Be on the trust fraud front foot

What would you do if you found yourself falsely accused for misappropriation of trust money? How are you able to prove that it wasn’t you? Is there a certain action or behaviour that you do each day that is uniquely you that no else knows about?

Why on earth would someone want to frame you? Because they can.
It’s just unfortunate that we live in a world of criminal opportunists. Importantly, this is not a ‘how to’ on getting away with trust fraud. Rather, it is a first hand account of someone that has experienced false accusations.

Learning from the experience first hand

Being falsely accused of something you didn’t do is an awful situation that you may face in your career (hopefully never). It was a situation I found myself in many years ago when I began my real estate career. I felt it necessary to share what my experiences were so that others may hopefully learn from this awful scenario and take into consideration methods for prevention of this type of behaviour.

In my very early career, I was a Property Management assistant and part of my role was to receipt cash rents paid by tenants that would come into the office to pay their weekly rent over the counter. The process was that the funds would be placed into a sealed envelope and then the envelope would be fed through a deposit slot that had been purpose cut into the reception desk. The issue with the deposit slot was that it was big enough to stick your fingers through and was quite shallow, so the sealed envelopes were easy to reach for anyone that was was inclined to do so.

Over a period of time the contents of these envelopes began to change and the daily banking was falling short at the end of each days total. Sometimes the envelopes were missing small amounts such as $20-$60 and sometimes as much as $500 at a time. Of course as the person responsible for rent receipts, the fingers were in my direction.

The saving grace

My one saving grace was the fact that I was able to prove that I did the same thing every day, in the exact same way. Every time I took a cash receipt I would place it in the envelope with the notes facing in the same direction, the notes would be banded which made it easy for counting in the afternoon.
My signature was placed on the inside flap of the envelope and I also sealed the envelope, drawing a diagonal line over the back sealed section of the envelope in blue pen.

The in-house thief fortunately was not aware of my process but several other staff were able to vouch for the way that I did things. The ‘tampered’ envelopes were an obvious stand out, they’d been replaced with fresh ones, had no markings and the notes were not facing the same direction. The thief had tried to divert the attention away from their behaviour and onto me by taking amounts from the envelopes and trying to cover their tracks by placing the newly sealed envelopes back into the cash slot. Their thieving activity was later recorded, proven and they subsequently lost their job – rightfully so!

Lessons learned

18 years later, I carry the same principles in my daily practice when it comes to handling trust money. It is very seldom that we handle cash receipts in 2015. We handle mainly EFT payments. There are still processes and procedures that I put in place should prevent any similar criminal action. Prevention examples may include:

  1. Using the same colour pen each day (blue) for receipting and an alternate colour pen for reconciling (red)
  2. Entering your initials in CAPS instead of lower case when taking a receipt in your trust accounting software
  3. Signing off on everything and date stamping it
  4. Processing receipts at roughly the same time each day
  5. Writing explanations on the daily banking if receipts require reversal so others cannot make changes to the same transactions
  6. Logging out of your user profile in your property management software when you leave the office

The final say

Adopting these practices in your daily trust accounting process will stop others from misappropriating funds and framing you. Your auditor or regulatory body highly regard it if and when they audit your trust records.

Have you ever been framed for trust fraud? Do you have your own unique process for daily trust accounting practices that you’d like to share? Has reading this experience altered the way you manage the trust account? We’d love to hear from you. Share your thoughts/comments on this subject below.

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~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 18 years industry experience. Don’t trust just anyone with your trust accounting. Trust End of Month Angels and get back to what you do best – growing your business