From: Scott Gordon via Mesaterracehoa <mesaterracehoa+scott_at_gordon.bz@gaggle.email>
Sent: Thursday, May 11, 2023 11:09 AM
To: Mesaterracehoa <mesaterracehoa@gaggle.email>
Subject: RE: [Mesaterracehoa] $250, 000 Loan to HOA from Zongfu Li - Legal Case #1
Jake & Homeowners:
Regardless of Jake and Zongfu's continued communications relating to I want to make case #1 go away, you may recall for the last few months I have communicated multiple times asking Jake and Zongfu to stipulate for moving case #1 to state court so that it could continue. The goal was to go through the evidence and accusations and let the legal system determine the outcome.
My high-level understanding of their claim is:
- They believe CRP bought units under-valued at the time but Jake on behalf of Four Seasons Investments bought during the same time period for the same value. This relates to not that CRP did not pay agreed upon costs but rather CRP did not pay enough for the units. The transactions were facilitated by a title company and fully funded.
- They believe I as an employee (not Board Member) stole money from the HOA and/or expenses were too high. Yes, there were some high expenses when I was an employee which included repairing and painting all buildings, re-doing the parking lot twice, stairwells were re-done, etc. Documents have been produced with signatures showing 6 plus different Board Members over 5 plus years signed off on compensation plans for all employees. The monthly HOA fee was $185 or LESS while I was an employee and when I terminated my employment there was approximately $250,000 in the bank.
- Summary: Now the HOA fee is $335 per month, nothing left in reserves, very minimal cash in operating and Zongfu/Jake deferred major projects during their tenure. Per Michael Gross and Michael Carmel, the board did not maintain the property and thus it needs $500,000 or more to address deferred maintenance issues.
There has been no response from Zongfu or Jake in regard to moving this case along which they keep telling the Homeowners about.
Earlier this week CNA Insurance hired a bankruptcy attorney, and a motion was filed to remand the case to state court. Copy attached for reference. The goal is to move this case along. At this point we wait to see if the current Board votes to spend more money to dispute the motion OR agrees to let the case keep moving.
CRP continues to be open to communications for resolving these matters.
Scott
Canyon Ridge Properties, LLC.
To all homeowners
Here is the history and fact about this BK case
1. Gordon, Karla and Mark met in secret and all voted to put the HOA in BK in July, 2022.
2. At that time, we had $65,000 in the bank.
3. Karla testified she voted to file bankruptcy to stop a lawsuit that seeks to recover money for (NOT from) the HOA.
4. Since then, BK trustee and attorney's fees are over $300k and rising
5. We believe the bankruptcy was a huge mistake, but we have to pay our bills.
6. We have to pay the attorney's fees incurred by the attorneys Gordon, Karla and Mark hired and directed.
7. Either we get a loan or we raise monthly assessments.
Sam:
See attached to verify the information for yourself.
In response to your comments.
- "Scott's Board" worked with attorneys to determine what was best for the HOA. Scott abstained from the BK Motion. Scott as a Homeowner received numerous communications from the Board with financial status, asking for assistance, etc. Each person I have spoken to about the situation has agreed a $40,000 retainer should have easily covered the bankruptcy re-org process. Homeowners who are unsure why the BK was filed should simply ask Karla and Mark why they motioned the way they did. The answer was not as simple as doubling the HOA fee. Homeowners have access to the attorney invoices that the HOA is responsible for. Review them and see where all the time was spent.
- Zongfu, Jake and Board Members have terminated the Debtor counsel and hired a new firm to start the process over.
- There is a section in the CCRs about loan requirements and requiring 2/3 vote. HOA was asked for clarification, no reply.
- Zongfu and Jake do not apparently want you to know what is going on. They have access just like all of us to post to the list. They have had numerous meetings since taking office.
- In fact, 7 attorneys over the last few days have been going back and forth relating to this list and potentially how the Board could take control of it. We can only guess how many thousands of dollars of legal fees were incurred for that project.
- Transcend has been in place since 11/1/22. To date they still have yet to distribute or post any financials.
- While I understand everyone has their differences, CRP has tried to support the community and do what is right for the community.
At the end of the day you may have had an issue with how the Board enforced rules when I was an EMPLOYEE BUT the place was clean, secure, operational, had plenty of funds, pool was open, crime was down and the assessment was half of what it is now.
The Board had the opportunity to take back the HOA from Michael Carmel yesterday. When the judge asked the HOA attorney what the Board wanted to do, he replied to keep it as is. This was in response to the motion the previous Board (Scott, Mark and Kayla) filed once there was a 3-person Board in place.
This case continues to be similar to Zongfu's other property take over in Mesa. Only difference here is Zongfu cannot become majority holder without working with CRP.
CRP continues to be interested in resolving matters. Zongfu group has cancelled Mediation at least twice now.
Per Michael Gross and Michael Carmel Zongfu and Jake on the last go around did not maintain the community and there are major roofing issues. We are months away from the monsoon season.
Scott
Canyon Ridge Properties, LLC.
IF this is accurate, this would be a massive conflict of interest and should require a vote by the association members. The board should not be able to vote to borrow money from another board member, or any related entity. Any competent attorney should see that conflict of interest. Also, the HOA should not be able to borrow money under its current financial situation. We had a vote for an assessment and the vote was 100% in the negative. Now you are side-stepping our vote and you are going to borrow the money. Seems like we need a better financial manager, not a loan. If the attorney can't get paid, so be it. They will have to wait like all of our other projects that need money.
There is a reason our bank accounts are empty 1) Under Zongfu's prior board leadership we had around $250,000 and by the time he (and the board) was done more than $200,000 was gone, spent on legal fees. 2) Scott's board put us into a bankruptcy plan which is costing hundreds of thousands of dollars in useless legal fees. They had a simple solution at the time... raise the HOA dues so we could pay our own way out of the debts. That would have solved everything! They refused to take the approach and so here we are spending all our money on legal fees.
The solution remains the same: Get the attorneys and legal system out of everything and let us manage the association with Transcend or any professional management company. Legal fees are anchoring us and we can't come up and breathe. The problem keeps coming back to Zongfu's and Scott's legal quarrel that started this whole thing and put the community squarely in the middle of it. You two are the problem. You just can't let it go. Neither of you should be on the board, but you both have too many votes to make that happen.
Zongfu, if you are going to make this loan, you need to resign from the board and let a new board vote on this.
480-584-3450 O | 480-203-7768 C
3514 N. POWER RD. STE 132 | MESA, ARIZONA 85215
Care to inform the homeowners of your decision to loan the HOA $250,000 at 7% interest just to pay a portion of legal fees with no funds being spent to repair/address open HOA Issues?
This is on top of the $40,000 you have already loaned to pay Michael Carmel's first invoice.
Per Michael Carmel the loan was already discussed in an executive session earlier this week. Per his filing the loan was already decided on. He didn't even wait to file his motion with the court for the official open Board meeting to take place.
HOA sent a notice about a meeting yesterday with no agenda to the Homeowners. Is the Board hiding the fact that they are going to execute a loan on behalf of the Homeowners for $250,000 and Zongfu Li, President of the HOA is going to sign off on his own loan to the HOA?
The Board, who has a fiduciary duty to the homeowners believe this action is in the best interest of the community?
Canyon Ridge Properties, LLC.
--
--
