Circle C Neighbors

Steve Bartlett
1111 West 11th Street
Austin, TX 78703

Dear Mr. Bartlett:

I am writing to you because you have served on the Board of Circle C Homeowners Association (CCHOA) as the Vice-President for about sixteen years since the inception of the Association in March 1988. During this period of time, you were also working as a top employee for the Developer, Gary Bradley?’s two companies ?– Alien, Inc. and Phoenix Holdings, Ltd.

After examining the financial documents of CCHOA and CDC (Circle C Child Development Center), I discovered many questionable items. As a homeowner, I would like to exercise my right to inquire about them.


CIRCLE C CHILD DEVELOPMENT CENTER

Circle C Child Development Center (CDC) was registered as a non-profit organization. The CDC facility was funded by the CDC?’s Escrow Fund which was a contribution of $1,000 for every new home built in Circle C Ranch and was donated to the CDC?’s Escrow Fund by the builders. CDC?’s Escrow Fund was used to fund the entire facility including the land, building and capital improvement.


LAND

In 1994, CDC acquired a land of 9.184 acres (LOT 125 BLK RR) from the Developer?’s Phoenix Holdings, Ltd. at the appraised value of $91,840. In the following year of 1995, the size of the land was reduced to 3.521 acres (LOT 125A BLK RR) and the appraised value of the land was reduced to $35,210.

Could you please explain why the size of the land was reduced? How did CDC acquire this piece of land? Was it by donation or by purchase?

If Phoenix Holdings, Ltd. donated the land to CDC for tax deduction purposes in 1994, did you file an amended tax return after the land was reduced to 1/3 of the original size? Did Phoenix Holdings properly pay the taxes it owed Uncle Sam? I would like to receive a copy of the amended tax return for the year of 1994.

If Phoenix Holdings, Ltd. sold the land to CDC for $91,840 in 1994, did you return the difference of $56,630 ($91,840 - $35,210) back to CDC?’s Escrow Fund after Phoenix Holdings, Ltd. took back 2/3 of the land? I would like to receive a copy of the bank statement, the returned check and other documents related to this refund.


BUILDING

I was quite amazed to discover that there were three different cost figures for this building, and all this information was recorded on official documents as follows:

Based on the Travis County Appraisal District 1994 Property Information, the appraised value of this building was $608,160.

Based on CDC?’s Balance Sheets and CDC?’s tax return Depreciation Report for Form 4562, the cost basis of the above building was $1,005,985.

Based on an online article about Newmark Homes, the cost of this building was $1,700,000. I verified with Grady Bible of Newmark Homes at (512) 288-9191 and was confirmed by him that $1.7 million dollars was the cost of the facility you had told him many years ago. Here are my questions for you:

(1) Did you minimize the cost basis of the building and the land with the Travis County Appraisal District in order to avoid paying higher property taxes?

(see Part 2 below)

Letter to Steve Bartlett (2)


(2) Did you maximize the cost basis of the building with Uncle Sam, so that Phoenix Holdings, Ltd. could have a bigger depreciation deduction and thus allow it to reduce its income tax liability?

(3) How about that $1.7 million dollars figure? From CDC?’s financial documents, it looks like a large sum of money was funneled into Phoenix Holdings, Ltd. annually for all these years (1994 ?– 2003). Was $1,700,000 the total amount Phoenix Holdings, Ltd. has received from CDC?

(4) How much illegal profit did Phoenix Holdings, Ltd. make on this building which was constructed not by Phoenix Holdings, but by White Construction Company, a general contractor?


CASTLE REALTY MANAGEMENT SERVICES

This company was created and owned by you in July 2001, and was in business for about sixteen months. In November 2002, it was taken over by Susan Hoover and Dennis Nordstrom; they jointly operated under the name of Full Circle Management.

(1) Why did Castle Realty Management Services charge the Association $55 per hour for handling the Developer, Gary Bradley?’s business, such as e-mail correspondence, meetings & conversations with Stratus representatives; deed restrictions review, boundary reviews, signage review of Stratus properties regarding the Bear Lake PUD and Circle C Commercial Community, Inc.; survey on Stratus properties, etc.? These were business activities among the two developers. You should bill your boss, Gary Bradley, for these kinds of services. Why did you charge the Association? Did the above services have anything to do with homeowners?’ comfort, health, safety, and welfare? Please kindly explain this.

(2) Why did Castle Realty Management charge the Association $55 per hour for the Board Members?’ VOLUNTARY services, such as Board?’s meetings, Board?’s communications and homeowner issues? Please kindly explain this.



HERE ARE MY FINAL THOUGHTS:

While you were serving on the Board of CCHOA, you were also the President of Alien, Inc. and the Vice-President of Phoenix Holdings, Ltd. You have total control and influence on the financials of the above non-profit organizations (CCHOA and CDC) and the two for-profit companies (Alien and Phoenix). And you have personally benefited greatly from the bottom line of these two for-profit companies.

When I analyzed CCHOA?’s Income & Expenses Statements for the last ten years (1994 ?– 2003), I noticed that you have created many income resources. Unfortunately, you didn?’t do that to benefit the Association; you did that for yourself and your buddies along the way.

You are fully aware of the laws. You knew that you could not profit directly from the homeowners association; and therefore, you created a lot of other ways to funnel the money out of the association fund and benefited from it indirectly. You used us; you used the Association as a money making machine.

If you created all these income resources for the sake of the Association, we would have a big reserve and homeowners?’ association dues would be reduced. You have not only betrayed our trust by ripping us off for all these years; you have also cheated Uncle Sam in many ways. I believe that one day you will be punished for your greed and dishonesty.

I look forward to hearing from you soon. As a homeowner, I am entitled to these answers. If I don?’t hear from you within ten days from the date of this letter, I will have the pleasure of seeing you in court.

Sincerely,
Lisa L Sun