Constantia Sectional Title Managers – currently under curatorship – has allegedly misappropriated a huge amount of money from the 450 bodies corporate that it managed and the curators say missing money could amount to anything between R20-million and R40-million.
Quentin Brown – who ran the operation until an interdict was obtained by the Estate Agency Affairs Board to prevent him from doing so – has been provisionally sequestrated and the Hawks has now launched a criminal investigation into the affairs of CSTM.
According to the curators about R10-million was collected by CSTM from unit owners for the payment of municipal rates, taxes and services but the company is believed to not have paid this money over to the local councils, leaving unit owners high and dry and deeply indebted.
Curator Lawrence Moepi says that there was about R500k in the trust accounts at the end of last month but the income moving through the companies trust accounts amounted to about R300-million a year.
Cindy Nicholls, one of a team of forensic investigators looking into CSTM’s affairs warned that the company could be involved in possibly the biggest case of fraud ever faced by the EAAB.
She has confirmed that the many accounts opened by CSTM did not comply with the Financial Intelligence Centre Act and the investigators, Pasco Risk Management has asked First National Bank to investigate how these accounts were opened and who was involved.
At this stage it appears that the owners of units managed by CSTM would not be able to sell their properties until they received clearance certificates from the responsible body corporate. Moreover, banks would not grant bonds for affected units because the financial statements of these bodies corporate were suspect.
The EAAB investigation has shown that there allegedly were:
- Fictitious payments to municipalities;
- Contractors were paid kick-backs to inflate invoices to body corporates;
- Individual trust accounts were not opened for different organisations;
- Call accounts belonging to bodies corporate were used as security by CSTM for its Nedbank overdraft;
- Financial statements from CSTM were incorrect;
- A number of fraudulent transactions appeared in its management system;
- Almost every account on its books had been meddled with over the past three years.
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