16 Feb 2011
JOHANNESBURG - The Leapfrog Property Group has cancelled with immediate effect an agreement with one of its franchisees in Cape Town amid suspicions trust fund monies had been misappropriated. Leapfrog's Bruce Swain says the company decided to conduct a snap audit of its 50 franchisees across the country when it discovered irregularities in that the agent's trust account did not balance.
The company said in a statement: "Leapfrog has reported the franchisee to the Estate Agency Affairs Board (EAAB) [which] has seized control of the administration and winding down of the business it shut down and is monitoring the situation closely." It says the businesses of the remaining franchisees were in order. The suspended independently operated franchise had two offices, namely City Bowl and de Waterkant. "To ensure as far as possible that no clients are inconvenienced, Phill Conning, the highly successful Leapfrog franchisee for Tableview and surrounding areas, has opened a new franchise in de Waterkant, where it is business as usual," the statement says. Swain says Leapfrog is now assisting clients in compiling affidavits in order to claim from the Fidelity Fund which is set up to protect the interests of investors. He says the company carried out the audit in the light of recent scandals in the real estate industry. Last month the systemic misuse of trust monies among estate agents first came to light when news broke that property baroness Wendy Machanik and Wendy Machanik Properties had allegedly dipped into the trust account. It's been alleged they transferred money from the trust account to the business account in order to keep the business afloat, pay salaries, Machanik's personal expenses and the development of her residences. Lat month Pretoria-based estate agent Ansie Fourie conceded funds had been siphoned out of the Anzel trust account, but she put the blame squarely on the shoulders of her former business partner, . Swain says after discovering the discrepancies in the Leapfrog franchisee, the company obtained power of attorney from the principal, allowing them to take control of its bank accounts. The matter is currently being probed by Leapfrog, external auditors and the EAAB. Write to Micel Schnehage: micel@moneyweb.co.za