Curse as Blessing: How the Discovery of Theft Kept a Co-op From Sinking
Feb. 17, 2016 — Sometimes, what initially appeared to be a curse turns out to be a blessing. This was the case at Lindenwood Village, a 146-unit co-op in Howard Beach, Queens, where the discovery of a theft by the office manager led to a major house-cleaning that helped salvage what had been a sinking ship.
But it wasn’t painless, and it wasn’t easy.
In April of 2014, Lindenwood Village was at war. A minority board faction and group of concerned shareholders, dissatisfied with the board vice president’s self-management of the co-op, were fighting to get access to the corporation’s financial records. With legal costs mounting and vitriol at a boil, the co-op got hit with a bombshell.
Bill Artuso, the co-op’s accountant, called the first of several emergency meetings to discuss a devastating discovery: Joan Ujazdowski, the office manager, had spent more than two years using co-op funds to buy gift cards from Staples, Barneys, Home Depot and other stores – to the tune of $88,000. It is still unknown if she spent them or gave them away as gifts.
“At the third meeting,” recalls board member Eliot Tokar says, “[the co-ops’s attorney] told us we shouldn’t go to the insurance company or the cops. Instead, we should sign a confidential agreement between the board and the office manager that would allow her to make restitution gradually over five years – with no interest payments – and we would not release the information to the shareholders.”
Tokar was the lone dissenter when a majority of the board members present voted, 4-to-1, to sign the deal, accepting an initial payment of $60,000, to be followed by monthly payments of $400 for the next five years. Feeling it was the board’s fiduciary duty to reveal the theft to shareholders and have authorities look into it, Tokar approached the Queens district attorney, who looked into the matter but determined that the board’s settlement precluded prosecution.
Nonetheless, Tokar says, the episode “reignited people’s understanding of how deep and serious the problems were.”
After many more months of acrimony, threats, stonewalling, and lawsuits, the concerned shareholders finally won an order from the State Supreme Court to hold a new election in December 2014. When the votes were counted, the concerned shareholders had won eight of the board’s nine seats, and Tokar was elected president. Now the serious house-cleaning could begin.
What had initially appeared a curse – the theft of $88,000 – wound up being a blessing. With a new management company and other professionals in place, the Lindenwood Village board got busy righting what had once been a sinking ship.