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Rogue letting agent jailed after £200,000 fraud against tenants and landlords

A former Belvoir letting agent has been sentenced to two years and nine months in prison after admitting fraud against both tenants and landlords.

Trained accountant Harpreet Garcha, who ran lettings franchises for Belvoir in Kettering, Desborough and Corby, was investigated by Northamptonshire county council’s trading standards team after a landlord made a complaint about being overcharged for routine maintenance at her rented home in Kettering.

It turned out that the cost of safety checks by a contractor was actually £166.25 but she had been provided with fake invoices for £502.50. 

A court has heard how Garcha, 39, fraudulently generated significant profits at the expense of tenants and landlords, whose properties he marketed.

To disguise the practice, he set up a second (sole trader) business called Kettering Property Maintenance (KPM) which the contractors would invoice. KPM would then appear on the landlords’ monthly statement with the inflated cost.

The investigation found he had made around £200,000 by dishonestly increasing the cost of maintenance and safety work. This amounted to a mark up of about 30 per cent. 

Garcha, of Kettering, admitted two counts of fraudulent trading, two counts of money laundering, five counts of insurance fraud and one offence of VAT fraud, committed between 2008 and 2012. Two further counts of mortgage fraud were left to lie on file.

He was also convicted of providing false invoices to HMRC to reclaim VAT on business expenditure, making false statements in insurance claims on behalf of landlords which resulted in unjustified county court judgements against former tenants, and contempt of court for breaching a restraint order made under the Proceeds of Crime Act 2002.

His sentence, announced yesterday, includes two and a half years for the fraud-related offences and three months for the contempt of court offence, to run consecutively. He has also been disqualified from acting as a director for nine years.

The council’s trading standards department is now conducting a financial investigation under the Proceeds of Crime Act with a view to seeking a confiscation order.

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    The worst aspect of this is that Belvoir continue to trade in Kettering as if nothing has happened. I appreciate that there is a new franchisee but how can anyone have confidence in any form of agency which allows such blatant wrongdoing to happen under its very noses. Whoever is in charge at Belvoir should issue a very public apology to the Landlords and tenants of Northamptonshire and should then resign.

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    Sorry Adrian but that's a very ill-informed comment. No franchisor can ever guarantee that they won't have a rogue franchisee, in the same way that a corporate cannot guarantee that they'll never have a rogue branch manager.

    Belvoir (it appears) took decisive action against the franchisee when wrongdoing was uncovered. It's nonsense to say that a new business owner shouldn't be able to trade under the Belvoir brand in Kettering or that Belvoir directors should resign.

    To draw an analogy, imagine if a Ford franchise was found to be overcharging customers and had its franchise withdrawn. By your reasoning Ford shouldn't be allowed to sell cars in that town in future.

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    Steve,

    This chap traded under the name Belvoir, to the public he was Belvoir, their name has been severely tarnished. If Belvoir choose not to control what happens in their name that is upto them but they have to accept any criticism which follows on from actions taken in their name.

    I would like to think such a thing would not and could not happen within my business but if it did I would not expect to be able to continue to trade as if nothing had happened. I have not said the new franchisee should not be able to trade if he or she wants to, and I wish them well but they will have a uphill battle given the bad press this has given them.

    As for those in charge of Belvoir, they need to look carefully at how Mr Garcha was able to do what he did. Was he the only franchisee setting up the business in this way? Directors can make their own decision and decide whether they still want to be associated with the brand.

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    Surely this is the problem with any multi-site business - bad actions by one branch can impact upon others. This happens within banks, accountants, and shops, often only discovered during audits. Charities too suffer similar frauds and in the same way it's not practicable nor necessary for the main company to re-brand after every indiscretion and AFAIK it's it's only when then are of such a gross nature and by those at the very top (eg Ratners) that selling off or re-branding is necessary.

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    Adrian,

    I agree that the actions of this rogue franchisee tarnished the Belvoir brand in that area and the new franchisee will need to work hard to repair this. However, do you really think Belvoir just "allowed it to happen?".

    Unless you are a sole trader or a small independent you cannot possibly monitor everything that goes on in your company's name. All you can do is put systems and processes in place to minimise the risk of malpractice, carry out due diligence checks, and act if and when you discover something is amiss, which is what Belvoir appear to have done. I also hope and expect that Belvoir have been in contact with those clients affected by their former franchisees actions, but I don't see why should they be expected to make a "very public apology to the landlords and tenants of Northamptonshire".

    I should add that I'm a Martin & Co franchisee, so Belvoir are "the competition", but I'm sticking up for them out of a sense of fair play.

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    Steve,

    From reading the local press coverage it seems that Belvoir did not take any action until after Trading Standards had become involved and the issues had been going on for sometime. As an RICS member I am subject to rigorous checks on my Client Accounts and if I tried something like Mr Garcha did the RICS would have found me out well before Trading Standards got involved.

    We do not know what checks if any Belvoir made on the activities of Mr Garcha or whether any other professional body was involved. But the fact that he was allowed to trade under the name for so long indicates any checks were not thorough enough.

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