Property management agreements are, indeed, handled via contracts.  So are tenant rental contracts, including deposits.  However, Mr. Shockley, for all the information I've read and heard, over a period of years, raided trust accounts for his own use.  So long as those accounts were not regulated and audited, Mr. Shockley was able to "cover" ongoing cash flow needs with a Ponzi-like scheme.  As things got worse and his "margin of safety" disappeared, he borrowed significant amounts of money from friends, including fellow church members, on unsecured "signature" loans.  

Responsible third-party auditing would have, likely, exposed his scheme several years ago and saved his victims millions of dollars.  

As President Reagan put it ...."trust and verify."