TOM FINNEGAN / TFINNEGAN@STARBULLETIN.COM Waipouli Beach Resort, a new development in Kapaa, has been the source of an investigation that has pitted homeowners against one another as they tried to figure out why they paid nearly $1,600 in monthly fees.

Condo owners allege fleecing

Residents at a project on Kauai question millions of dollars levied in monthly fees

The developer of a new luxury condominium resort project on Kauai is being accused of charging condo owners more than $2.2 million in bills that he should have paid himself.

Some condo owners at the new Waipouli Beach Resort have asked state and county authorities to investigate developer Chris Singleton.

An audit by a forensic accountant turned up more than $2.2 million in "questionable" charges to condo owners, former and current members of the condo board said recently.

Singleton calls the allegations "irresponsible and false" and says they arose after a couple of owners were ousted from the project's board of directors.

Before the audit, the condo owners were paying nearly $1,600 in monthly fees. Now they pay about $1,300 a month, plus electric, taxes and whatever mortgage they have.

"Everybody was sort of horrified," said David Leinweiber, a former board member.

FULL STORY »

KAPAA, Kauai » Condominium owners at the new Waipouli Beach Resort allege that the developer of the project, who is a condo owner himself, has swindled them out of millions of dollars over the past two years.

Developer Chris Singleton, who lives at the resort and has his real estate company in the lobby, denies the allegations, saying they are the fallout from upheaval on the project's board of directors.

Singleton is accused of using the maintenance fees paid by the condo owners to pay for his own items, such as his electric bill, the furniture in the bar, construction costs and others.

An audit by a forensic accountant turned up more than $2.2 million in "questionable" charges to condo owners, former and present members of the condo board said recently.

Among those charges at the resort, which opened in January 2007, is the electric bill of developer Singleton's own six hotel-style condo units. The six rooms, these board members found, had been wired directly into the main electric meter for the entire complex, while the rest of the 176 units had their own electric meters. The bill for the main electric meter was paid from the condo owners' maintenance fees.

Singleton has repaid more than $32,000 for the electric bill, but the rooms remain wired to the main meter, condo owners allege.

Condo owners have complained to the Kauai prosecuting attorney and the state Regulated Industries Complaint Office.

"He's commingled everything," said Richard Blohm, a condo owner. "Everything he's using in his private commercial" space is being paid for through the maintenance fees.

Blohm said Singleton has served as the developer; principal real estate broker; former president of the condo board; commercial apartment owner; owner of the bar, spa and restaurant; owner of about 20 unsold units; and owner of the lobby.

Blohm also said that Singleton hand-picked the original board and, when they turned against him, persuaded the condo owners to pick a new board. This enabled him to bill the condo owners, through the board, for leasing furniture in the bar, his portions of the landscaping bill, and other items such as umbrellas and lava rocks that should have been covered in the construction costs, Blohm and others allege.

Before the audit, the condo owners were paying nearly $1,600 in monthly fees. Now they pay about $1,300 a month, plus electric, taxes and whatever mortgage they have.

"Everybody was sort of horrified," said David Leinweiber, a former condo board owner.

Leinweiber, Blohm and other former board members said they worried the new board would be accommodating to Singleton and settle their disputes for pennies on the dollar.

However, Jeff Crosbie, president of the new board, said they have formally sent Singleton a bill for the $2.2 million identified by the audit. He has until mid-September to respond.

"We need one of two things: a satisfactory answer or money," Crosbie added. "We're not sweeping anything under the carpet."

Singleton said that Leinweiber and Blohm's claims are "irresponsible and false ... and in retaliation for their removal from office."

"I am committed to working with the new board of directors to fully address and resolve all issues facing the resort, including the accounting issues identified in the forensic accountant's report," Singleton said in an e-mail reply to questions from the Honolulu Star-Bulletin.

"I have already made several payments to the (condo owners) and have agreed to pay all expenses that are legitimately the developer's responsibility," he added.

While Leinweiber and others wait for answers to their complaints to state and county authorities, Crosbie said the new board is "interested in solutions."

As for the complaints, county Prosecutor Craig DeCosta said he received an e-mail regarding the alleged improprieties at Waipouli and forwarded it to other law enforcement agencies for further investigation. However, he would not comment on any possible investigations.

JoAnn Uchida, complaints and enforcement officer for the Regulated Industries Complaint Office, would not say whether an investigation is under way into Singleton's dealings with the Waipouli Beach Resort.

The luxury resort, between Kapaa and Wailua, features a spa and a 300,000-gallon saltwater pool with water slides.