Former Hollymead Citizens Association treasurer and bookkeeper Patricia Cuthbert appeared in court twice last week, and will go to trial on October 30 to face a judge for her embezzlement charge. Cuthbert was arrested in August for making more than $73,000 in unauthorized transactions between January 2008 and December 2012. This isn’t the first time a local neighborhood association has discovered fraud in recent years, and Hollymead residents are asking their leadership for more honesty and transparency.

As the neighborhood association’s treasurer—which is a non-voting board position —and part-time paid bookkeeper, Cuthbert had the most access to the neighborhood association’s finances. Residents say they had no reason to suspect anything fishy. But when board president Charlie Smith, who didn’t respond to requests for comment, objected to having an external audit, questions arose.

“We had a sense that there wasn’t careful financial oversight,” said 15-year Hollymead resident Paul Moruza. “There was no transparency, and whenever questions were asked about the details of financials, Charlie would push back.”

In January of this year, residents and fellow board members finally convinced the president to hire a third-party company, Wills & Associates, to conduct a financial review, which led to the audit. Shortly after, Moruza said, Cuthbert admitted to stealing thousands of dollars from the association—and the board tried to keep it quiet.

“Our first concern was over the decision the board had made not to report it to the police,” Moruza said. “Our concern was that there would not be a full audit, and it was inappropriate for this to be an internal investigation.”

Residents called the police in May, and while it turned out there wasn’t much to audit, as Cuthbert had successfully destroyed most of her paper trail, she was arrested three months later.

Since the community caught wind of the fraud, residents created Concerned Citizens of Hollymead, a group that’s calling for a more transparent and cooperative neighborhood association board. Moruza said the relationship between residents and the board has improved, but he’s still disheartened by the fact that six of the nine members who were present during the time of embezzlement are still sitting on the neighborhood association board. The president, he said, “takes full responsibility for everything that happens on the board,” but has publicly stated that the fraud was not his fault. Smith was reelected as president at the meeting in May.

Moruza said a board member has never, to his knowledge, been forced to resign. Removing someone from office requires a quorum and simple majority vote, he said, and it’s something the Concerned Citizens of Hollymead are looking into. On August 18, a poll on the group’s blog asked “Should Charlie Smith resign as Hollymead president?” Six voted no; 44 voted yes.

“It’s not that he did anything bad,” said Moruza. “He was just negligent in his financial oversight for seven years. We’re just not comfortable that the same people are still in charge.”

Hollymead isn’t the first Albemarle County neighborhood to encounter an embezzlement case. In the summer of 2009, Michael Corner, treasurer of the neighborhood association of gated Keswick community Glenmore, went missing just before a meeting with the board about a financial audit. Turns out Comer, who served as treasurer, secretary, and board representative for the neighborhood’s developer, had embezzled upwards of $660,000 in an attempt to remedy the developer’s ongoing cash flow issues.

“We didn’t see it coming,” said board president Trevor Joscelyne. “People had no reason to distrust him.”

Unlike Hollymead’s board, the governing body of Glenmore’s neighborhood association waited only 24 hours before contacting residents and calling the police. One of the board’s first moves, Joscelyne said, was appointing a board member with accounting experience as the new treasurer. Within days following the discovery, a group of non-board members formed a financial oversight committee, which he said acts as “overseers to make sure all financial dealings are properly done.”

Joscelyne said transparency is essential when it comes to maintaining a good relationship with the rest of the neighborhood.

“Hollymead is doing it totally wrong,” he said. “The most important thing is credibility of the board. You can’t start hiding things from the residents, hiding information that they’re entitled to have.”

Joscelyn said Comer’s embezzlement had “no long-term negative effect” on the neighborhood. On the contrary, it made a surprisingly positive impact.

“I’m not saying it was good for the community,” Joscelyn said. “Obviously it wasn’t. We had bad publicity and bad feelings at the time. But we’ve come out of it much stronger and healthier, and the feedback we’re getting from the community is very good.”

Wills & Associates accountant C Jay Roberts said he’s always surprised to hear when a board discovers a financial discrepancy and chooses not to publicly address it.

“I wouldn’t know why a homeowners’ association, or any entity, for that matter, once they get that knowledge, wouldn’t want to look further into it,” Roberts said.

Now, Hollymead’s finances are overseen by Condominium Management of Charlottesville, who hired Wills & Associates to conduct annual reviews.

“I think it’s really smart for any association to outsource that,” Roberts said. “It provides a separation of duty, and improves internal control over oversight of finances.”

If the association has too much internal oversight, he said, there’s no telling what could be happening behind closed doors.

Cuthbert will return to Albemarle Circuit Court at 3pm on Wednesday, October 30.