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Judge forces sale of HOA-management group
Koger Management Group, which managed homeowners associations in this region, has been forced out of business by federal judge

Date published: 7/10/2008


Robert Koger's business legacy with Koger Management Group is over.

Koger, whose company successfully managed hundreds of homeowners associations in the state and dozens in the Fredericksburg area for decades, remains embroiled in bankruptcy proceedings after millions of dollars went missing.

A judge ordered the sale of the company. It was auctioned last month. Koger also voluntarily signed a consent order that revokes his real estate license, required to operate such a business.

He now wants to switch his Chapter 11 bankruptcy case to Chapter 7--a move that could result in "pennies on the dollar" for the HOAs that filed claims against the company, says Lella Amiss E. Pape, an attorney representing dozens of the HOAs. About 200 HOAs filed claims worth $10.3 million in Koger's bankruptcy case.

She said with Chapter 11, Koger would be allowed to continue business, which increases the chances of full payout to creditors. In Chapter 7, Koger would sell his limited assets to pay creditors.

Koger's troubles started in 2006 when his son, Jeffrey Koger, the former chief financial officer, was named in a state investigative report as the "primary culprit for embezzling the funds" from hundreds of HOA accounts. Robert Koger actually reported the missing funds to police. No charges have been filed in case, which remains under investigation by federal authorities.

As Koger's lengthy bankruptcy case continues, his son is in jail, charged with attempted murder of a Virginia state trooper. On June 17, a Fairfax County judge sent Jeffrey Koger's case to a grand jury for possible indictment in what police described as a shootout near Springfield Mall in February, five days after a different judge ordered the company's sale

Gates, Hudson & Associates Condominium Management purchased Koger Management Group, which renamed itself Tri-State Management in an attempt to regroup. GHA paid $275,000. Dennis Emison, vice president of GHA, said the company took over 100 accounts from Koger. Emison was not immediately sure how many accounts are in the Fredericksburg area.

A July 18 hearing is scheduled for Koger's motion to switch to Chapter 7 bankruptcy. Koger's attorneys did not return phone messages.

Toni Brown, president of the Falls Run Community Association in south Stafford County, said the HOA and the neighboring Villas at Falls Run are missing nearly $300,000. Insurance covers about $98,000.

"We've had very low expectations. We're an insecure creditor, so that would put us at the bottom of any list for recovery in a bankruptcy proceeding," she said.

Whenever she talks about this case with friends who live in HOAs, she tells them they must be vigilant when a private company is managing their funds.

"You cannot just turn your money over to someone else's control and just assume they are handling it like they are supposed to be," she said.

Dan Telvock: 540/374-5438
Email: dtelvock@freelancestar.com

Chapter 7 bankruptcy is sometimes called liquidation bankruptcy. Companies that file for Chapter 7 are no longer trying to reorganize and must sell all assets to pay creditors. In Chapter 7, the creditors collect their debts according to how they loaned the money to the firm. A trustee is appointed, who ensures that any assets that are secured are sold and that the proceeds are paid to the specific creditors. Priority creditors are paid first.

Chapter 11 bankruptcy also is called rehabilitation bankruptcy, allowing a company to reorganize its debts and become a healthy organization again. In these proceedings, a trustee supervises the assets of the debtor and allows business to continue.