Police investigate missing money
Deposits cause for latest probe of Gunnison real estate company
Times Staff Writer
Originally published 2013-09-12
Gunnison Police are investigating a local real estate and property management company after security deposits reportedly went missing.
As of press time, no charges have been filed in the case. Yet, legal wrangling has begun in an effort by tenants and property owners to recover the lost funds.
Gunnison Police Detective Chris Danos confirmed that police are investigating the now-shuttered Quality Realty and Management, owned by Shirley Woodbury, after the company notified its tenants of the missing funds. Woodbury has been a real estate broker in Gunnison for more than 25 years and has managed numerous properties throughout the city.
“The management company put out a letter telling the owners that they didn’t have the security deposits any more for their tenants, so I’m looking into where the security deposits went,” said Danos.
Meanwhile, four separate small-claims cases have been filed in Gunnison County Court against Woodbury by tenants in an attempt to recover their deposits.
“I took security deposits on behalf of the owners,” Woodbury told the Times. “The owners were notified, and the tenants have not lost their security deposits. The owners will pay those.”
However, Woodbury made no reference to those owners’ losses.
One case filed by Tom Flynn ended in a default judgment in favor of Flynn, with the judge awarding him his $900 deposit, plus court fees and 8 percent interest.
Woodbury did not appear in court in the matter.
Flynn’s security deposit has been covered by the owner of his home, but he went to court to try to recover the lost money from Woodbury.
“The default judgment fell in my favor,” Flynn said. “However, recovering the money may never happen.”
In another small-claims case filed by Sara Bergstrom of Gunnison, both Bergstrom and Woodbury appeared in court on Aug. 28. The matter was continued until Sept. 25 by Judge Ben Eden.
Bergstrom is seeking restitution of $775 — the amount of her deposit.
Court documents in Bergstrom’s case included a letter addressed to Don Andrews, of Nucla, who owns Bergstrom’s home on North 12th Street.
In the letter, Woodbury wrote that she was no longer able to manage the property. She stated that she had allowed someone else to maintain her trust accounts, which included security deposit funds, because of her failing eyesight.
According to the letter, Woodbury claimed that because the funds were managed by “someone else” the “security deposit funds have been depleted, and I am not able to replenish them.”
Woodbury also stated in the letter that she takes “responsibility as the broker.”
“I have been in contact with the Real Estate Commission and they are aware of the deficit in the security deposit account,” she wrote. “I have advised them that I will be relinquishing my license as of Aug. 1, 2013.”
Woodbury said she has since done so and her business is now closed. However, according to the Colorado Division of Real Estate, which is a part of the Colorado Department of Regulatory Agencies, Woodbury’s broker license was still active as of Monday.
Properties once managed by Quality Realty have now gone to other management companies. One such property is being managed by Kelly McKinnis of Gunnison Real Estate and Rentals. Upon receiving the property in June, McKinnis advised the owner to cover the security deposit himself.
In this instance, the owner paid Gunnison Real Estate and Rentals the amount of the deposit.
That’s because under Colorado law, even though a property manager may hold a deposit for an owner, the owner is ultimately responsible for returning that deposit to a tenant if he or she should vacate the property.
“You have 30 days to return a security deposit if it is not in the lease, or up to 60 days if it is written in the lease,” McKinnis explained.
She said that by covering the amount of the deposit, the owner may avoid paying three times the amount of the deposit in damages.
In a separate matter, Quality Realty and Management was investigated by police last year when Spike Trading Company, which owns the building that houses the Gunnison Brewery, contacted authorities about missing rent payments.
According to a police report, rent checks paid each month by the Gunnison Brewery to Quality Realty and Management had cleared the bank.
However, the former accountant for Spike Trading Company told police those funds never made it to the property owner.
The accountant, Cindy West, reportedly told police at that time that Woodbury made excuses for not transferring money, claiming the tenant was late with payments.
According to police investigators, when Quality Realty was contacted about the missing money, Woodbury said there had been a mistake and the money was paid to the owner immediately. No charges were filed in the case.
(Chris Rourke can be reached at 970.641.1414 or email@example.com)