Kukui Plaza homeowners in downtown Honolulu are out more than a quarter million dollars.
Their condo association says the money was stolen from a bank account, and the bank says it’s not obligated to reimburse the homeowners.
The president of the association sent a letter to homeowners saying $276,000 were stolen from an American Savings Bank account. The theft was done electronically and the money was transferred to mainland business accounts.
Homeowners were floored.
“I was really shocked, because we’re so trusting. We don’t normally go to the association meetings, so I was really shocked that such a thing could take place,” said homeowner Linda Takai.
The letter adds that because it was a business account and not a personal account, different standards apply and the bank will not reimburse the association.
So what do condo owners need to know, and how can associations protect their bank accounts?
KHON2 learned that business accounts do not have the same level of protection as personal accounts. Edward Pei, head of the Hawaii Bankers Association, says banks give more protection to personal accounts because it’s required by consumer protection laws.
“Businesses on the other hand are assumed to have a little more savvy and so there aren’t the same protection capabilities afforded to business accounts,” Pei explained. He says that applies to all business accounts, whether it’s a mom-and-pop shop or a large corporation.
But, Pei says, homeowners associations and business owners can protect their money by adding certain safeguards.
For example: check your account regularly, have the bank send an alert for transactions exceeding a certain amount, and ask the bank for additional security options. That can help avoid the uneasiness many Kukui Plaza homeowners are now experiencing.
“I’m going to ask if we’re going to have to contribute a little extra this year, or if our maintenance fee will go up next year because of this loss,” said Takai.
We went to the office of the management company to address their concerns. The general manager said the association has enough money to pay its bills so it won’t be asking the homeowners to pay any additional fees.
He adds that the association is still working with the bank and its insurance company to try and recover the money. The bank has also added security measures to the homeowners association’s other accounts.
KHON2 reached out to the association president, the vice-president, and to American Savings Bank. They did not respond.
We also checked with Honolulu Police and will let you know if there’s an update on the investigation.