Brazil: Scheme did not have government approval
A solicitor prosecuted for his involvement in a Ponzi scheme – and for the second time over the same set of facts – has this time been struck off.
Charles Valentine Fraser-Macnamara was thrown out of the profession after eight allegations were proved over the collapsed overseas investment scheme, in relation to six of which dishonesty was found.
The Solicitors Disciplinary Tribunal decided that he profited from, and/or misled members of the public into investing in, a company called Ecohouse Developments when he knew it was “operating a Ponzi scheme”.
He had already been suspended for 12 months in 2016 [1], for his actions in one capacity and this time was prosecuted for what he did in another capacity.
Mr Fraser-Macnamara was one of three solicitors sanctioned for their involvement in Ecohouse in the first hearing. He was a consultant to now-defunct Midlands law firm Sanders & Co.
They were acting for both Ecohouse and 849 individual investors, over five developments in Brazil.
The individual investor would make an investment, linked to a specific unit on a development, and would receive a set percentage profit on the investment in addition to the return of investment monies, a year later.
The firm operated an escrow account on behalf of Ecohouse in which it received, held and distributed money on behalf of investors following the receipt of ‘triggering’ documents from Ecohouse.
Over two and a half years it received £33.7m into the escrow account and deducted a total of £714,730 in fees from the investors. Some 163 received the investment back plus the expected profit, of whom 71 reinvested in Ecohouse.
Ecohouse suspended its worldwide operations in November 2014, following the intervention of the Brazilian police. A statement filed at Companies House by liquidators in January 2015 recorded the company’s debts as over £21.4m.
On the second occasion this week, Mr Fraser-Macnamara was prosecuted for his role as the sole director of Ecohouse and/or sole director of Black Country Legal Consultancy and/or director of Black Country Business Consultants. The hearing proceeded in his absence.
Though the full decision of the tribunal has yet to be published, it found that, in addition to his profiting from the Ponzi scheme, over three years Mr Fraser-Macnamara caused and allowed misrepresentations to be made to potential investors to the effect that Ecohouse owned the land that would be developed and that funds invested in the projects were secure.
He was also found to have allowed misrepresentations that Ecohouse was an approved supplier of housing under a Brazilian government scheme, was entitled to use the Olympic logo and had ISO 9001 accreditation. All of these claims were untrue.
Further, the tribunal ruled that Mr Fraser-Macnamara failed to maintain, preserve or deliver up adequate accounting records for Ecohouse, and involved himself in a dubious scheme and/or dubious transactions and/or caused or allowed transactions which bore the hallmarks of fraud and/or money laundering.