Director disqualified for misuse of tenants’ deposits

Daniel Richard Maurice McCarthy, director of Jupita, a rental company based in Wirral, has been disqualified as a director for eight years following an investigation by the Insolvency Service's company investigations team in Manchester.

McCarthy, of Prenton, Wirral, gave an undertaking to the Secretary of State for Business, Innovations & Skills which disqualified him from managing or in any way controlling a company or being a director until 2020.

In giving the undertaking, McCarthy did not dispute that he paid himself £48,909 between November 2009 and July 2010. During this period creditors, including landlords who were owed at least £113,809, were not being paid. McCarthy was also in tax arrears to HM Revenue & Customs.

Jupita, which traded as GDH Property Management Services, went into liquidation on 21 July 2010 with assets of £6,000, liabilities of £416,879 and a deficiency of £410,879.

McCarthy did not dispute that he did not deal with tenants' deposits in accordance with the Housing Act 2004, which requires deposits to be retained or insured via an approved scheme. Instead, he used the money for the benefit of Jupita and to make the net payments to himself. As a result, tenants and/or their landlords have lost at least £35,990.

Landlords associated with the company have been made liable for the return of the deposits and a fine of three times the deposit.

Claire Entwistle, director of company investigations at the Insolvency Service, said: "Directors who seek to use tenants' and landlords' monies, which should have been protected, particularly if used for their benefit, ahead of creditors, in insolvent companies, will be pursued rigorously by the Insolvency Service.

"The public should be assured that the Insolvency Service will seek to disqualify the directors of companies that do not obey the law and use other people's money for personal gain."

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As a responsible but ‘accidental’ landlord I can’t help but feel this man has got off far too lightly. Wouldn’t a prison sentence be more appropriate? The amount of money he has essentially stolen far exceeds that which you average burglar would ever be able to steal and yet they get custodial sentences (and rightly so). Also I find it very unfair that the unsuspecting landlords associated with this company are having to pay the 3x deposit fine which it isn’t really there fault it wasn’t lodged with the appropriate tenants deposit scheme. Surely this is what they pay agencies to do, and therefore absolve responsibility?

By Andrea Baron

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