real-estate-trust-account-fraud-criminal

No imprisonment for trust fraud over $70,000

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The Events and Police Charges

Our client was a real estate agent, holding his licence for over 30 years. He was seeking legal representation, having been accused of fraudulently converting almost $74,000 for his own use and for the use of his own Corporation. He pleaded guilty to this action. Under s211(2) and s218 of the Property and Stocks Agents Act, the maximum penalty for this offence is 10 years imprisonment.

Our client was the sole director and majority shareholder of a Real Estate Agency Corporation and the sole signatory of all personal business and trust accounts. In 2017, An inner-west Sydney property was sold for over $2.4m with a deposit of 5%, ~$120,000 made. The purchasers gave our client a cheque. The cheque was deposited into our client’s e-saver account. Upon the deposit into the e-saver account, money was then accordingly transferred into our client’s main or savings account for personal and business expenses, including wage payments and further transfers into a Rental Trust Account. A total of 12 transfers were made from the e-saver account causing a ~$74,000 deficiency. Upon property settlement, and the vendors’ conveyancer sent our client an order on property to release the funds to the vendors who were to be accounted for the amount of the deposit minus the commission. At settlement date, our client’s e-saver account was short causing our client to delay accounting to the vendor due to insufficient funds. However, payments were made over three occasions totalling making up the deficit. Tracing of the funds shows that our client sourced those funds from either the Rental Trust Account or his own main account. Our client was invited to participate in a formal interview with NSW Fair Trading, however, no interview took place.  

Our Submissions and the Court

Submissions were made to Parramatta Local Court by Fair Trading claiming that the amount withdrawn was excessive and that these actions were typical of a trust account fraud matter which should be dealt with by way of imprisonment. However, the magistrate was not convinced of this, but rather a peculiar case in that it was a single transaction and all money had been repaid. Our submissions indicated that our client has no prior criminal history, is otherwise of good character, and entered a guilty plea to the offence. Additionally, although our client had misappropriated a significant amount of money, it was for a short period of time and was ultimately repaid, contrary to the argument put forth by Fair Trading.

The Outcome

Our submissions sought for the matter to be dealt with by way of a s10 non-conviction, noting that the vendors provided a letter confirming that they were agreeable to the amount taken from trust to having been withdrawn and thereafter returned. This outcome could not be made as the matter was not trivial and there were no extenuating circumstances. However, the magistrate did consider that all money had been fully repaid, a guilty plea was made at the first available opportunity, the good character of our client, and that he had been experiencing personal family issues during this time.

Instead, the matter was dealt with by way of a community correction order (CRO) for a period of 3 years due to the large sum of money, 150 hours of community service, and a $500 professional fee payment to Fair Trading. This was a favourable outcome as the CRO was made in place of a term of imprisonment.

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