Sydney agent Louise Catherine Sultana has admitted to taking $330,000 from the trusts of Century 21’s clients between 2010 and 2012. The 25 year old, who is reportedly pregnant, has been handed an 18 month sentence with a seven month non-parole period in a hearing at Parramatta Local Court on Thursday.
Sultana converted $208,689 from her company’s sales trust account and $55,062 from Century 21’s rental trust account. She was also convicted of failing to lodge $66,650 of rental bonds. She was operating under the agency Century 21 Lifestyle Hawkesbury, via BLM Enterprises Pty Ltd located in Windsor, as can be seen in Fair Trading’s enforcement report. BLM is currently under administration.
Century21 Australasia chairman Charles Tarbey said the company took a proactive approach to addressing Sultana’s actions.
“We were party to finding that problem, and we reported it. We assisted the Department of Fair Trading,” he said.
“We audit our offices, and there’s no level of tolerance for that. And as far as we’re concerned, when we found out, we immediately opened up to the authorities any information we could provide, because we operate in real time, and could see all the transactions. And the Department of Fair Trading got everything they needed.”
Tarbey said there were multiple practices in place to monitor the accounts of franchisees.
“Because we operate in real time, we can see all their transactions. They also have an obligation to provide us with a full audit. And when we requested one and it wasn’t available, that was when the flag went up for us – and when it was requested again, that’s when the flag went up again.
“And we said, ‘If we don’t receive this within, we’ll be reporting [the matter] to the Department of Fair Trading.”
The Century21 Australasia chairman noted that this was not an isolated incident in the industry.
“It’s not the first time – and it’s not the first time for my business, either. You see it around the traps.
“A perfectly good franchisee has issues outside of your franchise, and the relationship you have with them in business – you don’t know what they do.
“I understand one of the people reported on today, from another franchise group, had a drug and gambling problem. I don’t think any franchisor would know that. In fact, I don’t think any employer would find that about some of their employees.
“There have been many cases where employees in legal firms, accountancy practices and real estate agencies have defrauded the trust accounts, and it takes an audit to pick it up. And those audits are only legally required annually. So a lot can happen in that period of time.”
As a result of her actions, Sultana’s real estate license has also been cancelled. She has been disqualified by NSW Fair Trading from holding a license or certificate for 10 years, and disqualified from being involved in the direction, management or conduct of the business of a licensee for 10 years. Sultana was formerly the director and company secretary of BLM Enterprises, trading as Century21 Hawkesbury.
The breach was found during a NSW Fair Trading compliance campaign into real estate traders who failed to lodge their auditor’s reports for the 2010/2011 financial year.
Trust accounts are used by agents to hold money on behalf of buyers. They cannot legally be used for a purpose other than to hold funds for the completion of a sale or transaction. According to NSW Fair Trading, disincentives for commiting trust fund fraud have not been high enough. NSW Fair Trading commissioner Rod Stowe told the ABC that the body has recently changed its policies to deal with trust fund fraud more aggressively.
“It was our view that there was not a strong message going to people in that industry that they wouldn’t get away with it,” Stowe told the ABC. “While we were taking their licences away, we weren’t stopping them from making a living.”
NSW Fair Trading is now actively seeking criminal prosecution in cases of trust fund fraud, said Stowe.
According to Tarbey, he has a zero tolerance policy for any fraudulent behaviour by employees or franchisees.
“I won’t tolerate it. If I see it, hear about it, if anybody even whispers about it – that’s it.”
This article first appeared on Property Observer.