low-life property manager INDICTED

13 properties, $2.1mm … so far
Way back on January 30 I commented on Richard Bassik, a downtown property manager who was accused of stealing $2mm from buildings he managed and was featured in a NY Daily News article from January 24. That post, why hire a low-life as property manager? ‘cuz you didn’t know, included the story of one Bassik-managed Manhattan loft building that had escaped without a financial problem (so far?) and talked about what coops and condos can do in these situations (after the fact, not much; before hand, a lot).

A Manhattan Loft Guy reader has been kind enough to keep me informed as the New York County District Attorney got involved in the case (thanks JMR!) and yesterday forwarded to me the June 30 DA press release announcing that Bassik had been indicted on 25 felony counts involving $2.1mm stolen from 13 properties he managed, from January 2005 to August 2009.

According to the press release, "[m]ost of the money — more than $1.7 million — was taken in the form of wrongfully-issued checks, cash withdrawals, and the diversion of CD funds." Here are some of the things that Bassik is accused of having done:

  • On several occasions, BASSIK instructed the outside accounting company to issue a large check in the name of one of the buildings he managed, allegedly to transfer the funds to a “reserve account” for that building. Once BASSIK had the check in hand, he simply opened a new bank account in the name of the building with himself as the sole signatory on the account. He then proceeded to drain the account, transferring the money to other accounts that he controlled, and spent the money.
  • On one occasion, BASSIK used $370,000, which was part of a “reserve account” check, to pay restitution owed by his step-daughter and her husband as part of their sentence in an unrelated Suffolk County criminal case.
  • BASSIK also accomplished his thefts by submitting false invoices to the outside accounting company in the name of “American Systems” or “The American Company” — both made-up company names — allegedly for some kind of insurance coverage for one of the buildings that he managed
  • BASSIK used more than $400,000 of stolen money to pay his American Express bills. He used the stolen funds to pay for a variety of items, from fine jewelry and expensive clothing to parking garage fees and MetroCards. He bought airline tickets to the Caribbean, accommodations at the Pierre Hotel and the Ritz-Carlton, and groceries and gasoline.

There’s no indication in anything I have seen about the prospect that any of these buildings can recover any substantial money for their losses. As I mentioned in that January 30 post,

Of course the bad guy was bonded as a property manager, but my friend guesses that the coverage limits will be well short of the losses suffered (other buildings may yet discover that they got fleeced, but it is a $2mm problem so far). The Daily News implies that the bad guy has signed some confessions of judgment and the District Attorney is involved, but there was no suggestion that anyone is likely to track enough assets to make up much of these losses. And however much the bond is for has probably already been tendered (or will be shortly), without much fight.

more victims, few more losses
Interesting that the Daily News reported in January on 4 buildings that had lost "nearly $2mm", while the DA found 13 buildings (that "represent a diverse spectrum – from high-end co-ops and condos to a building owned by a nonprofit organization") that had lost "more than $2.1mm". It seems that the 9 "new" victims were relatively lucky in that they suffered relatively smaller losses. I know that my buddy the coop board member in a small downtown Manhattan loft building had been contacted to testify before the grand jury, so perhaps his building is one of the new victims with small losses.

love your anal board member
The things that coop and condo boards can do to protect their fellow owners are simple, limited, and effective:

  • pay attention
  • require multiple signatures for non-trivial checks, including a board member signature
  • check your property manager’s bond and insurance limits, and compare those limits to the amount of money they manage
  • create a culture in which detailed scrutiny by the board is perceived as professional and a sign of good management instead of a sign of suspicion
  • and (first, last, and not least) … pay attention

Recall the story I told about one anal board member who just may have persuaded Bassik to raid someone else’s cookie jar first, or harder:

I asked my friend why he thought they had come through unscathed. He said that this colleague was a pain in the butt, that he closely reviewed all the coop’s financial statements and accounts, and asked many questions that revealed a (shall we say) anal personality. If there was a bank late fee in an account, he would want an explanation and to know whether the property manager had tried to get the fee reversed at the bank. When there was a $200 charge one winter month for "snow shoveling", he protested, saying that he thought that there had been no appreciable snow that month. When the coop reserve fund was tapped to pay for board-approved projects, they asked for details to show how the reserve funds had gone from $xxx to $yyy.

From what they can surmise, the bad guy may well have figured that this coop was paying more attention than others and maybe was not a prime candidate for hankypanky. (Neither my friend nor I know anything about how these other buildings ran their operations, so this is not intended to blame them for these losses.)

Recall also that, in the World in which some Manhattan coops and condos are managed very well by their boards and some are not (with a wide range in between), your board doesn’t necessarily have to "out-run" the Bad Guys if it can out-run other, less well-tended coops and condos.

paging Steve Boccho, again
Be careful out there, folks!

© Sandy Mattingly 2010

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