A letting agent has been sent to jail after fiddling landlords out of £69,000, in a case that once again highlights the lack of controls over how letting agents hold client money.
A NALS meeting today is likely to have its attention drawn to the case when it discusses the issue of client money protection.
Stephen Greenwood was given a 12-month sentence for fraud after a ‘catastrophic’ fall from grace. He has also been banned from being a company director for four years.
The court, at Leamington Spa, heard that Greenwood ran his own letting company, Greenwood Homes, in Rugby, which he set up in 1985.
But Greenwood, 55, of Coventry, ran into money problems when a Spanish property investment failed. He continued to take rents from tenants, but failed to pass these on to landlords, whilst sending them fake statements saying they had been paid.
He pleaded guilty to four counts of fraud, worth more than £19,000, but asked for a further 59 counts to be taken into consideration – worth a further £50,000.
His business closed in October 2009 and went into liquidation a month later.
Prosecutor Michael Hanning said: “It was only after the company ceased trading that the offences came to light. Landlords of property managed by Greenwood realised they had not been paid rental payments they were due. It’s one of those cases of robbing Peter to pay Paul.”
A landlord who owned four properties which had been managed by Greenwood without problems for six years, checked his accounts when he heard that the business had closed. He found he had not been paid since January 2009.
In mitigation, Michael Brook told the court: “Mr Greenwood today is in effect a broken man. He had built up a reputation and business over decades in Rugby and that is now in ruins. To put it bluntly, he finds himself with no home, no job and without a relationship.”
He said Greenwood had hoped to repay the money unnoticed when his Spanish investment paid out.
He added: “This is a man of good character who suffered a catastrophic fall from grace.”
Judge Charles Harris told Greenwood the charges could only be dealt with by a custodial sentence. He said: “It is a sad case. You come from a good background and you are an intelligent, middle-aged man. You are remorseful and I give you credit for your pleas.”
Last autumn, former Belvoir letting agent David Sole admitted stealing over £143,000 of client money.
Parliament has steadfastly refused to act despite a Bill (Property Letting Agents Client Money Segregation) being introduced by Howard Flight as long ago as July 6, 1999, when he told the Commons that he was “amazed” to discover from a constituency case that letting agents were not required by law to hold client money in separate designated accounts.
The case he cited concerned an ARLA member who went bust, leaving his constituent £1,000 out of pocket.
The Bill, however, went the way of many private members' Bills, and sank without trace.
Meanwhile, you have to ask: where is Which? when you need it.
%20(002).png)
.jpg)
Comments
It would be interesting to ask the Local trading Standards office if anyone ever made contact with them about this company before it closed. It my experience neither they or the police are interested until it is too late.
I agree it is hard to feel sorry for landlords who don't bother to check their bank accounts but tenants are often victims too. It is high time something was done to bring the entire industry into line. The bad letting agents let us all down, even when they are members of NALS, ARLA, etc, or one of the reputable chains. Time for the talking shops to end and for real action.
How can a Landlord go even a month without knowing they have been paid - or not as the case may be. Sadly this sort of theft is on the increase and ARLA has more than doubled its client money protection element of its annual fee for 2001/12 from the previous £200 to £432.
Once again the blindingly obvious case for client money protection is highlighted.
But let's not forget too that landlords still need to check they're receiving the funds, and raise merry hell if they don't get the rent paid to them.