Cedar Run Update - Receiver's Report w/ Financials Available

The receiver's most recent (sixth) report, as presented in court on 11/4 is now available.

To view or download the report, click HERE.
(Please note that although the heading of the report says it is the fifth report, it is actually the sixth)

**UPDATE**

Transcript from 11/4 hearing now available by clicking HERE. 

**UPDATE**

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Full Audit Not Possible

Most notably, the report indicates that a certified audit of Cedar Run's financial records during the Sher/Shaw tenure (August of 2012 through February of 2015) CANNOT and WILL NOT be done (item #14).  This is due to a myriad of issues with the way the association was run under the Sher/Shaw and in part due to the legal complexities of Cedar Run at present day.

• There was essentially NO FINANCIAL SYSTEM or accounting procedures under Sher/Shaw
• No meeting minutes or backup documentation on MAJOR transactions
• Multiple tax returns not filed, no financial statements or bank reconciliations
• The list could go on forever.......

All of the above items must be available for a CPA to perform a proper and certified audit.  As mentioned in the receiver's report, "[there is] sufficient doubt about management's integrity, such that representations are not reliable" [emphasis added].   See the receiver's report for a more in-depth explanation of why an audit cannot be done (page 11) and for a list of alternative options in lieu of an audit (page 5).

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Clarification

Since Cedar Run was first placed into receivership, the accounting firm Frost, Ruttenberg & Rothblatt (aka FR&R, aka 'Frost') had been been reviewing the Cedar Run HOC's financial records, en route to produce a report (which came in at around 3000 pages). During this process (from February to September of 2015), we had often referred to Frost as 'the auditors'.  This was actually an error.

While Frost was performing many tasks that one could consider to be 'auditing' the books, the report they produced (all 3000 pages of it) is NOT an audit. The over-simplified explanation is that the report is a reconstruction of the financials in order to properly determine what the HOC's assets & liabilities are, determine the correct balances for all 408 owner accounts, and put the records in order so an actual audit could then be done.  This was needed because (as mentioned previously) the Sher/Shaw group essentially had no real financial system in place.

In theory, once the Frost Report was complete, a different CPA firm would then perform an audit (Frost cannot because it would be considered a conflict).  But in reality......well, you know the rest.

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Current Financial State

And now for a dose of good news.  The current financial state of the Cedar Run HOC has improved dramatically as of this report. The cash situation and near-term financial outlook for a new board (whenever we get one) is looking much better than expected despite the MAJOR expenses needed to clean up the Sher/Shaw mess.

Cash Assets as of 9/30/15

Contributing factors to this include:

• Shaw Legal Services no longer being paid with homeowner funds (though Anne/Caryn Shaw are fighting desperately to change this)
• Reduced rate and reduced number of hours spent by receiver and receiver's staff
• Settling of unpaid assessments due to the HOC from owners (though there is much more that still needs to be settled)

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Frost Report Available Soon

Per the judge's order on 11/4/2015, the receiver will make the Frost Report available to all Cedar Run unit owners.  We expect this report to reveal never-seen information on Cedar Run's state of disarray under the Sher/Shaw group. We expect some of the facts and figures to be quite telling and quite shocking.  You DEFINITELY WANT TO READ THIS ONE!!

The court order requires the receiver to 'publish' the report, but it is unclear how it will actually be distributed to homeowners.  If a true, correct, and verifiable copy of this report becomes available soon enough, you may just see it on the blog first.

Please stay tuned!

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Cedar Run (brief) Legal Update

There have been some significant legal developments in Cedar Run.

Cedar Run Phase IV vs. Robert Sher
As mentioned in a previous blog post from 8/21/15, Robert Sher's phase association had taken him to court for unpaid assessments & legals fees.  Based on the amount owed, it appeared that Sher had not paid his Phase dues for over three years.

On 9/24/15, a judgement was entered against Sher, and Cedar Run Phase IV was granted an order of possession for his unit.  Facing imminent eviction, that would have happened on or around 11/24/15, Sher (begrudgingly no doubt) paid off his ENTIRE judgement.  Including legal fees & court costs, it is estimated that Sher had to pay in excess of $8000 to vacate the judgement.  On 10/21/15, the judgement was vacated and the case was dismissed.

SO.....apparently he's here to stay folks, but at least he has FINALLY paid his dues like the rest of us.

Click HERE to view the public Court Docket.
Click HERE to view our original blog post from 8/21.

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Master Board (HOC) Litigation
On 11/4/15, two issues were brought before Judge Garcia by Anne Shaw

1. Anne's request to be paid with HOC (Homeowner) funds for her legal services dating back to February (when receivership began).  Result: DENIED  **UPDATE/CORRECTION** Judge did not issue a ruling on this despite Anne Shaw's urging to grant her payment**
2. Anne/Caryn Shaw's motion to strike the report from the accounting firm Frost, Ruttenberg & Rothblatt (aka 'the Frost report')  Result: WITHDRAWN (meaning that Anne Shaw basically gave up after realizing she has no chance of winning). **UPDATE**Anne Shaw also admitted to using false facts facts in her motion***

What we do know is the following:

• The Frost report will now be made available for ALL Cedar Run Homeowners.
• The Receiver will disseminate the Frost report information by publishing the 25-30 page "body"of the report.
• The body of the report will also be translated to Spanish so Hispanic owners can understand the information.
• All Cedar Run homeowners will also have the option of reviewing the full 3000 page Frost report at the Clubhouse office.

We'll know more about these developments once the 11/4/15 hearing transcript is available.  We will also obtain a copy of the latest receiver's report.  But for now, the order that was entered on 11/4/15 can be viewed HERE.

**UPDATE**

Transcript from 11/4 hearing now available by clicking HERE. 

**UPDATE**