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Court Hearing Set for Koger

Forensic accountant has difficulty obtaining financial records from bank, accused management company.

An Aug. 7 hearing has been scheduled in Fairfax Circuit Court after a forensic accountant and a court-ordered monitor reported difficulties in obtaining cooperation from the Koger Management Group, Inc. and its bank, BB&T.

Koger has been the largest management companies for homeowners and cooperative apartment associations in this area handling at one time hundreds of thousands of dollars for some 440 clients.

On Feb. 26, 2007, Robert A. Koger, the 79-year-old principal of KMG, entered an agreement in Fairfax court that he would retain a forensic accountant and a court monitor to analyze irregularities in the accounts of several associations that his firm managed and set up an equitable repayment system.

Koger reported to the Fairfax City Police at that time that an employee had "embezzled" some $800,000 and requested an investigation. He later wrote to homeowner associations that the employee was in the financial department and he had been discharged. The head of that department was Jeff Koger, the chief financial officer of Koger between 2004 and 2006. Jeff Koger is Robert Koger’s son.

On July 16, Jeffrey D. Barsky, the forensic certified public accountant Koger retained, wrote to the court monitor that he was meeting significant delays in obtaining bank and Koger records on several transactions. He also reported that his early analysis showed that between 2004 and 2006 "approximately $2,239,000 has been withdrawn from the BB&T ACH account and transferred to either Jeff Koger or Tri-Fitness." Tri-Fitness is a health club in which Jeff Koger allegedly holds an interest, according to Barsky's filing.

Barsky wrote he was "quite concerned that the amount of withdrawal from the BB&T ACH account exceeds the amount of claims paid by so large an amount."

He said "it is unlikely that there are unpaid claims of $2,226,000 which would explain this difference."

Barsky wrote that "it has been suggested to me by criminal IRS investigators that this commingling of funds may have occurred."

Barsky said that he had asked the Fairfax City Police to issue subpoenas for certain bank records in the hope of obtaining more attention from the bank. The police have made no statement about the investigation since it was announced on Jan. 11, 2007.

Barsky said that Koger was relying on auditors for homeowner associations to report losses or irregularities and he estimated that perhaps 200 associations did not have auditors and do not know whether they suffered losses.

On July 17, Richard Mendleson, the court-appointed monitor, wrote to Robert Koger underscoring that it was imperative that "losses incurred as a result of the illicit actions of the former CFO may be identified and their losses determined."

On July 18, the two men reported to a meeting of the Department of Licensing and Regulation on the Koger matter. The department, which is represented by the Virginia attorney general’s office, brought the suit last January because Robert A. Koger holds a real estate broker’s license which gives the department jurisdiction over Koger Management.

George H. Ragland, a lawyer who represents Koger, did not return a telephone. Pam Koger at Koger Management did not return a telephone message. A current telephone number for Jeff Koger could not be located.

Lucia Trigiani, a Fairfax lawyer whose complaint on behalf of several home owner associations touched off the Department of Licensing’s interest in Koger, said it was only a fluke that the department could look into the matter. "I don’t know that Koger ever bought or sold a property, but he had the broker’s license and they could step in." She said that with the enormous housing boom in Northern Virginia over the past three decades, the quasi-government homeowners and condominium associations have become multi-million operations.

"They are actually unregulated," she said, but she thought people in the legislature are planning new laws after this case.

Associations arrange for garbage pickup, maintaining grounds, snow removal and street cleaning and often manage electrical power and water service. "They were the idea of developers who wanted to create a town or community atmosphere in a development," she said. Even in Alexandria, which has city services, she said, there are developments that have homeowner associations.

Anyone with information on Koger Management Group, Inc. may call Connection reporter Nicholas Horrock at 703-403-2035.