Real Estate Agent Convicted for Trust Fund Fraud

A former real estate agent who siphoned nearly $75,000 of clients’ funds from his agency’s trust account in a series of multiple small transfers, has been convicted and sentenced in the Melbourne Magistrates’ Court.

Jean-Noel Alain Philippe Gillet, 63, of Dandenong, transferred sums of between $50 and $300 each from the trust account of his agency, Agent 96 Real Estate, between March 2019 and January 2020.

Gillet pleaded guilty to two rolled-up charges which reflected 941 instances where he had caused a deficiency in a trust account or fraudulently converted money for his own use.

He was convicted and sentenced to a 12-month community corrections order, which includes a requirement to perform 200 hours of community service.

He was also ordered to pay $74,613 in compensation to the Victorian Property Fund, which provides financial protection for consumers adversely affected by trust account defaults. The Fund has compensated the clients financially impacted by Gillet’s actions.

Consumer Affairs Victoria Director Nicole Rich welcomed the outcome.

‘Trust account money belongs to consumers – and agents who misuse it are engaging in serious misconduct,’ she said.

Anyone who misuses trust account funds – regardless of the amounts involved - can face penalties including substantial fines, losing their licence to practice, or jail for more serious offences.’

Consumer Affairs Victoria first became aware of the alleged offences after Gillet self-reported personal use of trust funds by letter and phone. If you were the OIEC of an agency, what policies and procedures could be applied to stop this practice happening to ensure ethical practice.

As the Officer in Charge of an agency (OIEC), implementing robust policies and procedures is essential to prevent the misuse of trust account funds and ensure ethical practices. Here are several strategies that could be applied:

1. Strict Trust Account Management Policies

• Segregation of Duties: Ensure that different individuals are responsible for handling, recording, and reconciling trust account transactions to minimize the risk of fraud.
• Regular Reconciliation: Conduct monthly reconciliations of trust accounts to ensure that all transactions are accurately recorded and that the account balances match the records.

2. Comprehensive Training and Education

• Mandatory Training: Provide regular training for all employees on the legal and ethical responsibilities associated with handling trust funds, including the consequences of misuse.
• Updates on Regulations: Keep staff informed about changes in laws and regulations regarding trust accounts and consumer protection.

3. Clear Policies on Fund Usage

• Defined Use of Trust Funds: Establish clear policies that outline what trust funds can and cannot be used for, ensuring that all employees understand these guidelines.
• Approval Processes: Implement a strict approval process for any withdrawals or transfers from the trust account, requiring multiple levels of authorization.

4. Monitoring and Auditing

• Internal Audits: Conduct regular internal audits of trust account transactions to identify any discrepancies or unusual patterns that may indicate misuse.
• External Audits: Engage third-party auditors to review trust account practices and ensure compliance with regulations.

5. Whistleblower Protections

• Anonymous Reporting Mechanism: Establish a confidential reporting system for employees to report suspected misuse of trust funds without fear of retaliation.
• Encourage Reporting: Foster a culture of transparency and accountability where employees feel empowered to report unethical behavior.

6. Client Communication and Transparency

• Regular Statements: Provide clients with regular statements detailing their trust account balances and transactions to enhance transparency.
• Client Education: Educate clients about their rights regarding trust funds and how to recognize potential misuse.

7. Disciplinary Measures

• Clear Consequences: Define and communicate the disciplinary actions that will be taken against employees who misuse trust funds, including termination and legal action.
• Zero Tolerance Policy: Adopt a zero-tolerance policy for any form of misconduct related to trust accounts.

8. Technology and Security Measures

• Secure Systems: Utilize secure accounting software that tracks all transactions and provides alerts for unusual activities.
• Access Controls: Limit access to trust account information to only those employees who need it for their job functions.

9. Regular Policy Review

• Continuous Improvement: Regularly review and update policies and procedures to adapt to new risks and regulatory changes, ensuring they remain effective.

By implementing these policies and procedures, an agency can significantly reduce the risk of trust account misuse and promote a culture of ethical practice within the organization.