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My co-op is holding board elections soon. I've read some horror stories about these elections being rigged or compromised in some way. How can we ensure the entire process is conducted fairly?
First, keep in mind that the vast majority of co-op board elections are conducted fairly, our experts say. But if you do suspect the potential for fraud, there are a few things to look out for, and actions to take.
"In my experience, if fraud is going to occur, it happens with submission of fraudulent proxies," says Steven Wagner, a partner at Wagner Berkow (a Brick sponsor). "There are a few signs of proxy fraud to look out for: For example, if there is a dramatic increase in the number of proxies from prior years, or someone arrives at a meeting with a large number of proxies that include proxies from people who already gave proxies to another candidate."
If this happens, conduct a careful check of the signatures on the proxy forms against your co-op's records, he advises.
You can also run into trouble with how ballots are distributed to shareholders.
"A sure way to avoid fraud is to distribute a ballot as the apartment owner is checking in, and to have the ballot 'authenticated' by either numbering them, stamping or initialing them, or having the ballot be a different color," Wagner says.
This way, you'll be able to keep track of how many ballots are in circulation. These ballots should also be counted by "disinterested inspectors," Wagner suggests, to further avoid any tampering.
The potential for fraud can arise when there is a high number of absentee voters and many paper ballots in circulation.
"The safest way to ensure a fair outcome is to have the voting done through a computer program which requires a password for each shareholder or owner," says Deanna Kory, a broker with Corcoran. "Many buildings have some sort of a centralized program, and perhaps voting can be set up through that system for people who will not be present at the meeting. This would ensure elections to be accurate and fair."
If you talk to neighbors and find that they share your concerns, you could also band together and engage an outside party for oversight.
"The writer (and any group of like minded shareholders) can request the board retain an independent election company to conduct the election. This would offer a level of objectivity and protection," says Jeffrey Reich, partner at Schwartz Sladkus Reich Greenberg Atlas. "Should the board refuse any such request, the writer should review the corporation’s by-laws to determine if there are any provisions regarding the appointment of inspectors of election and should use that information to ensure that independent inspectors of election are appointed."
Once the election is over, if the results are disputed by shareholders, the board should ask them to write down their concerns.
"I recommend giving the persons challenging a reasonable period of time to put their objections in writing, typically a few business days, and will even allow the challengers to inspect the ballots, proxies and sign in sheets in a controlled, supervised environment," Wagner says.
The board should try first to resolve the disputes outside the legal system, in a transparent way that keeps all shareholders informed.
"Lawsuits take time and can cost a lot of money," Wagner says. "Neither of these serve the interests of the coop or condo in my view."
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