Sea Gate residents take homeowners’
association to court over fi nances
BY ROSE ADAMS
Three residents from a gated
community in southern Brooklyn
are taking their homeowners’
association to court to force the
release of its fi nancial records —
claiming that there are more than
$5.1 million in discrepancies between
the governing body’s tax
returns and fi nancial statements
over the course of four years.
The homeowners say that the
Sea Gate Association — which
manages the Sea Gate community
at the western tip of Coney Island
— inconsistently logged its revenue
from government grants and
spending on construction projects,
among other items, between
2015 and 2018.
“This is not providing correct
information, it’s hiding information
and falsifying information,”
said Gary Daniels, a Sea Gate
resident, who claimed that board
members have not been forthcoming
about their fi nances. “You
can’t get answers out of them.”
The Sea Gate Association, a
501(c)4 nonprofi t run by volunteers
elected every two years,collects
O B S TE R S L H ’O K C U I S N 6565565656565656565656565656565565
E
Years
Celebrating Open 7 days a week for delivery & takeout
Visit our website: nickslobsterhouse.com/takeout-menu
for weekly updates & delivery information.
COURIER L 12 IFE, JUNE 5-11, 2020
fees from homeowners to fund
garbage collection, a small police
force, infrastructure repairs, and
other services throughout the
4,000-person community.
Since Superstorm Sandy devastated
Sea Gate in 2012, the organization
has also received tens of
millions of dollars in government
grants for storm resiliency projects,
the association’s president said.
“We brought over 60 million
into our community so far,” said
David Wynn, a homeowner who
has been a member of the association
for more than 10 years.
But several local residents
say that the association’s refusal
to make its fi nances public, along
with the inconsistent records,
raise questions about the projects
and the association’s fi nances.
Daniels and a small group of
other homeowners began looking
into Sea Gate’s fi nances after attending
a public meeting in 2018 about
the association’s fi nancial statements
from the previous year, which
Daniels said looked strange to him.
“Quite frankly, something on
the fi nancial statements from 2017
just didn’t smell right,” said Daniels,
a fi nancial consultant and
longtime resident of Sea Gate.
Daniels gained access to the association’s
tax returns and fi nancial
statements between 2015 and
2018, and noted discrepancies between
the separate fi lings. While
the association’s total expenses
and income remained fairly consistent
across documents, the original
tax returns tended not to list
signifi cant amounts of money paid
to independent contractors, legal
expenses, or the amounts the association
received in government
grants.
Following Daniels’ criticism, the
association amended its 2016 and
2017 tax returns, revealing some of
the gaps in its previous reporting.
As a non-profi t, the association
doesn’t pay taxes, and its tax
returns are purely informational.
But Daniels said the inconsistent
fi lings help obscure the association’s
revenue and spending.
“Many people play with their
tax returns. But this is $5.1 million
dollars in discrepancies,” he said.
The association, however, said
that the differences in the returns
are minor — especially since all
the documents report the same
amount of total costs and revenue.
“The accountants amended
the return to read that one plus
one is two, rather than one plus
one plus one equals three,” said
Barbara Garafalo, a member of the
board for about 16 years. “We’ve
been audited and they’ve never
found anything wrong.”
The board members added that
the state closely tracks funding for
government funded-projects, such
the bulkhead project.
“Grants don’t just come to us, we
have to lay out funds and we get reimbursed,”
Garafalo said. “It’s not
like we’ve gotten money for grants.
Nobody’s throwing money at us.”
After noting the discrepancies,
Daniels and two other residents,
Olga and Vincent Scarcella, demanded
in December that the association
hand over the minutes to
its executive meetings as well as
hundreds of documents regarding
most of the association’s fi nances
over several years.
In a January meeting, members
of the board told the three homeowners
that they could see some
documents, but would have to sign
a non-disclosure agreement fi rst.
The protesters declined.
President David Wynn defended
the non-disclosure agreements,
saying that all board members
sign them and that they serve
to keep the homeowners from
blasting sensitive documents on
social media.
Wynn added that the association
is willing to show the protesters
documents, but can’t hand
over hundreds at a time, especially
since lawsuits with homeowners
are confi dential. Daniels and the
Scarcellas argued they could sift
through documents on the association’s
computer or look through
boxes of papers.
Olga Scarcella fi led an Order
to Show Cause in late February,
which would require the association
to hand over the requested
documents to the homeowners.
The hearing was postponed because
of the coronavirus outbreak,
and is rescheduled for June
25, Daniels said.
“BACKYARD BBQ”
Saturdays & Sundays, 1pm-8pm
Weather Permitting, Take Out Only
Charcoal Grilled Skewers & Lobsters
Dear Neighbors & Friends,
Your business & amazing support has given
us the opportunity to give back
over 9,000 meals to our community.
THANK YOU
5 Boroughs One Community
We Are NY Tough.
/takeout-menu