The former Belvoir franchisee Harpreet Garcha, who was yesterday jailed after marking up maintenance bills, was described by investigators as “being at the centre of a sophisticated web of fundamentally dishonest financial criminal activity”.
The case comes as it is known that there are other agents who routinely charge mark-ups.
Any new scandal is one that the industry could do without – although this case is clearly exceptional.
Garcha was specifically in breach of his agreement with Belvoir where he should not have inflated any bills but simply passed them along to landlords, and where the sub-contractors should have billed the landlords directly.
He is also said to have utilised “multiple businesses, multiple bank accounts, family members, fraud, forgery and perjury to generate significant profits”.
Garcha, 39, ran a company as sole shareholder and director, called Five Rivers Enterprises, that operated three Belvoir franchises from 2006.
Northamptonshire County Council began investigating in late 2011 after receiving complaints.
Trading Standards officers found a man described by his own staff as dishonest, ruthless, money-orientated, dominating, a control freak, and “a man determined to get away with whatever he could”.
The franchise agreement with Belvoir required him to use local sub-contractors for maintenance jobs.
He was expected to pass the expense on to the landlords at cost, having obtained competitive prices. Sub-contractors should have been asked to invoice the landlords directly.
However, Garcha breached the agreement by insisting of one tradesman that the invoices were sent to his Belvoir address. The invoices were then increased by at least 30% before being passed on to unsuspecting landlords.
Tenants were also caught: Garcha would frequently retain deposits by lying or exaggerating about the damage caused to properties, and over-charging for repairs.
Garcha also set up a second sole trader business called Kettering Property Maintenance, with the object of disguising what he was up to.
Sub-contractors would address invoices to Kettering Property Maintenance, which would then appear on statements as the contractor that had done the work.
KPM subsequently had some employees who did do maintenance work and this was also marked up.
Garcha was said to rely on the fact that few landlords would ask to see invoices, and would take their statements of account at face value.
However, one client complained about the price of work and demanded to see the files.
A gas safety certificate that cost £57.50 had been inflated to £95; an electrical inspection at £58.75 was inflated to £312.50; and a £50 gas safety certificate almost doubled in price to £95.
The painstaking investigation cross-referenced over 1,000 invoices and found that Garcha’s fraud amounted to at least £200,000.
The prosecution said this amount had been money-laundered.
There was also VAT fraud, with over £6,800 of VAT refunds falsely claimed.
Other charges included insurance fraud, and contempt of court for breaking the terms of an order stopping him from dissipating his assets.
As EYE reported yesterday afternoon shortly after sentencing, Garcha was sentenced to two years and nine months in prison after admitting two counts of fraudulent trading, two counts of money laundering, five counts of insurance fraud and one of VAT fraud.
Garcha has also been banned from being a director for nine years.
However, when he comes out of jail, as the law currently stands, there will be nothing to stop him working in either the lettings or estate agency industry.