Three individuals have been sentenced at Wolverhampton Crown Court for their involvement in the fraudulent sale of repossessed properties following an investigation by the regulator.
The Office of Fair Trading (OFT) launched its investigation after Connells estate agency reported concerns about “suspicious activity” in its West Bromwich office in late 2011.
The criminal investigation uncovered that Thomas Francis Kelly, who was a branch partner at Connells’ West Bromwich office until June 2011, made a series of purchases of three repossessed homes which Connells was marketing. His wife Samantha Kelly assisted him in each of these frauds.
Between April 2009 and May 2011, Kelly arranged for his wife to buy three repossessed houses and in each case he did so without declaring his personal interest to the seller.
According to the OFT, to disguise the fraud Kelly registered them on Connells’ internal systems under his wife’s name.
He also hid the fact that she was the purchaser of these properties by overriding Connells’ internal audit processes, and by forging the signatures of other staff.
Thomas and Samantha Kelly then arranged a quick sale of the three houses, which generated a total profit of £98,550.
Following a tip-off, the OFT investigated a further fraud and found that Andrew Butts, who worked as an estate agent at the West Bromwich office of Connells, acted as the estate agent for another repossessed home, which was bought by his brother-in-law in March 2010.
Butts failed to declare his relationship with the purchaser to the seller.
The property was sold in July 2010 after some “minor cosmetic work”, making a profit of £34,500.
All four property sales generated more than £133,000 in illicit profit.
Kelly has been sentenced to six months in prison, suspended for 12 months, as well as a community supervision order for six months, which will include 180 hours of unpaid work.
Samantha Kelly was handed a six-month supervision order and Butts was sentenced to a conditional discharge for 12 months.
Judge Dudley said: “The bedrock principle of the estate agent profession is a safeguard that there should not be a conflict of interest and you have all breached that.”
As a consequence of the fraud, an innocent Connells’ employee was arrested because his signature was forged and his identity impersonated by Thomas Kelly in an attempt to hide his personal involvement in the house purchases.
Stephen Blake, OFT head of criminal enforcement, said: “It’s vital the public can have confidence in the house buying market and that sellers can have confidence that the people entrusted to sell what will often be their most valuable asset will act in their best interests.
“The conduct of the convicted individuals in this case is particularly invidious, given that the properties in question had been repossessed.”
Elizabeth Brown, divisional managing director for Connells, said: “We do not tolerate any wrongdoing from staff and are very pleased with the outcome of this case. After alerting the OFT to the fraudulent activity, Connells fully supported and assisted with the investigation.
“Although these are isolated incidents, we will always carry out an investigation should malpractice be suspected and will report anyone found behaving against industry codes of conduct or Connells’ own robust compliance policies to the appropriate authorities.”