EMM successfully prosecutes fraudulent Estate Agent

On 9 June 2017, the jury in the matter of R (Fuseon Ltd) v Timothy Shinners returned guilty verdicts in 4 of 5 counts of fraud and theft. Mr Shinners fraudulently abused his position as a Director causing losses to the company to the value of approximately £100,000, contrary to s.4 Fraud Act 2006.

Mr Shinners, of Chorley, Lancashire was convicted following a 3 week trial at Preston Crown Court and on 7 July 2017 was sentenced to 3 years imprisonment and disqualified from being a Director of a limited company for a period of 8 years.

Over a period of 6 years, Mr Shinners was accused of abusing his position as a Director by:

  1. Failing to comply with the statutory requirement to register tenant deposits with an approved tenancy deposit protection scheme;
  2. Charging to the company items of personal expenditure to which he was not entitled, including accommodation for himself, cars, payments to family members, telephones, outstanding debt liabilities, foreign currency transactions and other items;
  3. Stealing cash from the company;
  4. Adapting a maintenance invoice to inflate the value of work completed at a property; and
  5. Fraudulently adapting tenancy deposit protection documents to disguise irregularities.

When the fraud came to light, the offences were reported by a co-director, Mr Laycock to Greater Manchester Police, who subsequently declined to investigate, stating:

The police service has felt the brunt of the government’s austerity measures” and as a result of the force centralising its fraud investigation capabilities, “there are fewer police officers investigating reports of fraud at a time when the volume of fraud is increasing significantly” leading to “difficult decisions” which may not be “satisfactory to the victim”.

After feeling let down by the police inaction, and left with the sense that crime does pay, Mr Laycock, the now sole Director of Fuseon Ltd (trading as Platinum Properties) instructed the services of specialist private prosecution firm Edmonds Marshall McMahon to advise on whether the case was suitable for a private prosecution.

Following months of investigation and preparation, Mr Laycock is relieved to have had his case taken seriously and to have finally achieved justice; however, he is still rectifying the damage to the business caused by Mr Shinners’ fraud.

Small businesses have a particularly tough time falling victim to economic crime. They are especially vulnerable to fraud, often because they lack the resources to implement complete systems of internal controls, and properly segregate accounting duties among their limited staff with the necessary checks and balances that are available to larger organisations.

Edmonds Marshall McMahon frequently see cases of this nature that are often not investigated by the police. Such fraud can be perpetrated in many different ways, from straightforward theft of a company’s funds, through to incredibly complex hidden trails that eventually lead to the employee/director.

In this instance, HSNO forensic accountants were instructed, as experts in the field, to assist in the financial investigation and to trace the fraudulent appropriation.

Mr Shinners – Private prosecution

Throughout the 3 week trial, evidence was produced which demonstrated that Mr Shinners was well aware of his legal obligation to register tenants’ deposits with a Tenancy Deposit Scheme – indeed, he had gone as far as registering with the DPS scheme in 2009. Mr Shinners was therefore conscious of the fact that tenants’ money was not for him to do with as he wished and should have been protected as specified by law. However, time and time again, he knowingly received deposits into the business and failed to transfer them to the DPS account. It was only as a result of Mr Laycock’s injection of cash into the company that allowed the deposits to be registered and protected. Mr Laycock’s cash injection at this stage was described as an “act of decency” by the trial judge.

Mr Shinners’ actions went far beyond mere negligence. On 2 May 2015, in an attempt to cover his tracks, Mr Shinners forged a number of documents to conceal his fraudulent conduct from his co-directors and those working at Platinum Properties.

Evidence was introduced which demonstrated that Mr Shinners (who had made representations that he was not taking a salary from the company) was treating the company as his own personal bank account. Following investment and the appointment of Mr Laycock as a Director of the company, it was discovered that Mr Shinners had drawn at least £76,352 in company money over and above his permitted salary and expense allowance. Items included in this personal expenditure were family holidays, foreign currency transactions in Hungary, Turkey, France and Ireland, groceries, meals out, his own stag weekend, car insurance and even his wedding suit.

He had also, unbeknownst to his co-directors, rented a Platinum Property for the use of himself and his family, using company funds to pick up the bill for this property for more than 3 years.  He even went so far as to keep the landlord in the dark about who the true tenants of the property were. A tenancy agreement in the name of his wife and father-in-law was created, and Mr Shinners continued to represent to the landlord that he was the managing agent; this deception was maintained even after he had resigned from the company. In one communication to the landlord, who at the time was demanding outstanding rent, Mr Shinners informed him that he was preparing eviction notices to serve on the ‘tenant’ as a last resort.

Mr Shinners was also accused of withdrawing cash from the company bank account for his personal use, and falsifying a maintenance invoice in relation to the property he was living in, to avoid having to reimburse the landlord.

Following 3 weeks of the prosecution case, the jury convicted Mr Shinners on 4 counts of fraud. In sentencing, HHJ Knowles QC remarked that it was unsurprising that Mr Shinners was convicted of 2 frauds and 2 forgeries that ran for 6 years. It was an aggravating feature that Mr Shinners sought to blame other people during the trial.

This case demonstrates the importance of private prosecutions in times of state retrenchment. The circumstances of this fraud show a clear case of consistent dishonesty; the behaviour of Mr Shinners would have gone unchallenged had the option of a private prosecution not been available to Mr Laycock, to ensure Mr Shinners was brought to justice.

Quotes:

Stephen Laycock comments: “The decision to proceed with the private prosecution was taken as a last resort and was not an easy one. The charges represented only a small amount of the losses I have incurred as a result of Mr Shinners.  The advice and direction from EMM was excellent – from focusing only on a small number of relatively high value charges, to their recommendation of forensic accountants, barrister and trial strategy. The process is significantly different to civil proceedings, completely led by the solicitors and the legal team, who are sometimes not able to discuss issues so as not to influence a witness, such as myself. Confidence in the team is therefore essential and with EMM I felt that I had the right team throughout – Matthew in particular gained a quick grasp of the case, no stone was left unturned.”

Matthew Edwards, Senior Associate at Edmonds Marshall McMahon comments: “Stephen Laycock came to Edmonds Marshall McMahon due to our expertise in conducting private prosecutions. Conducting a large scale investigation of this type has been a significant and challenging task, and we therefore welcome the comments of the trial judge who noted that proceedings had been brought with “great diligence and skill”. This has been a difficult journey for Mr Laycock, who has invested a significant amount of his own money and time in ensuring Mr Shinners is brought to justice. We hope that the decision of the jury will help to finally put this difficult chapter behind him.”  

Matthew Edwards & Fani Gamon

Share on LinkedInTweet about this on TwitterShare on Google+Share on FacebookEmail this to someone
This entry was posted in Articles, Cases, News. Bookmark the permalink.