Hammocks Receiver David Gersten Now HOA Monitor

The Hammocks, the embattled West Kendall homeowners association where former board members allegedly ran a massive fraud, has exited receivership. But that doesn’t mean it is back to being fully independent from outside oversight.

David Gersten, who became the Hammocks receiver nearly two years ago following the arrests of five people accused of fraud, is now the HOA’s monitor. The transition comes as Gersten wrapped up his civil lawsuits against former HOA vendors he accused of playing an “insider” role in the alleged scheme and also settled his claims against the final law firm he sued.

Gersten also has implemented a Hammocks Bill of Rights meant to impose additional protections against potential future fraud, kickbacks and insider dealings. The bill of rights supplements safeguards already in state law and the Hammocks’ governing documents.

The end of the receivership marks a turning point for the Hammocks, which has been picking up the pieces after police in late 2022 arrested a former board president and her husband, as well as three ex-board members. Prosecutors allege a scheme where bogus contractors, including some run by the ex-president’s husband, were hired but did no work on the property. The association’s payments to the contractors were then misappropriated, including to the pockets of some of the former board members, according to the arrest affidavit.

The 3,800-acre Hammocks, between Southwest 120th and 88th streets and between Southwest 147th and 162nd avenues in unincorporated Miami-Dade County, has about 5,500 single-family homes, townhomes and condos. It is one of Florida’s biggest HOAs.

As receiver, Gersten worked with a team of attorneys and forensic accountants to plow into HOA accounts and trace misappropriated funds, start repairs and maintenance of common areas, hire a property manager and hold new board elections. Gersten filed civil suits against others tied to the HOA during the time of the alleged fraud. This includes suits against non-criminally charged former board members, ex-HOA attorneys, former HOA vendors and criminal defense counsel to the former president. Maglli Gallego, the former president, was first arrested in 2021 on a charge of grand theft of association funds.

Most of these suits have settled over the past year, and three more settlements were reached this summer. In all of these agreements, the defendants admit to no wrongdoing.

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Gersten’s suit against Hermida Law, a former criminal defense counsel for Gallego, settled for $95,000, court records show. In the complaint filed last year, Gersten said the Coral Gables-based law firm received at least $180,000 from the HOA in 2021 and 2022 for its work as criminal defense counsel to Gallego.

Hermida Law’s Ricardo Hermida, who declined comment, previously said he did nothing wrong, pointing out that the Hammocks’ own governing documents require the HOA to indemnify board members.

Also, Gersten recently settled his suit against Jesus Cue and his accounting firm Worldwide Business Solution for $50,000; as well as Raul Gonzalez-Cortina and his security services firm Off Duty Services of SOFL for $25,000.

In the November complaint, Gersten had accused Cue and Worldwide of receiving $637,000 from the HOA from 2019 to 2022, including while they were “aware of the fraudulent schemes” and assisted ex-board members “in improperly obtaining association funds.” In the same complaint, Gersten claimed Off Duty Services provided personal security services to Gallego and another arrested former board members, yet received $409,883 from association coffers.

Cue and Worldwide’s attorney Lorne Ethan Berkeley previously said they provided legitimate accounting services to the Hammocks and if there was any misappropriation of funds, they had no knowledge of it. “Worldwide has resolved the matter with the receiver for a number significantly less than what was originally sued for,” Berkeley said.

Off Duty Services and Gonzalez-Corinate’s attorney Bryan Morera said the security firm denies involvement or knowledge of alleged fraud by former members. The firm provided crime deterrence at the Hammocks at a time when car burglaries were on the rise, Morera said in a statement.

Before Gersten sued Off Duty, the firm turned over information in response to the receiver’s subpoena. “Despite the clear-cut evidence exonerating Off-Duty produced before and during the litigation … Off Duty was left with no choice but to negotiate a settlement with the receiver to avoid incurring unsustainable legal fees,” Morera said,

Worldwide Solution/Cue and the Off Duty/Gonzalez-Cortina’s settlement amounts aren’t coming from the companies’ insurers, according to the settlement. The settlement amounts also aren’t going to the HOA’s coffers.

In his push to recover as much funds as possible for the HOA, Gersten had obtained the full $1 million policy from the Hammocks’ former crime insurer, Philadelphia Indemnity Insurance Company, this year. Now, Philadelphia filed subrogation rights claims in the lawsuit against Worldwide and Off Duty Services, meaning a request for reimbursement for covered claims. Philadelphia will collect the settlement amounts and also take over from Gersten as plaintiff in the claims against a third ex-HOA vendor, Javier Ceppi and his computer and tech services vendor CompuFix.

In the November lawsuit, Gersten had accused CompuFix of receiving $923,892 from the association and of aiding Gallego and former board member Monica Ghilardi in falsifying HOA election votes, allowing them to keep their power, according to the complaint

Ceppi and CompuFix could not be reached for comment. They list no attorney in the case.

The Hammocks now is led by its board elected in February. As monitor, Gersten will retain the power to access financial records, sit in at board and committee meetings, break tie votes, approve the hiring and firing of all vendors, attorneys and other outsiders providing professional services to the HOA, and otherwise oversee the association’s operations.

In February, some homeowners mounted an opposition to Gersten’s plan to remain as monitor of the Hammocks, taking issue with the receivership’s costs and some of Gersten’s practices, including a reduction in assessments, despite needed repairs and suspension of a committee member.

Judge Beatrice Butchko has largely sided with Gersten, telling homeowners at court hearings that a receivership is costly but needed to make the Hammocks whole. Late last month, Butchko approved Gersten’s motion to transition to monitor, records show.

Butchko approved the Hermida Law settlement in June, the Worldwide and Off Duty settlements last month, and the Hammocks Bill of Rights in July. The bill of rights mandates that the HOA’s professional service firms, such as property manager and vendors, are licensed and independent from any ties to the Hammocks and its homeowners.

Gersten will remain monitor at least through year-end and will submit a report to the court on Dec. 1 on the HOA’s progress, recommending when he should be fully discharged. Separately, Gersten or another monitor will continue to oversee all future board elections.

“There remains a pervasive fear within the community (and by the receiver),” Gersten wrote in a July court filing proposing his transition to monitor, “that a future board could potentially disregard or dismantle the defense measures implemented to protect the community.”