Company director of management company empty’s bank account

by Readers Question

10:13 AM, 12th August 2014
About 4 years ago

Company director of management company empty’s bank account

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Company director of management company empty’s bank account

I have not mentioned any names as there is an ongoing police case. Company director of management company empty's bank account

I would like some options with regard to this issue. I have recently been informed by a newly appointed management company that they have been appointed to manage the site.

These are the bare bones of the issue …..

  • The site consists of block of flats around 36 in number and 56 1 bedroom houses.
  • In 20011 the 3 directors of the residents holding company (call it company A ) decided to appoint a new company to manage the site (call this company B ) The old management company handed over £110,000 after finalizing the accounts in 2011.
  • One of the three directors of company A was the managing director of the new management company B
  • This director of company B informed the other two directors that he had taken £40,000 out of the bank account of company A without permission in October 2013.
  • Once informed of this they told him to refund the money and not to take anymore out of the account without permission.
  • In November 2013 the directors call a members meeting and it was decided to appoint another management company as of 1st April 2014.
  • Newly appointed company call it C repeatedly asks for accounts and for details relating to accounts but get no reply from company B
  • On 2ed April 2014 the new company C ask the bank to freeze the business account due to concerns.
  • The two directors of company A get a bank statement in July 2014 and discover that most of the money has been transferred to company B leaving around £2000
  • They then dismiss the offending director on 22nd July 2014 as a director of company A.

I have recently received a service charge from the new management company C for years 2014 to 2915 which I paid. They then invoiced me for the service charges from 2011 to 2014. At this point I started asking questions as I was unaware of the situation.

Once I became aware of what has transpired I suggested the following ….

1) Claim off the insurance cover of company A or company B under theft or fraud or even directors public liability for failing to run the company correctly.
I have been informed that company A have let their insurance cover lapse . They don’t know if company B has any insurance cover as they do not get any response from that company. I don’t know if a claim could be made against the two remaining directors personal insurance?

So the bottom line is the new management company C do not know anything and are asking for proof of payment prior to them taking over management. Can they do that?

I understand they are trying to do their best but how did the directors allow it to go on for so long they don’t know were the service charges for the last 3 years have gone in addition to the £110,000.

Regards

Chris



Comments

Mark Alexander

10:19 AM, 12th August 2014
About 4 years ago

Hi Chris

Thanks for not naming and shaming, that's part of our policy here at Property118 - see http://www.property118.com/what-property118-is-not/

Unless you are incredibly lucky the police will pass the off as a civil matter. Mark Smith (Barrister-At-Law) wrote an excellent blog on the Cotswold Barristers website about this problem very recently. He also explained how effective private criminal prosecutions can be in these circumstances - see >>> http://www.cotswoldbarristers.co.uk/police-failing-businesses-victims-fraud/

For more information about Private Criminal Prosecutions also see >>> http://www.cotswoldbarristers.co.uk/private-criminal-prosecutions/
.

Joe Bloggs

12:07 PM, 16th August 2014
About 4 years ago

thats terrible! im a director of an RTM company where similar but not so blatant dodgy dealings are taking place by the three other directors (who out vote me). i wonder if there are connexions? where about is this block? do the initials AR and WE ring any bells?

Chris Bunn

19:27 PM, 17th August 2014
About 4 years ago

Hi Joe,

I am also a director of a RTM company

I thought this is be a good warning to us all. The initials have no connections to this matter.
The offending person bought 2 property's through his management company and that opened the door. He has got away with around £250,000 at my reckoning.
The other directors at best have been gullible if not negligent and I would not want to be in their shoes.

Joe Bloggs

9:38 AM, 18th August 2014
About 4 years ago

hi chris,

thanks. this is a seemingly useful way of getting directors disqualified:
https://www.gov.uk/company-director-disqualification

please keep us posted. are you suing/ bringing a private prosecution?

Mark Smith (Barrister-At-Law)

9:53 AM, 18th August 2014
About 4 years ago

Please contact me for advice on this.

I agree with Mark A, the police will in all likelihood treat it as a civil case or at best a low priority business fraud. An article in the Standard recently showed that out of 81,000 business frauds reported to the Met Police only 95 resulted in criminal convictions. Private prosecutors are not constrained by budgets or political priorities, and in many cases we can claim back your legal fees from the state, regardless of the success or failure of the case. The criminal court can order unlimited compensation, against fraudsters in person; they cannot hide behind a company identity.


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