Two agency directors who took £304,000 of tenants’ deposits have escaped jail after admitting fraud.
The money was in an account holding the deposits, which were protected by insurance-back tenancy deposit protection scheme Mydeposits.
A third man, a developer who had been a client of the firm and who wrote cheques into the account knowing they would bounce but enabling it to pass audits by Mydeposits, was also spared jail.
The affair will once again focus attention on insurance-backed schemes which allow agents to physically hold tenants’ money. In Scotland, only custodial schemes which remove the money from agents and bank it, are allowed.
On Friday, Paul Masella, 46, and Grant Leber, 33, together with Desmond Moore, 44, appeared at Guildford Crown Court on Friday for sentencing.
The court heard that all the money had been paid back.
Leber and Masella had pleaded guilty at a previous hearing to a joint charge of fraud by abusing their position as directors of Masella Coupe Sales and Letting in Godalming, Surrey, to make a gain of £304,000.
Moore had pleaded guilty to three counts of encouraging or assisting the commission of one or more offences.
The offences took place over a period of more than two years between September 1, 2009, and December 2, 2011.
Leber said he took responsibility for withdrawing around £100,000 of the money, and Masella the remainder.
Jessica Clarke, prosecuting, told the court that Masella and Leber received deposit money from tenants and held it on behalf of landlords.
She said that both men were in financial difficulty and started withdrawing money from the deposit account.
The court heard that Mydeposits is required to carry out audits.
Knowing that the accounts would show a deficit, Ms Clarke said that Leber and Masella started to bank cheques sent by Moore that they knew would not be honoured.
“The money would show just long enough to get them through the audit,” she said. “No money ever left Mr Moore’s account, he didn’t have it.”
The court heard that Moore did not know exactly what the purpose of his activities was, but did know the cheques were for criminal use.
He had paid cheques into the deposit account on different occasions of £200,000, £240,000 and £304,000, which he knew would bounce.
Recorder Leslie West QC, sentencing, said: “In the case of all three of you, you were driven by, I’m sure, greed to a certain extent.
“You had a lifestyle, which in the case of Mr Leber and Mr Masella, you really couldn’t afford and you couldn’t let go of.
“But the money has all been repaid.”
Recorder West gave Leber and Masella each a sentence of six months, suspended for two years, and ordered them to carry out 180 hours of unpaid work and pay £600 costs.
He gave Moore a three-month sentence, also suspended for two years, plus 80 hours of unpaid work and £600 in costs.
In addition, all three must each pay a £180 victim surcharge.
Masella Coupe was set up by Leber and Masella in 2008 in the leafy Surrey town, which has been dubbed ‘Celebrity Central’ because of the number of famous people who have made their homes there.
Mydeposits is the insurance-backed tenancy deposit scheme run by Hamilton Fraser on behalf of the National Landlords Association.
It was recently put under the spotlight on TV when it transpired that rent-to-rent agent Daniel Burton had been expelled by the scheme, meaning that tenancy deposits were not longer protected. The money itself disappeared.
Comments (9)
I’ve used Mr Masella’s services before and got well and truly ripped over another matter. They come across as convicts, every one of them. It disgusts me they are still trading and raking it in – how is this allowed? I think convicted fraudsters should be kept out of ANY business, but especially as an estate agent. I will boycott Masella Coupe, and if enough people wish to join me, let’s see if we can bring them down.
In this case it was the work behinds the scenes from mydeposits that helped bring this case to the attention of the law and enforcement agencies. We caught this case early due to our robust auditing processes and immediately alerted the police and enforcement agencies. In fact our actions led to no one losing out out.
Furthermore, over recent years mydeposits has developed a very comprehensive and effective approach to identifying members who try to bend the rules.
We work closely with Police and Trading Standard’s Officers in England and Wales as they seek to understand how TDP schemes operate and then obtain sufficient evidence against ‘rogue’ businesses.
2 years is early?
As they got passed your robust auditing procedures on two occasions, presumably you plan to "tighten up" your "robust" procedures. I am though curious, is Masella Coupe still a member of your scheme?
Peter, they didn't 'get past' our auditing procedures they just failed to comply which then breached our scheme rules for which we then past their information on to law enforcement. Under section B2.1.3 of our scheme rules – Failure to produce a client account statement as requested via Audit. This is also the case for Masella Coupe who's membership was cancelled in October 2011. Unfortunately these cases take time to work through the legal systems .
Hi MyDeposits, I assumed it was the last audit, the article mentioned two earlier occasions where bounced cheques were credited, that it was picked up, so something must have gone awry. Good to learn though that their membership was cancelled. Also good to see MyDeposits taking part in posts.
community service,£600 for £300,000 loan, sounds pretty rates to me. better than what my bank offers!
£304k – £600 fine to cover costs! Still at least the community service is unpaid, the judge must have been in a bad mood!
Is it just me, or should they be banned from operating a letting agency. Makes no difference that it was paid back, trust is lost and others need to be protected.
Go to their website and click on the Financial Service link, which will link to their partner; Looks like their Financial Service's partner needs to update their Beware section me thinks.
I wonder how many others are doing the same thing by writing cheques just to balance the books for a specific day; it seems so easy to fool MyDeposit. they really should get a bank statements showing past transactions.
Custodial Scheme, I keep harping on!
It's an interesting case. It's good that the money has been repaid, but had they not been found out, this deficit may well have grown to a level at which they may not have been able to repay it.
Are they still trading? If so, then they will still be taking client's money & I can think of no other industry that would allow this.
Obviously, I don't know the details of the case, but it seems another example of a sentence not providing sufficient deterrent. Remember, kids nicking a pair of trainers in the heat of the moment during the London riots got 9 months in prison. A sustained and deliberate fraud and you keep your liberty.
Funny old world.