Using Conflict of Interest to Generate Money and Prison Time

When I teach the 101 Board Education course for the Canadian Condominium Institute of South Alberta, I comment several times that board members should always avoid conflict of interest.

Conflict of interest for those who may not be clear on the term:

A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other (Wikipedia).

Note that a conflict of interest doesn’t even need to a realized corruption, but just the possibility. For boards, common conflicts of interest include voting on contracts with bidders that include family, friends, and business partners. It also includes board members doing services for the condominium and receiving remuneration.

For a group in Las Vegas – they saw being in a conflict of interest as a process to profit. They hatched a scheme.

They recruited individuals who they gave money to buy units in condominiums. In return, the individuals were asked to run for the board and once on, direct legal and construction work for the condominium to companies designated by the group who fronted the cash. Just to make sure the scheme worked, board elections were rigged, and ballots were forged.

So far, one of the people fronted money – Steven Wark – will be facing a maximum sentence of 30 years for his participation in the scheme (and pay more than $94,000 in restition).  The reason: after he was elected to the Vistana homeowners board he took payments and voted “in a manner directed by and favorable to his co-conspirators.”

That would very much be a conflict of interest.