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Real estate agent jailed for misusing trust money

A former Rainbow Beach real estate agent has been convicted and imprisoned following an Office of Fair Trading (OFT) investigation into the wrongful use of trust money.

Ian Andrew Phillips, formerly the sole director and principal licensee of Think Tank Management Pty Ltd, pleaded guilty in Brisbane District Court (5 July 2022) to dishonestly taking trust account money for his own use.

Mr Phillips was sentenced to three years imprisonment and will serve a minimum of six months.

In March 2021, Mr Phillips business partner, Tony Charles Freeman, also appeared in front of the Brisbane District Court where he also pleaded guilty to dishonestly using trust money.

Mr Freeman was sentenced to two years and six months imprisonment wholly suspended. A conviction was recorded.

The court heard that Think Tank Management Pty Ltd held the management rights to Rainbow Beach Resort, offering holiday accommodation and venue hire facilities.

A trust account was opened by Think Tank Management Pty Ltd to handle funds associated with the management of the resort. Mr Phillips was the sole signatory of the trust account, however arranged for his business partner and general manager of the resort, Mr Freeman to have electronic access while he was not on the premises.

Between January 2017 and February 2019 money in the trust account, that belonged to the unit owners, was being transferred to the Think Tank Management Pty Ltd business account to cover expenses such as tax debts, staff wages and superannuation payments.

Email correspondence between the two men showed that Mr Phillips was aware of the financial difficulties the business was facing, and approved requests from Mr Freeman to move money from the trust account to the business bank account.

A total of $219,128 was unlawfully transferred from the trust account to the business bank account.

Think Tank Management Pty Ltd went into liquidation on 15 March 2019, after the business was abandoned. Liquidators notified the OFT who commenced an investigation and froze the trust account.

Affected consumers were compensated through the Office of Fair Trading Claim Fund.

In sentencing Mr Phillips, Justice Ken Barlow QC said the defendant used $219,000 of other people’s money to pay personal debts and he has benefited from the fraud stating this is a serious breach of trust.

Commissioner for Fair Trading Victoria Thomson said the OFT will not tolerate real estate agents spending money that does not belong to them.

“Trust money must never be taken from a trust account without proper authorisation from the person that it belongs to,” Ms Thomson said.

“Agents, as well as their employees, cannot use trust money for personal payments or to cover their own business expenses and debts.”

The OFT’s Trust accounts guide is a booklet summarising agents’ trust account obligations.

Anyone who has concerns about real estate trust account anomalies or misappropriation of trust account funds should lodge a complaint with the OFT online at https://www.qld.gov.au/law/fair-trading or by calling 13 QGOV (13 74 68).