Liquidators working with Constantia Sectional Title Management have warned that R80 million may have been misappropriated from the company as there is “virtually nothing” left in the company’s trust accounts. This is significantly higher than the original estimate of R20 million.

The company’s accounts were frozen and it was placed under curatorship in June this year. CSTM was responsible for managing the bodies corporate of at least 450 residential complexes mainly in the Johannesburg area.

Money was collected from property owners for municipal rates and services by CSTM and was supposed to have been paid to the respective councils on behalf of the owners but was allegedly used, instead by CSTM’s owner Quinton Brown.

The liquidators have sent summons to a number of people and organisations in an attempt to find out where the money collected by CSTM has gone and one of the company’s to receive a summons was Pasco Risk Management, the company that had originally investigated the alleged fraud at CSTM.

Pasco has to appear at two liquidation hearings to be held in the first week of September and company chief executive George Nicholls say this places them in an invidious position because it had helped the police with the criminal investigation into CSTM dealings.

The Estate Agency Affairs Board hired Pasco to investigate a number of case of fraud and misappropriation and then recently fired the company while it was in the middle of its investigations. Reasons for terminating Pasco’s services remain unclear.

According to CSTM’s liquidator Mathys Krog, the purpose of the hearings in September is to gather as much information as possible, particularly concerning the CSTM’s bank accounts.

The Hawks and Pasco removed all documentation from the company when they raided its offices and Krog says the only information they have is from Brown’s personal computer.

Krog confirmed that they intend to subpoena Brown’s mother and brother because he is concerned that these people might be hiding assets that belong to Brown.

Krog also intends to also subpoena Nedbank officials to explain how the bank allowed a Ferrari to be purchased using money from the CSTM trust account.

The full extent of the alleged fraud is unknown but Krog says that some money will be recovered as Brown owns 30 properties in one development, a number of other properties around Johannesburg and has some additional assets such as a luxury boat and various vehicles.

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