that the unit wasn’t yet ready. The property manager reduced Diaz’s first month’s rent accordingly, to just $500.

“In Colbath’s audit,” LaRock writes, ​“she found that Nitza Diaz was not listed in the system even though she had made the required security deposit and monthly rent payments. A former tenant was still listed” in the unit.

A fourth tenant, Daquana Gamble, paid three months’ rent in security deposit at the property manager’s request when she moved in in 2015. The reason, the property manager stated, was because Gamble had an eviction on her record. The property manager also asked Gamble to pay $700 per month in rent in cash, which the tenant did for the next four months. After reviewing her lease, Gamble realized she was only required to pay $675 per month in rent. Furthermore, after the property manager was fired, the property manager’s records showed that Gamble had only paid $1,350 as a security deposit, as opposed to the $2,300 the tenant had actually paid.

And in March 2017, LaRock spoke with local attorney Sandra Huggins, who said she had provided the property manager, at the latter’s request, with advice on KAPA notices, or pre-termination notices that landlords are required by law to send to tenants before proceeding with an eviction.

Colbath provided LaRock with six KAPA letters that had been sent out to Beechwood Gardens tenants on Aug. 30, 2016, all with Huggins’ signature and all stating that the landlords intended to evict those respective tenants. Huggins denied that she had ever signed the documents and identified the letters as forgeries. Huggins subsequently told the police that she would not be filing a complaint against the property manager for forgery.

After trying to reach out to the property manager for an interview, LaRock received a call from local attorney Allison Near. ​“Near advised me that she will be representing [the property manager] and that [the property manager] will not be coming into speak with me.”

Bank Accounts Searched

In February 2018, Superior Court Judge Walter Spader signed off on the city police’s search and seizure warrants for the property manager’s two banking accounts, one at TD Bank and one with Yale New Haven Healthcare Federal Credit Union, now called the Healthcare Financial Federal Credit Union (HCFFCU). In the warrants, the detectives had requested all bank statements, signature cards, biographical data, and copies of all deposits of checks and money orders dating from July 2013 through November 2016.

LaRock didn’t find anything suspicious in the HCFFCU account, but the TD Bank account search revealed something quite a bit different.

The account, which was under the names of both the property manager and the property manager’s husband, contained two dozen money orders from Western Union, United States Postal Service, MoneyGram, and Chase Bank, and other banking services. The money orders ranged from $150 to $1,000, were addressed to Beechwood Gardens or directly to the property manager, and were all from Beechwood Gardens tenants.

The bank account also contained a $1,350 check written on behalf of CommunicCare’s Community Supports for Families program to assist a Beechwood Gardenst tenant with her security deposit.

“The money orders and checks found in the Deposits and ATM sections of [the property manager’s] TD Bank account belonging to tenants of Beechwood Gardens totals $12,901.00,” the report reads.

“Tenants that were able to provide copies of cash receipts for Beechwood Gardens that were never applied to their rent totaled $123,826.50,” the report continues.

By reviewing cash receipts, money order receipts, checks, and the property manager’s TD Bank account, LaRock writes, he was able to identify 38 tenants at Beechwood Gardens whose rent payments were never credited to the landlord’s property management accounting system.

The property manager ​“had been asked repeatedly by Beechwood Gardens management staff to turn over all the tenant/rent ledgers and all receipt books for Beechwood Gardens,” the report reads. She ​“has never turned in any of the ledgers or receipt books.”

“The total loss discovered to Beechwood Gardens,” the report concludes, ​“is $146,894 as a result of [the property manager’s] embezzlement.”