Homeowners associations (AKA: HOAs) get a bad wrap. Between their high monthly fees and what many residents see as gross overreach, most people have a distaste for homes located within these types of organizations.
However, hundreds of people in Maryland may have a whole new reason to hate their local HOA, after a woman named Sarah Chester was convicted of stealing more than half a million dollars from the HOAs she worked for, using the money to fund a lavish lifestyle that included European vacations. Now, she's looking at 20 years behind bars and some pretty hefty fees as a result. Keep reading to learn more.
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According to Realtor.com, Chester was arrested after the president of one of the HOA boards her company was hired by began looking into inconsistencies in the books. "It’s been stressful and time-consuming, among many things, from being a victim of her financial crimes," the board member said after the woman's conviction. "She caused so much damage."
That damage is more than just the nearly $600,000 prosecutors say she stole and used to purchase things like European vacations, memberships to posh country clubs, and other personal expenses. According to the publication, it also took the hard-earned money out of the pockets of an estimated 1,500 people, which amounts to over 250 homes. Fifty of those people even came out to attend her sentencing hearing, where Chester learned she would be facing a 20-year sentence (with all but five years suspended) and restitution to all those she defrauded.
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How Was She Able to Steal from the HOAs
Chester was convicted of running this scam from 2021 to 2025, when a group of HOAs hired Magnolia Properties to manage their associations. Chester, who worked for the company, then used her position to steal money from the HOAs, transferring it to her personal account, where she spent it on trips and personal items.
To cover her tracks, it sounds like she created fake bank statements to hide the fact that she was transferring money between the HOA accounts to keep anyone from catching on. She was able to get away with this for so long because she was responsible for reconciling the bank accounts, approving invoices, and cutting checks, something one expert who spoke to the publication said should actually be handled by three separate people.
"To be placed in a position of trust by your community only to violate that trust in such an egregious way is despicable and behavior that will not be tolerated in Harford County," the State's Attorney said in a statement to Realtor.com.
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How to Avoid Fraud in Your HOA
While there is a whole contingent of people who hate HOAs for all kinds of reasons, there are those who love living in this sort of community. First, it helps ensure that rules are followed, including those that require people to keep community spaces clean and tidy.
These types of associations can also help build a stronger sense of community, as they hold neighborhood meetings with some regularity. If you're looking for a home and considering one in an HOA but are a little worried about becoming a victim of fraud, First Service Residential says there are a few things you can do to protect yourself, including:
Getting involved in the organization and making sure that they are vetting new vendors and requiring two signatures for bank transfersRequest an annual auditMake sure they carry fidelity insuranceLearn about the red flags to look out forWhile Chester's story is likely an extreme one, fraud unfortunately does happen, so it's important to recognize the signs and ensure your community is protected.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
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