RML Lie Exposed: RML Actually Has Negative Cash Flow Of $152,000 Per Year

Summary:  Do you realize that HALF of all HOA fees collected each YEAR from ALL Deer Ridge Owners are illegitimately used to pay the $152,000 a year negative cash flow of RML???

No wonder we never have ANY reserves for Deer Ridge – and the illegitimate “board” tries to force all owners to fund an illegitimate $353,500 Asinine Assessment to help cover up their lie that RML fully supports itself.

I have completed a GGRC and RML budget analysis that we intend to use in our $3 million lawsuit against GGRC and Joe Thomas and the “board” – and I thought you might find it overwhelming indicative of the lies and misrepresentations that are being perpetrated here at Deer Ridge.

It shows that RML actually has, in reality, a NEGATIVE CASH FLOW of $152,000 EACH YEAR - not the $12.000 “positive” cash flow that Joe Thomas and the “board” lied to you about with the budget mailing to all owners last December.

OK.  Fair warning:  This post is all about numbers and budget analysis which I know is a total bore to many of you.  So, in an effort to make it easy for you, I am going to give you, up front, the Executive Summary and bottom line of all that follows.  All the data is there if you would like to plow through it to understand where each and every number comes from.

The key question to remember:  For every operating cost associated with Deer Ridge, would that cost, or that full cost, be there IF Deer Ridge was not operated as a motel?  Would that cost, or that full cost, be there if we were operated solely as a small, 84 unit residential condo complex owned by over 78 owners with diverse needs and goals?

Bear in mind that there is NOTHING in the Master Deed or Bylaws that indicates this property is anything other than a small, 84 unit residential condo complex – so there is nothing in our regime documents that sets Deer Ridge out as a motel or as a predominately rental property.  Therefore, when folks buy a condo at Deer Ridge, there is NOTHING in any of the legal documents that provide for RML or running the property as a motel. Each owner can choose to rent or not rent their unit out – but any and all costs associated with renting a unit is that unit’s responsibility.

Hence, the Common Expenses that are funded by all of our HOA fees can ONLY relate to operating Deer Ridge as a small, 84 unit residential condo complex.  So, the point of this analysis is to break out any and all expenses or partial expenses that would not be required of a small, 84 unit residential condo complex.

The Executive Summary – The Dirty Dozen Secrets Of RML

All of the following is my personal opinion based on my detailed analysis of the audits and budgets provided by the “board.”

Joe Thomas and Larry Ohm and the rest of the “board” have been LYING to you for years that RML is profitable – and that RML is the part of Deer Ridge that really supports the real costs here.

All of that is a lie.

1. The real truth is that RML has a NEGATIVE CASH FLOW of over $152,000 just for 2010, assuming all the budget numbers are hit. (Last year they missed their revenue budget number by almost $100,000 – so, if they miss this year’s number by the same amount, that means the RML Negative Cash Flow could be over $252,000 just for 2010!)
2. The 2009 actual numbers show that the NEGATIVE CASH FLOW for all of 2009 was over $130,000 according to the numbers in the audits handed out at the 2010 “Annual Meeting.”
3. The reasons that the budget numbers and the audits show otherwise is that these guys have been playing games with at least 14 line items of expenses totaling nearly $164,000 that are falsely shown as GGRC expenses when they, in fact, have nothing to do with operating and administrating a small 84 unit residential condo community.  Those 14 line items, instead, are related to being in the motel business that is run by RML.
4. Joey and the “board” know that the truth of this would be unacceptable to a significant number of Deer Ridge owners – so they lie to all the owners about which company is really responsible for each line item – hoping that their “artful dodger” arithmetic will go by unnoticed.  This is one of the reasons for their disinformation campaign and lies trying to discredit me – because they KNEW that I was going to expose these secrets for all Owners to see and understand.
5. Assuming the last six years was the same level of negative cash flow for RML, then RML has squandered OVER $1 Million of our HOA fees!
6. This is almost THREE of the current Asinine Assessments!  No wonder we don’t have any money in any of our reserve accounts!  No wonder that Deer Ridge has the HIGHEST HOA fees in the entire area.
7. This ANNUAL NEGATIVE CASH FLOW represents over HALF of the total HOA fees collected from ALL owners at Deer Ridge – each and every year.
8. This $152,000 NEGATIVE CASH FLOW each year equates to a cost of over $1,800 to each and every owner at Deer Ridge – including the 20 plus units that do not use RML.  If just those who use RML were to pay this $152,000 negative cash flow each year, they would have to pay $2,375 a year EXTRA just to keep RML out of bankruptcy.  If you think in terms of NET dollars to each owner per year, you can see that RML is not a good deal for ANY owner at Deer Ridge.
9. This means that RML has wrongly robbed me of over $9,000 just for my unit during the past five years we have owned here.
10. On top of the financial impact, RML is a illegitimately formed and operated “for profit” corporation owned by a non-profit organization.  There was never even the guise of a vote authorizing its formation – and there is zero provision in the property’s master deed and bylaws that provide even a nickel for paying for RML out of our Common Expense – and here it is, taking over HALF of our HOA fees each and every month from ALL owners.
11. If GGRC were operated correctly, without RML, and using a professional HOA management company, GGRC would generate a POSITIVE CASH FLOW each year of over $118,000 with current HOA fees in place.  This would have equaled approximately $600,000 over the past five years!  This is almost enough to cover TWO Asinine Assessments – without requiring owners to dig in their pockets for even more money.
12. The GGRC “board” has a fiduciary duty to ensure that GGRC, not RML,  is operated properly for ALL  Owners in accordance with the Master Deed and Bylaws.  Joe Thomas and the rest of the Gang of Six are GROSSLY violating their fiduciary duty to GGRC by trying to protect RML’s negative cash flow from being discovered – and continuing to deplete hundreds of thousands of dollars of HOA fees to do so.  It is past time to hold every member of the Gang Of Six personally and financially responsible for their wanton disregard for their fiduciary responsibility to every owner at Deer Ridge.

All owners should be outraged at this despicable lie that has been perpetrated by Joe Thomas for YEARS just for his own self-serving reasons to keep employed and paid all the money he unjustifiably gets from our small 84 unit complex.

All owners should be outraged that Luther Parker and Larry Ohm and the rest of the “board” are either so incompetent and grossly negligent to understand this – or are in collusion with Joe Thomas to intentionally misrepresent these facts to all the owners.

We expect to hold Joe Thomas and every member of the “board” fully accountable for every dollar of Owners’ money they have wasted on RML with our $3 million lawsuit – and believe that the jury in our case will have no difficulty in understanding and believing the following analysis that proves their lie – and the extent to which it has been covered up.  And, since these Dirty Dozen Secrets About RML have affected EVERY OWNER, past and present, for the last decade, this will probably be the basis for a SECOND Class Action Lawsuit against Joe Thomas the rest of the Gang of Six.

An Alternative – Professional HOA Management of Deer Ridge

My previous posting How To Fire Joe Thomas And Save GGRC Tens Of Thousands $$$ Each Year gives details on a bid we received from a professional HOA management company that specializes in providing the managerial, administrative and maintenance services required of home owner associations in the Knoxville and Gatlinburg areas.  Their bid provides for:

• A one time set up fee of $1,680 to audit the books and records
• A monthly management fee of $1,680 per month plus any and all late fees they collect
• Maintenance done at $25 per hour for individual homeowners’ repairs.
• Maintenance for common areas at $40 per hour without a maintenance contract and at $20 an hour with a maintenance contract.
• All monthly bookkeeping included, which would also save GGRC thousands of dollars per year.
• All personnel would be their people – not ours – so there would be no cost to us for all personnel related costs. This also means that they provide the back up folks for vacation, illness and resignations and firings.

You can see their full bid by clicking Bid and view their brochure by clicking Brochure.

Bear in mind, that all of these activities are strictly GGRC related and have nothing to do with the illegitimate RML and its’ activities.

Their company:

• Has been providing HOA services in the area for over a dozen years.
• Has managed over $800 million in HOA property at over 50 different locations throughout East Tennessee.
• Has their own accounting and maintenance people along with their own lawn care experts.
• Prepares the annual budget for the HOA.
• Collects HOA fees and assessments.
• Includes all the bookkeeping in their charges.
• Generates management reports that include monthly management summaries, balance sheet, income and expense statements, budget performance, collection report and bank reconciliation.
• They maintain the state-required HOA “Administrator’s Book” that seems to be so difficult to produce with the current management team led by “full time” General Manager Joe Thomas.

Again, you can see the whole previous posting by clicking How To Fire Joe Thomas And Save GGRC Tens Of Thousands $$$ Each Year.

By tapping the expertise of this, or some similar company, GGRC ends up with a HUGE positive cash flow each year of nearly $120,000 each year!  That kind of surplus would have been able to fully fund even the absurd Asinine Assessment of $353, 500 in under three years without the need for any additional pay in by all the owners.

Doesn’t it make sense for GGRC to have this kind of positive cash flow each year – instead of using HALF of our HOA fees each and every year from ALL owners to feed the RML negative cash flow???

The Detailed Analysis For Your Review

The following detailed analysis shows you exactly how all of the above conclusions were reached.  I invite you to pour over each of the numbers yourself so that you understand each line item and its implications for our property.

Here are the “claimed” budgets as done by Joe Thomas and the “board” last November and mailed to all owners in December 2009.

Notice that both RML and GGRC magically show a slight positive cash flow for each year.

However…

The Intentional Misrepresentation To Hide RML’s Negative Cash Flow

There are at least 14 line items on the GGRC Budget that have nothing to do with operating a non-rental 84 unit residential condo association.  These 14 line items are listed below:

If you examine each of the above 14 line items, you will see that our small 84 unit complex needs none of many of those cost factors – or in some cases, like utilities and insurance, we are paying a major premium for being in the motel business – BUT – those incremental costs are not properly shown as an RML expense.

• Except for the gas for those expensive-to-operate commercial laundry machines, RML has no line items for all the utilities they use – including  for the water or for the very expensive electric part of those expensive-to-operate commercial laundry machines, nor for all the office equipment, the game room (GGRC gets none of those funds), Joe’s office, the break room, the lighting for all that area, etc.  So, I have attributed one-third of our annual common area utilities to RML to cover their use of water and electricity.
• Likewise, 25% for insurance has been allocated to RML ($8,000, or 14%, of the $58,000 annual premium alone is spent on errors and omissions, director and officers and criminal fraud coverage that is not a part of the usual multi-peril coverage.)
• One of the key differences is that our small 84 unit condo doesn’t need those full time employees – with all of their employee benefits.  These folks are clearly used in RML-related endeavors for the most part.  (Don’t worry – we add back in the RIGHT level of personnel for GGRC below.)
• Our small 84 unit complex does NOT need a vehicle and we don’t need a $2,000 a year computer
• We don’t need a bunch of chairs that are used for RML related meetings, reunions, etc.

The above shows that if all the costs are properly attributable to RML that are genuinely RML related, the financial picture that Joey and the “board” try to falsely project changes dramatically.

Now, we show the REAL cost – and risk – of owning a real estate management company:  a NEGATIVE CASH FLOW of over $152,000 EACH YEAR.

Where does this huge amount come from each year?

Out of the pockets of ALL the owners at Deer Ridge Mountain Resort!

• This amounts to $1,811 being paid each year by EVERY owner to support RML – including the same amount being illegally charged to the 20 or so owners who have nothing to do with RML.
• This means that for the five years I have owned here, and assuming the above numbers are indicative of all five years, I have been illegitimately charged nearly $9,000 to support RML!  (This is in addition to the nearly $11,000 I, and all other 29 1-1 owners have been overcharged by the “board” not abiding by the Master Deed Percentages.)
• This means, in total for both rip offs, Joe Thomas and these illegitimately conceived “boards” have taken over $20,000 out of just my pocket in direct cash.

The only things missing are the masks and guns.

How much have they “inappropriately taken” from YOUR bank account over the years?

The Real GGRC Budget

So, what does all of this mean to the REAL budget for GGRC?

The following budget assumes that we hire a professional HOA management company and have them provide the personnel we really need for our property.  It shows that GGRC, with the current HOA fees, SHOULD be positively cash flowing over $118,000 a YEAR or nearly $600,000 over five years.  Now, that would be a reserve account that would never require any kind of special assessment!

Doesn’t it make sense for GGRC to have this kind of positive cash flow each year – instead of using HALF of our HOA fees each and every year from ALL owners to feed the RML negative cash flow???

Backup Data – Snapshots Of The “Claimed” Budget From Joe Thomas And the “Board” Sent To All Owners

OK.  Here are the actual budgets as provided by your friends Joe Thomas and Larry Ohm – and blessed by the rest of the “board.”

Kind of makes you wonder what else they may be lying to all the owners about, huh?

All of the yellow highlighted entries are the ones in question that should be fully or partially attributable to RML.

That’s it.

Now, you see how the numbers should REALLY be done.

Maybe there’s some quibble room of a few thousand dollars.  Maybe even $20,000.  But the bottom line implications of all these years of lies, all the HUGE negative cash flows for all these years, is massive.

Give or take, about $1 Million has been squandered over the past six or seven years from hard-earned money paid by ALL owners at Deer Ridge.

In my opinion, most of this was done to fund The Joe Thomas Continued Employment Act of 2000-2010.

Here’s the same executive summary as you saw above.  Look at it again so you can better understand how massive the lies have been from Joe Thomas, Larry Ohm and the rest of your “board.”

The Executive Summary – The Dirty Dozen Secrets Of RML

All of the following is my personal opinion based on my detailed analysis of the audits and budgets provided by the “board.”

Joe Thomas and Larry Ohm and the rest of the “board” have been LYING to you for years that RML is profitable – and that RML is the part of Deer Ridge that really supports the real costs here.

All of that is a lie.

1. The real truth is that RML has a NEGATIVE CASH FLOW of over $152,000 just for 2010, assuming all the budget numbers are hit. (Last year they missed their revenue budget number by almost $100,000 – so, if they miss this year’s number by the same amount, that means the RML Negative Cash Flow could be over $252,000 just for 2010!)
2. The 2009 actual numbers show that the NEGATIVE CASH FLOW for all of 2009 was over $130,000 according to the numbers in the audits handed out at the 2010 “Annual Meeting.”
3. The reasons that the budget numbers and the audits show otherwise is that these guys have been playing games with at least 14 line items of expenses totaling nearly $164,000 that are falsely shown as GGRC expenses when they, in fact, have nothing to do with operating and administrating a small 84 unit residential condo community.  Those 14 line items, instead, are related to being in the motel business that is run by RML.
4. Joey and the “board” know that the truth of this would be unacceptable to a significant number of Deer Ridge owners – so they lie to all the owners about which company is really responsible for each line item – hoping that their “artful dodger” arithmetic will go by unnoticed.  This is one of the reasons for their disinformation campaign and lies trying to discredit me – because they KNEW that I was going to expose these secrets for all Owners to see and understand.
5. Assuming the last six years was the same level of negative cash flow for RML, then RML has squandered OVER $1 Million of our HOA fees!
6. This is almost THREE of the current Asinine Assessments!  No wonder we don’t have any money in any of our reserve accounts!  No wonder that Deer Ridge has the HIGHEST HOA fees in the entire area.
7. This ANNUAL NEGATIVE CASH FLOW represents over HALF of the total HOA fees collected from ALL owners at Deer Ridge – each and every year.
8. This $152,000 NEGATIVE CASH FLOW each year equates to a cost of over $1,800 to each and every owner at Deer Ridge – including the 20 plus units that do not use RML.  If just those who use RML were to pay this $152,000 negative cash flow each year, they would have to pay $2,375 a year EXTRA just to keep RML out of bankruptcy.  If you think in terms of NET dollars to each owner per year, you can see that RML is not a good deal for ANY owner at Deer Ridge.
9. This means that RML has wrongly robbed me of over $9,000 just for my unit during the past five years we have owned here.
10. On top of the financial impact, RML is a illegitimately formed and operated “for profit” corporation owned by a non-profit organization.  There was never even the guise of a vote authorizing its formation – and there is zero provision in the property’s master deed and bylaws that provide even a nickel for paying for RML out of our Common Expense – and here it is, taking over HALF of our HOA fees each and every month from ALL owners.
11. If GGRC were operated correctly, without RML, and using a professional HOA management company, GGRC would generate a POSITIVE CASH FLOW each year of over $118,000 with current HOA fees in place.  This would have equaled approximately $600,000 over the past five years!  This is almost enough to cover TWO Asinine Assessments – without requiring owners to dig in their pockets for even more money.
12. The GGRC “board” has a fiduciary duty to ensure that GGRC, not RML,  is operated properly for ALL  Owners in accordance with the Master Deed and Bylaws.  Joe Thomas and the rest of the Gang of Six are GROSSLY violating their fiduciary duty to GGRC by trying to protect RML’s negative cash flow from being discovered – and continuing to deplete hundreds of thousands of dollars of HOA fees to do so.  It is past time to hold every member of the Gang Of Six personally and financially responsible for their wanton disregard for their fiduciary responsibility to every owner at Deer Ridge.

All owners should be outraged at this despicable lie that has been perpetrated by Joe Thomas for YEARS just for his own self-serving reasons to keep employed and paid all the money he unjustifiably gets from our small 84 unit complex.

All owners should be outraged that Luther Parker and Larry Ohm and the rest of the “board” are either so incompetent and grossly negligent to understand this – or are in collusion with Joe Thomas to intentionally misrepresent these facts to all the owners.

We expect to hold Joe Thomas and every member of the “board” fully accountable for every dollar of Owners’ money they have wasted on RML with our $3 million lawsuit – and believe that the jury in our case will have no difficulty in understanding and believing the following analysis that proves this lie – and the extent to which it has been covered up.  And, since these Dirty Dozen Secrets About RML have affected EVERY OWNER, past and present, for the last decade, this will probably be the basis for a SECOND Class Action Lawsuit against Joe Thomas the rest of the Gang of Six.