[1]Charges: prosecution dropped after further CPS investigation
The Crown Prosecution Service (CPS) has dropped charges against 11 solicitors and doctors who were accused of a £4m referral fee fraud involving after-the-event (ATE) legal expenses insurance.
The CPS has advised the City of London Police – which together with the Insurance Fraud Bureau (IFB) conducted the operation, codenamed Operation Triassic – to refer the facts to the Solicitors Regulation Authority and General Medical Council.
The charges involved conspiracy to defraud, money laundering and false accounting but the CPS decided there was no realistic prospect of conviction.
A CPS statement said: “Lawyers and medical practitioners were found to have accepted referral fees from insurers. The insurance companies provided the clients of the lawyers and medical practitioners with insurance to cover the eventuality of not winning a case.
“Where cases were settled in favour of the claimant, the lawyers and medical practitioners involved then recovered the cost of this insurance from the other party’s insurer. They did not, however, disclose the amount they had already been paid by way of commission.
“These professionals were thus receiving the commission twice and this is what was alleged to be fraudulent. However, recent enquiries made with other insurers have revealed that the payment of referral fees was widely known within the industry and that those insurers consulted did not regard the non-disclosure to them of these fees as fraudulent.”
A Solicitors Regulation Authority spokesman said: “We have been liaising with City of London Police on this matter and are aware of the operation. We will be having further discussions with them before making a decision on how to progress.”
An IFB spokeswoman said: “The IFB provided good evidence to the City of London Police to investigate the matter further and bring charges against the professionals concerned.”
The case involved BCR Legal Group, a London-based insurance intermediary specialising in ATE, which released a statement to say that it has been “vindicated” by the CPS’s decision, and reported that His Honour Judge Higgins, at Southwark Crown Court, described the prosecution as “scandalous”.
It said: “This misguided action by the IFB and COLP [City of London Police] will cost the taxpayers millions and raises serious questions about the competence and independence of both organisations. It raises very serious questions about the government’s decision to allow the insurance industry to fund 35 detectives and support staff in the COLP from January 2012.”
Ian Lewis, fraud partner at Manchester law firm Lewis Hymanson Small, representing BCR, said: “Despite repeated requests to be provided with details of the complaints, the CPS and the COLP failed to do so, raising speculation that this was an investigation led by the insurance industry with a suspicion of an agenda to continue the civil cost wars in the criminal courts.
“This investigation has cost BCR millions in terms of loss of business and damage to their professional reputation. Despite regular requests we have never been shown any evidence of criminality.”
Mike Stubbs, a partner of London firm Mishcon de Reya, acted for BCR in its successful appeal against a Financial Services Authority decision to remove its authorisation in the wake of the investigation.
He said: “The actions of the IFB and the COLP caused significant financial and reputational damage to BCR, forcing them into administration. I never had any doubt that the appeal would succeed as BCR conducted their business in an honest and ethical manner. I have never understood why the COLP and the CPS continued with their case for a further two years after the FSA had cleared BCR.”
Blake Weltman, managing director at BCR Legal Group, added: “I am extremely proud that despite this unfair onslaught from the IFB and the COLP, BCR has survived, and continues to provide an excellent service to our growing client base.”