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A Colorado investment firm is suing a former Cottonwood property manager to recover money that was part of a wider embezzlement scheme that the manager admitted to.

ET Investments filed suit last month in Yavapai County Superior Court seeking $13,596 in rental payments, deposits and property expenses from November 2015 that Margaret Shandera collected but failed to forward to ET.


The firm is also seeking unspecified punitive damages, attorney’s fees and interest. The lawsuit alleges breach of contract, conversion and breach of fiduciary duty on the part of Shandera and/or her company Shadow Mountain Real Estate. The company had been managing properties around Sedona and the Verde Valley.

ET is represented by Cottonwood attorney Shiloh K. Hoggard, who couldn’t immediately be reached at press time.

At the end of last year, Shandera told investigators that she took $137,000 from Shadow Mountain Property Management, according to the Arizona Department of Real Estate.

“ET was not advised of the misconduct of Ms. Shandera and Shadow Mountain until after the misconduct was discovered by the department and publicly disseminated through the media,” the lawsuit states. “In other words, defendants were never forthcoming with the misconduct and concealed their actions from ET.”

Both renters and owners reported that they suddenly were having difficulty reaching the company in order to either pay rent or collect the money they were owed.

One property owner, Larry Fulton, posted about his difficulties online.

“When we did not get our month’s rent in the mail, we emailed and called them,” Fulton said. “No response and voice mailboxes were all full.”

State regulators issued a cease-and-desist order against Shadow Mountain on Dec. 3.

Louis Detorre, assistant commissioner for operations and legislative affairs with the Department of Real Estate, said investigators had been looking at the business for more than a month.

Shandera was originally issued a real estate license in 2005, according to the order. In 2012, she filed with the Arizona Corporation Commission for Shadow Mountain Real Estate and Property Management, PLLC, a corporation where Shandera was the only manager and member.

The department conducted an on-site audit of Shadow Mountain on Nov. 2. When the auditor and an investigator arrived, they found the office closed and empty, including furniture and equipment.

Shandera was on the premises, according to the order and directly told the investigators that, “I have embezzled $137,000 of trust money and had just closed the business.”

The money had been drained from the account over 10 years, Shandera told investigators. The embezzlement targeted both client funds and security deposits put down by tenants.

The investigators asked to see financial records.

“Shandera told him that those records had been on her computer and that computer was not available as she had thrown it in the trash,” the department’s order stated.

Shandera told investigators that she had used the money to help friends and family and also spent some of it on herself.

The department issued Shandera a subpoena to appear before the department in Phoenix Nov. 12 with an order to produce her bank records, but she failed to show up.

The next day, the department received an email from Cottonwood attorney David Gordon saying that he had told Shandera not to talk to the department officials.

Gordon couldn’t immediately be reached at press time.

The order found that Shandera is “guilty of conduct that constitutes fraud or dishonest dealings” and that “she is not a person of honesty, truthfulness or good character,” which it stated was enough to revoke Shandera’s real estate license.

The case was referred to the Arizona Attorney General’s office for possible criminal proceedings, according to Dettorre.

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