A letting agent has been banned from being a director for ten years after almost £600,000 of clients’ money in the form of tenants’ deposits and rental payments vanished. The firm was wound up when it could not pay its debts.
Peter Phillip Leonard, director of Direct Residential Lettings in Hove, Sussex, has been disqualified from acting as a director for ten years for failing to make sure that tenant deposits and rent payments collected in by the company were properly protected.
Leonard, 58, has given a disqualification undertaking, which will prevent him from becoming involved in the promotion, formation or management of a company until 2025.
Direct Residential Lettings (Direct) was incorporated in January 1997 and traded a letting agency in Hove. Leonard became a director of Direct in February 2007 when he jointly purchased the company.
The company was placed into compulsory liquidation on September 30, 2013, on the petition of Leonard, as the company was no longer able to pay its debts.
An Insolvency Service investigation found that Leonard had failed to make sure that Direct complied with its statutory obligations, under provisions of the Housing Act 2004 and its relevant approved schemes. As a result, he failed to safeguard tenant deposits and rent payments, collected in from at least April 19, 2007 onwards.
Leonard was also responsible for causing Direct to mislead the National Approved Letting Scheme, of which the firm was a member, by submitting false accounting information to them from at least 2010 onwards.
As a consequence of Leonard’s actions, Direct owes at least £577,865 in respect of missing tenancy deposits and rent payments collected in and not paid over to landlords.
The Insolvency Service has been unable to account for transactions paid out of Direct’s bank account totalling £501,393 between October 2012 and May 2013
Liesl Cook, Official Receiver for Brighton and Croydon, said: “The public should be assured that the Insolvency Service will seek to disqualify the directors of companies that do not obey the law and use other people’s money for the benefit of the company.”
Leonard was arrested by police in June 2013 on suspicion of fraud but was reportedly released from bail in March last year and told no further action would be taken against him at that stage. However, it is understood that there is an ongoing police investigation.
Isobel Thomson, chief executive of NALS, said this morning:”NALS offers consumers financial protection through its Client Money Protection Scheme and has reimbursed landlords and tenants in respect of approved claims relevant to this particular matter.
“We have worked closely with the Insolvency Service over the past two years in their investigation into the conduct of Peter Leonard.
“We regret we are unable to comment further as there is an ongoing police investigation.”
Why no fraud charge?
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How can this guy steal over half a million pounds and not go to prison?
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That’s it. I’m off to set up a Lettings Company, steal half a million pounds and take being disqualified from being a director for 10 years on the chin, from my desert island base.
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“The public should be assured that the Insolvency Service will seek to disqualify the directors of companies that do not obey the law and use other people’s money for the benefit of the company.” That’s OK then.
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I worked for an agency which also ‘lost’ almost £500,000 of clients’ money and can’t to this day understand why there wasn’t at the very least an investigation into embezzlement or misappropriation of clients funds. And worse – the owners had their wives named as directors so, although the wives may not be allowed to hold directorship again, the pair responsible for the loss of clients’ money are free to do it all over again.
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Everyone just ignores me when I say how this can happen to perfectly innocent business owners. I KNOW how it happens and right now over half the industry is living with the problem!
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Same thing happened in our town, we inherited quite a few landlords who were being sued by tenants for the return of deposits ‘misappropriated’ by their former letting agent. They sold out to a large company who bore the brunt of angry landlords and tenants. A few of these Landlords went to the police who told them it was a ‘civil matter’. One landlord called the TDS to ask about the most recent audit that had been carried out and how they had not noticed that the money was missing? The response from them was ‘as long as deposits are returned as and when required we are not interested’. They remain uninterested. Mr Teflon (former letting agent) still lives locally in his flash pad in the name of his family and appears to be totally unaffected by the fact that he misappropriated over £500,000 of deposit monies!!
If you are crooked and there is no consequence to your actions other than being struck off as a Director then is there really any protection for tenants money?
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And yet as Estate Agents we are charged with monitoring money laundering but as Letting Agents we can do what you want… Just… Brilliant…
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The regulatory aspect of the whole industry is a shambles. Multiple Professional bodies for which membership is only voluntary (NAEA, ARLA, London Rental Standard , NALS etc, etc, etc). We need one supervisory body for which membership is mandatory if you want a business in the Estate Agency/Property Rental sector. Compulsory membership of The Ombudsman Scheme for Lettings is a joke. In London hundred of agencies haven’t registered. Enforcement is supposed to be by the local authorities but they have more pressing issues to attend to. You can never completely eliminate fraudsters but the current situation is “Eldorado” for anyone who wants to take advantage. When you can be working on the fish counter one day and the next open a lettings agency handling tens of thousands of pounds in rent and deposits, without supervision, training, insurance, client money protection, adherence to any standards – what is going to happen?
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“However, it is understood that there is an ongoing police investigation.” Am I the only one who read this bit?
Makes sense for the insolvency service to do their bit first and for the Police to go in afterwards; they have most of the evidence they need in their pocket by then.
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