A bookkeeper for the Summit House, a building at 2880 Grand Ave. housing 49 condominium units, has admitted she embezzled an undisclosed amount of cash over a period of several years to support a gambling habit, according to owners association documents obtained by the Business Record.

According to the minutes of a March 29 meeting of the Summit House Owners Association, bookkeeper Janis Hernandez, whose address is unknown, also admitted to two Summit House representatives “that she falsified bank statements used by auditors to prepare [the association’s] annual review of books.”

The association has hired the certified public accounting firm of McGowen, Hurst, Clark & Smith to audit the books for the four years of Hernandez’ employment to determine the amount of the loss. The audit should be complete in about a month, according to Ron Pogge, an attorney who is representing the Summit House owners. Neither he nor Bob Bergazyn, the president of the homeowners association, would elaborate on the ongoing investigation into the missing money. No criminal charges have been filed against Hernandez.

The association had $5,000 in its bank account when the embezzlement was brought to the attention of the board of directors. The group has since obtained a $150,000 line of credit to allow maintenance on common areas to continue. The association also had $50,000 in dishonest employee insurance coverage.

The Summit House Owners Association voted six years ago to eliminate the annual audit of its financial records in favor of a less rigorous review every three years. The group expects to revisit that decision and discuss whether to contract with an outside firm for professional oversight.

Ashley Johnson and Kris Saddoris, two executives at Conlin Properties Inc., say the alleged embezzlement makes a strong case for professional oversight of the financial dealings of homeowners associations, the fastest-growing segment of residential real estate. Johnson is Conlin Properties’ director of community association management and Saddoris is its director of development. Conlin Properties provides professional management services to9 about 115 Central Iowa homeowners’ associations, working with more than 7,000 homeowners. Summit House is not among them, but Conlin Properties founder and CEO James Conlin and his wife, Roxanne Barton Conlin, own a unit there.

Saddoris said misappropriation of funds from a homeowners association could affect the owners’ ability to sell their units or subject them to unanticipated personal assessments at the time of sale. “These people are going to pay a painful price” for their decision not to seek professional management of the homeowners association, she said.

“The value of these homes will be affected,” Johnson said.