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Cliffs POA Board Response to Double Diamond - March 18, 2019

The Board has received Mike Ward’s email dated March 15, 2019 in which he encourages the non-payment of the Special Assessment recently levied by the Association. The Board does not desire to waste your time with “tit-for-tat” email exchanges with Mike Ward, but the Association must respond to the email to set the record straight.

First, please ask yourself why Mike Ward sent this desperate email. Is it because he and Double Diamond have your best interest in mind? Or, is it because Double Diamond wants to protect their own interests?

It is the conclusion of the Association that Mike Ward and Double Diamond are protecting their own best interests. Mike Ward’s email is a desperate attempt to avoid having to address serious allegations made against him and Double Diamond for conduct occurring while they/he controlled the operation of the Association, including but not limited to its spending of Association money and the deplorable state of water and sewage treatment at The Cliffs. This is not mere speculation or opinion. Please read below and draw your own conclusions.

When Double Diamond Management Company served as the management company for the Association, it routinely transferred money from the Association bank account directly to Double Diamond, Inc.’s bank account. It is highly unusual for a management company to co-mingle client funds in such a manner. Double Diamond’s CFO, Rick De La Fuente has testified in this lawsuit that once Association money was transferred to Double Diamond’s bank account, Double Diamond was “free to do whatever it wants to do with it.” A weblink to download a PDF copy of the deposition excerpt, as well as several additional excerpts from Mr. De La Fuente’s testimony regarding Double Diamond transferring Association funds to Double Diamond is included here:

https://gallery.mailchimp.com/690f4c2cfa75c8a2d58b8cefa/files/768a6d3f-e472-4864-bd2b-6ddaafe400ed/DeLa_Fuente_Deposition.pdf

These are but a few examples of testimony that Double Diamond routinely transferred millions of dollars from Association bank accounts directly into Double Diamond’s own bank account. Despite requests, Double Diamond has failed to account for such transfers in an adequate manner. The Board simply shares this testimony with you so you can see one of the reasons why the Association believes it needs to keep control over its own money and prosecute the lawsuit.

Second, some context is necessary to fully understand why Mike Ward and Double Diamond send such emails to lot and timeshare owners. This is not Mike Ward’s first rodeo being involved in litigation on a Double Diamond property. Double Diamond has employed the same tactics and methods at other properties, as well. At the White Bluff property on Lake Whitney, Texas, Double Diamond had its collection company performing collection services for the WBPOA. Double Diamond had its management company earning money as the management company. Double Diamond claimed, without a note or loan agreement, that the WBPOA owed approximately $1.25 million to Double Diamond. Double Diamond refused to turn over their Association money and financial records. Sound familiar? Double Diamond and Mike Ward also sent emails to the White Bluff lot and timeshare owners, just like the ones he is sending to you. It is a part of his game plan to attempt to distract you. After many adverse rulings against Double Diamond and in favor of the WBPOA, including findings of sanctions and contempt of court against Double Diamond, that lawsuit settled. We urge you to search Google about Double Diamond and Mike Ward regarding other lawsuits involving Mike Ward and his other Double Diamond properties. This is a pattern by Double Diamond and Mike Ward. Do not for a second let Mike Ward of Double Diamond attempt to play the victim or distract you from the real issues our community is facing.

Third, please understand that each member of the board is aligned with you, the independent Property Owners. The Board is comprised of individuals who own lots and timeshares. Each board member is paying the Special Assessment, as well. Board members are not receiving any special treatment. The board determined that additional funds are needed for a number of Association items, including reserves, deferred maintenance, and legal and accounting expenses for a number of issues.  As recorded in the minutes of previous board meetings, your POA board hired Riddle & Williams (Chad Robinson) to provide guidance to the board members in the decisions and actions taken by the board and protect the interest of every property owner. Mr. Chad Robinson is the POA attorney performing that duty with the objective to negotiate a settlement whereby the POA can purchase the amenities from Double Diamond. These are all lawful reasons to spend Association funds and the Association intends to proceed with foreclosing on Double Diamond’s lots for its failure to pay their Special Assessment(s).
Double Diamond is not aligned with you. For example, for nearly twenty-five (25) years, Double Diamond has paid a minimum amount of assessments compared to the large number of lots owned. This is due to a favorable assessment provision in the Declaration that provides that Double Diamond only paid $1 per lot in assessments for most of its lots—a Declaration that Double Diamond drafted! Double Diamond provided itself full voting rights for each lot notwithstanding that it was not paying full assessments for every lot. Don’t be fooled into thinking that Double Diamond and Mike Ward have your best interest at heart.

Fourth, after you elected the current POA board, it requested that Double Diamond turnover the Association’s money and financial records. DOUBLE DIAMOND REFUSED! Please ask yourself: Why would Double Diamond refuse to turn over the Association’s money and financial records? The Association was forced to go to Court to obtain the money and records and the Judge agreed with the Association and ordered Double Diamond to turn over the Association’s money and records. Double Diamond continues to disrupt the transition to the POA’s new management company, Castle Group, in billing the maintenance assessments by not turning over critical, accurate ownership documents related to both timeshares and lots.  It is hypocritical for Mike Ward and Double Diamond to interfere with the collection of both annual and Special Assessments in light of Double Diamond’s desperate efforts to keep the Association from its own money. In whose best interest did Double Diamond act?

Fifth, one of the critical issues in the lawsuit is the failure of Double Diamond to provide an adequate accounting of how millions of dollars of Association funds were spent under Double Diamond’s watch before the new POA board was installed. For those of you who may not know this, for years, Double Diamond employees controlled the board of the Association while also serving as the management company (Double Diamond). The Association paid Double Diamond Management Company millions of dollars over the years for maintenance and other services, including handling Association money and keeping financial records. It should be easy for Double Diamond to provide sufficient proof of how Association money was spent. Nonetheless, the Association’s expert has opined that Double Diamond has not provided this to date. In whose best interest did Double Diamond act?

Sixth, Double Diamond claims that the Association owes it over $1.5 million for a loan to repay advances made by Double Diamond during the past twenty-five years. However, there is no loan agreement! There is no Note! Again, there is a total lack of the most fundamental written financial documents that routinely evidence such a financial transaction. Nonetheless, Double Diamond demands payment. In whose best interest is Double Diamond acting?

Seventh, in March 2018 before the current board was elected, Mike Ward, in a desperate move, on behalf of Double Diamond Management Company, and one of his cronies and Double Diamond employees, Randy Gracy, on behalf of the Association, signed a new management agreement that purported to give Double Diamond Management Company the exclusive right to continue serving as the management company for The Cliffs through 2028—for ten more years. A ten (10) year term is not normal in the industry, especially not for a prior developer’s management company who has been managing the property for nearly 25 years already. Moreover, the alleged agreement provides for a management fee of ‘cost plus 15%’ starting in 2019. That fee could amount to hundreds of thousands of dollars a year to Double Diamond. The Agreement was entered after the lawsuit was filed and after the lot owners attempted to take control of the board. It was also entered after Double Diamond lost control over management of the White Bluff property on Lake Whitney, Texas because it did not have such an agreement. Ask yourself who benefits from the management agreement, you or Double Diamond? A weblink to download the a PDF copy of the purported agreement is included here:

https://gallery.mailchimp.com/690f4c2cfa75c8a2d58b8cefa/files/5a7b3a20-d517-4a57-a42c-a622278e82de/Management_Agreement.pdf

Eighth, Mike Ward’s March 15th email violates a temporary injunction entered by Judge Moore in the pending lawsuit. The Judge provided that Double Diamond must not interfere with the Association’s collection of assessments. Apparently, Mike Ward and Double Diamond have no regard for the Judge’s ruling. It is an act of desperation (or worse) to ignore a Court’s ruling. The Association will seek to hold Double Diamond and Mike Ward accountable for this violation of a Court Order.

Ninth, for those of you who may not have experience with what is “normal” in the land development world, it is unusual for a prior developer, such as Double Diamond, to remain so involved in the community and POA for this long of a period. Most developers build out the property as quickly as possible, sell their lots and turn over control of the Association to the lot owners. Double Diamond is still continuing to challenge the duly-elected board (which the Judge has held was properly elected) comprised of independent lot and timeshare owners. As set forth above, it refused to turn over money and records after it lost the board election and forced the Association to go to Court. The March 15th email is further evidence that Double Diamond and Mike Ward refuse to let go of control of the Association. Ask yourself: Why is Mike Ward (Double Diamond) fighting so hard to keep control of the Association? What are they (Double Diamond) trying to hide?

Tenth, the Special Assessment is not being used to fund Mr. Dipprey and Mr. Priddy’s lawsuit, which was filed in July, 2017. The Association would have filed this lawsuit in it’s capacity if independent property owners had control of the Association prior to the November 18, 2018 election, but Mike Ward (Double Diamond) controlled the Association for the past 24 years until then! They/he certainly would not sue themselves. There was no choice for addressing the concerns over the water and sewage service issues in the community, the expenditure of your money under Double Diamond’s watch, and other issues except for lot owners to file the July, 2017 lawsuit.

Eleventh, while the Association bank account contained approximately $400,000 in December of 2018, the Association agreed to permit Double Diamond, with adequate accounting provided, to use the bulk of that money, plus further collections, ($500,000.00 dollars) for expenses to keep amenities open through Friday, March 15th. In that ‘court house negotiation’ ordered by the judge, the POA wanted to keep The Cliffs amenities open and the ninety-three (93) employees that Mike Ward fired, with only a two day notice, open and operating.  Mr. Ken Hill, a multi-lot owner and one of the original lawsuit petitioners, came to that court hearing with a check from his bank account to insure the employees could continue to be paid. It is dishonest for Double Diamond to create an impression that there was excess money just sitting in the Association’s bank account. Especially considering that Stack Bowers of Double Diamond stated in our December, 2018 open board meeting that the Associations bank account was empty and we had no money. Mike Ward is attempting to create a smoke screen. Please keep your eyes on the prize.

We need to stand united in our pursuit of equal treatment under the law, to control our own monies, our own property, and the management of our substantial investments to appreciate in value, and to be assured of clean, potable, and consistent water supply. And also to STOP the draining of open fecal sewer water allowed to flow into our beautiful lake and public water supply by “Double Diamond Utilities Company Inc.”.

For the best interest of ALL lot, timeshare, and condominium owners, we intend to stop Double Diamond and Mike Ward’s desperate attempts to continue lining its own pockets at our expense.



Sincerely,


Cliffs POA Board

Cliffs Independent Board Meeting

The Cliffs Property Owners board meeting began at 5:00 PM.

Dan Dipprey opened the meeting in prayer & called the Board meeting to order.

Dan preceded to introduce the new Board of Directors to the Members.

Board members present were Dan Dipprey, Tim Grissom, Curtis Priddy, Bob Lakey & John Liske. A quorum was present along with Shaugn Stanley who was present via telephone.

Noted that the Board does not have any minutes from the prior Board meeting to approve or disapprove.

Motion was made to remove all of the current officers, if any, and appoint new officers.  Bob seconded  / motion carries.

Motion was made to appoint Dan Dipprey as President, Tim seconded  / motion carries.

Motion was made to appoint Curtis Priddy as Vice President, John seconded  / motion carries.

Motion was made to appoint Shaugn Stanley as Treasurer, Bob seconded  / motion carries.

Motion was made to appoint John Liske as Secretary, Curtis seconded  / motion carries.

Minutes of the Board meeting were taken by John Liske.

Motion was made to appoint Bob Lakey & Tim Grissom as V. P. to head up Committees, Curtis seconded  / motion carries.

Motion was made to remove all of the current ACC members & to seek volunteers to serve on the ACC.  Curtis seconded  / motion carries.  At the next Board meeting, new ACC members will be appointed.

Next order of business, discussion to obtain Director & Officers Liability Insurance.  John Liske disclosed his relationship with the insured, and will recuse himself as needed.  John preceded to explain D&O coverage & coverages the Board should consider.
The Board tabled the vote until receiving legal counsel advice as to coverages & if Liske should recuse himself. The Board authorized that at least two carrier bids should be obtained to compare & report to the Board.

Next order of business, www.thecliffspoa.com & .org needs to to be utilized by the POA to keep POA members informed.
The Board authorized Tim Grissom to obtain a license to use the website for a de minimus amount ASAP.
The website should be updated immediately, minutes from this, & all future minutes, posted here.

The Board discussed using the website & the e-mails related thereto as well as Cliffs Chat & the Facebook page to inform members to not pay assessments they receive until counsel has determined the validity of the contracts, if any, that the POA has.

Next order of business was a discussion of retaining counsel to provide representation related to issues facing the Property Owners Association.  Attorney Chad Robinson with Riddle & Williams in Dallas, has experience in working with HOA’s. Chad was involved at White Bluff and the documents are similar to the Cliffs, which will get him up to speed faster. Additionally, Riddle & Williams did the CCR’s for Eagle Point Condos.
The Board will also ask Chad to look into who we should use to assist with the water & sewer issues, including any representation before the PUC and TECQ.

Motion was made to retain Chad and his firm for up to $400 per hour to advise the Board.  Curtis seconded / motion carries.

Next order of business discussed was possibly retaining a management firm such as First Service Residential to perform the management and administration of collecting our annual assessments, handling payroll, accounts payable, taxes etc. pending the advice of counsel.

The final discussion centered around contracting for services of a current or former county judge, county elections administrator, justice of the peace, county voter registrar, or a person agreed on by the Association & each person requesting the recount of the vote that removed the prior Board.

Motion was made to contract with whomever the Board determines should conduct the recount.  Tim seconded  / motion carries.

Next Board meeting will be January 5, 2019 at a location determined by the Board.  During this meeting attorney Chad Williams is to be present.

  President Dan Dipprey then officially closed the board meeting.

A Town Hall forum was then opened for questions / comments from attending members.  Resulting in positive dialogue discussions.

The Town Hall meeting dispersed at approximately 8:10 PM.

Dear Cliffs Independent Lot and/or Timeshare Owner

Dear Cliffs Independent Lot and/or Timeshare Owner,

The Board of Directors of the Association is writing to respond to the email communication Mr. Ward sent on January 9 on behalf of Double Diamond Management (“DDM”). The email speaks volumes about the problems we all face as lot owners who have lived under the thumb of DDM under Mr. Ward’s control. You cannot tell that from DDM’s email, but Mr. Ward is no longer on the Board. DDM and Mr. Ward have no right to instruct you how maintenance fees will be collected.

DDM works for you and the Association, not the other way around. Apparently, Mr. Ward still believes he controls the Board. He does not. Your duly-elected Board tells DDM what to do, including how maintenance fees will be collected and where such money will be deposited. Your dues pay DDM’s management fee. Please ask yourself why DDM and Mr. Ward are fighting so hard to keep access to YOUR money. All the Board is trying to do is set up a new account under the control of your duly-elected Board so that the Board can make sure your money is spent on Association business.

Mr. Ward and DDM claims there is a management agreement that entitles DDM to continue managing the community through 2028. What they fail to tell you in their email is that the management agreement was entered one week before a vote was scheduled to remove Mr. Ward, his employees and other directors friendly to Double Diamond from the Board. Mr. Ward signed the contract on behalf of DDM and Mr. Gracy, an employee of a Double Diamond company, signed on behalf of the Association. The Association believes the agreement is unenforceable on numerous grounds and will address that issue in court. Please ask yourself whether it was in your best interest or DDM’s and Mr. Ward’s best interest to lock the Association into paying DDM management fees for the next 10 years.  

The Association is not asking you to join the lawsuit personally. The Association, as a non-profit corporation, has joined the lawsuit. The Association has joined the lawsuit to protect the best interests of all owners. From what the Association can tell at this point, the water and sewage infrastructure is in atrocious condition and there is Association money, YOUR MONEY, that cannot be accounted for under DDM and Mr. Ward’s control. A lawsuit is the only venue, unfortunately, at this time where relief on these items can be sought.  In addition to the added expense for the lawsuit, the Association foresees deferred maintenance and other items that may require additional funds. The Board is just trying to be fiscally prudent. Don’t let Mr. Ward and DDM take your eye from the prize—gaining our independence. Double Diamond will have to pay the special assessment like all owners-that is why DDM and Mr. Ward are objecting.

We will not respond to the personal attacks in the communication—those attacks only serve to reveal Mr. Ward and DDM’s true colors. We, the duly-elected Board, are lot owners like you and have your best interest at heart.

We are working on getting independent management setup. Please bear with us until we are able to get the new infrastructure in place. We all need to stick together. Now is not the time for in-fighting, that only serves to help Double Diamond’s cause to keep control of your community.

Sincerely,

“Board of Directors of The Cliffs POA”
Curtis Priddy
John Liske
Tim Grissom
Shaugn Stanley
Bob Lakey
Dan Dipprey

Response to Mike Ward/Double Diamond email dated January 9, 2019

The Board of Directors of the Association is writing to respond to the email communication Mr. Ward sent on January 9 on behalf of Double Diamond Management (“DDM”). The email speaks volumes about the problems we all face as lot owners who have lived under the thumb of DDM under Mr. Ward’s control. You cannot tell that from DDM’s email, but Mr. Ward is no longer on the Board. DDM and Mr. Ward have no right to instruct you how maintenance fees will be collected.

DDM works for you and the Association, not the other way around. Apparently, Mr. Ward still believes he controls the Board. He does not. Your duly-elected Board tells DDM what to do, including how maintenance fees will be collected and where such money will be deposited. Your dues pay DDM’s management fee. Please ask yourself why DDM and Mr. Ward are fighting so hard to keep access to YOUR money.All the Board is trying to do is set up a new account under the control of your duly-elected Board so that the Board can make sure your money is spent on Association business.

Mr. Ward and DDM claims there is a management agreement that entitles DDM to continue managing the community through 2028. What they fail to tell you in their email is that the management agreement was entered one week before a vote was scheduled to remove Mr. Ward, his employees and other directors friendly to Double Diamond from the Board. Mr. Ward signed the contract on behalf of DDM and Mr. Gracy, an employee of a Double Diamond company, signed on behalf of the Association. The Association believes the agreement is unenforceable on numerous grounds and will address that issue in court. Please ask yourself whether it was in your best interest or DDM’s and Mr. Ward’s best interest to lock the Association into paying DDM management fees for the next 10 years.  

The Association is not asking you to join the lawsuit personally. The Association, as a non-profit corporation, has joined the lawsuit. The Association has joined the lawsuit to protect the best interests of all owners. From what the Association can tell at this point, the water and sewage infrastructure is in atrocious condition and there is Association money, YOUR MONEY, that cannot be accounted for under DDM and Mr. Ward’s control. A lawsuit is the only venue, unfortunately, at this time where relief on these items can be sought.  In addition to the added expense for the lawsuit, the Association foresees deferred maintenance and other items that may require additional funds. The Board is just trying to be fiscally prudent. Don’t let Mr. Ward and DDM take your eye from the prize—gaining our independence. Double Diamond will have to pay the special assessment like all owners-that is why DDM and Mr. Ward are objecting.

We will not respond to the personal attacks in the communication—those attacks only serve to reveal Mr. Ward and DDM’s true colors. We, the duly-elected Board, are lot owners like you and have your best interest at heart.

We are working on getting an independent management setup. Please bear with us until we are able to get the new infrastructure in place. We all need to stick together. Now is not the time for in-fighting, that only serves to help Double Diamond’s cause to keep control of your community.

Respectfully,
Your Board of Directors

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