A Maryland woman who oversaw homeowners associations and embezzled nearly $600,000 from residents to fund her lavish lifestyle has been sentenced to prison.
Sarah Chester, 44, of Nottingham, MD, received a 20-year sentence, with all but five years suspended, after pleading guilty to multiple counts of theft scheme, forgery, and embezzlement.
Prosecutors say Chester spent the stolen HOA funds on vacations to Europe, country club memberships, and other personal expenses.
From 2021 to 2025, several HOAs in both Harford and Baltimore counties hired Chester and her company, Magnolia Properties, to manage the HOAs and their funds, according to the Harford County’s Office of the State’s Attorney.
Chester ran a five-year Ponzi scheme, siphoning money from each HOA into her personal accounts to finance her lavish lifestyle, prosecutors say. She created fake bank statements to hide her theft and transferred money between HOA accounts to replenish stolen funds in others.
State’s Attorney Alison M. Healey said in a statement shared with Realtor.com®: “To be placed in a position of trust by your community only to violate that trust in such an egregious way is despicable and behavior that will not be tolerated in Harford County.
Thousands of homeowners were affected
Prosecutors say that over the course of five years, Chester’s thefts affected more than 250 households and approximately 1,500 individuals.
Fifty victims of Chester’s scheme attended her sentencing hearing. One of those victims was Ashley Sweeney, an HOA board member who helped uncover Chester’s crimes in 2025.
“It’s been stressful and time consuming among many things from being a victim of her financial crimes,” Sweeney wrote on Facebook. “She caused so much damage.”
In addition to her prison term, Chester must also pay what is expected to total nearly $600,000 in restitution to the affected HOAs.
“I commend the work of Assistant State’s Attorney Ari Kodeck for his efforts in securing a jail sentence in this case, as well as ensuring that restitution is ordered and these communities will one day be made whole,” said Healey.
The restitution amount will remain subject to revision for 30 days while the state verifies the total losses claimed by the affected HOAs.
When reached for comment, Chester’s attorney, Matt Kunka, told Realtor.com, “I have to respect my client’s wishes and make no further comments outside of court.”
Why HOA fraud cases are on the rise
“As the economy slows down, I think we will see more of these cases as people begin to fall on hard times,” says attorney Chad D. Cummings of Cummings & Cummings Law, who is not involved in the case but has examined the situation.
According to Cummings, in a properly managed HOA, the person who approves invoices does not also sign checks and reconcile bank statements.
“Chester allegedly had all three functions,” says Cummings. “That’s the main problem.”
Cummings says he frequently sees cases in his practice where poor financial controls lead to malfeasance.
“A single manager receives assessments, pays vendors, and reports financials to a board that rubber-stamps everything at a quarterly meeting,” he says. “That person also enlists allies to speak at the board meeting, who may or may not be accomplices, to lend the appearance of credibility and discourage open dissent.”
Cummings says that there’s no federal agency that regulates HOA management companies, and most states impose little to no licensing or bonding requirements.
“Maryland, where Chester operated, has no statewide HOA manager licensing regime,” he says. “The entire industry runs on trust. Boards that delegate financial control to an unlicensed, unbonded manager in an unregulated state have created the conditions for theft.”
Homeowners who are informed, show up to meetings, and ask questions are the best defense against fraud, in Cummings’ opinion.
“I cannot state this with enough force: Attend your HOA meetings,” he says. “Read the financial statements before the meeting starts. Ask where the reserves are held and demand a treasurer’s report that includes bank-verified balances, not manager-prepared summaries. In the era of AI, it is too easy to fake bank statements. This is why audits are so important.”
Cummings says HOA members should insist on an independent audit, even when their state statute does not require one.
“If your board tells you an annual audit is too expensive, remind them that Chester allegedly stole $600,000 over five years,” he says. “A $3,000 annual audit would have caught the fabricated bank statements in Year 1.”
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