Bank: Money not deposited
Leading legal aid law firm Duncan Lewis has been rebuked by the Solicitors Regulation Authority for deciding that the theft of client money was not a material breach that had to be reported to the regulator.
Instead, it considered the misconduct to be an “internal matter”.
In a regulatory settlement agreement [1] published yesterday – which means the case will not go to a tribunal – the firm accepted a rebuke and £1,500 fine, and said it would pay costs of £1,350.
The agreement said that, in September 2016, the firm identified that 23 cash receipts from clients, worth £6,117 and received between over a 11-month period, had not been deposited into any of the firm’s bank accounts.
Duncan Lewis replaced the money and concluded that it had been misappropriated by an administrative assistant in its Birmingham office, who had responsibility for paying the money into the bank, but had not done so.
The firm recorded the matter in its breach register but “described it in the register and an internal memo as being ‘not material’ and as an ‘internal issue’”, the agreement said.
It was not disclosed to the SRA until January 2017, when a member of SRA staff met with the firm about unrelated matters.
The firm admitted that it breached principle 7 of the SRA Principles – by not complying with its regulatory obligations – and outcome 10.4 of the code of conduct by failing to report to the SRA promptly serious misconduct by an employee.
It also admitted breaching the accounts rules by “failing to maintain effective accounting systems, and proper internal controls over those systems”, which led to the misappropriations going undiscovered for so long.
Meanwhile, in another regulator settlement agreement, a solicitor handed a two-year suspended jail term for conspiracy to defraud the Legal Aid Agency earlier this year has accepted a six-month suspension [2] to cover the period until he appears before a disciplinary tribunal.
Neil Frew was a salaried partner and head of immigration at Chambers Solicitors in Bradford. He, Mohammed Ayub, the firm’s principal partner, and Mohammed Riaz were convicted a year ago of conspiracy to defraud the Legal Aid Agency of £160,873.
Inflated invoices for interpretation services were submitted to the Legal Aid Agency by the defendants over a number of years, who claimed the interpreters were booked through an agency, when in fact the interpreters were booked directly from Chambers Solicitors.
The address of the alleged agency was in the same building as Chambers Solicitors, whilst its ‘owner’, Mr Riaz, was revealed to be Mr Ayub’s brother.
In June [3], Mr Ayub was jailed for three years and six months and Mr Riaz for two years and nine months.
Mr Frew received a two-year suspended sentence and ordered to undertake 200 hours of unpaid work, his counsel reportedly telling the court that the solicitor had played “nothing like a leading role” in the fraud and stood to make no financial gain.
The SRA closed Chambers Solicitors in December 2016, shortly after the convictions; this action triggers automatic suspensions, but Mr Frew had already left the firm by then and so was not caught by it.
An SRA spokesman said the agreement was a “temporary measure to protect the public interest by preventing him from practising”.
The agreement specified that “by entering into this agreement, Mr Frew makes no admissions in relation to his conduct and the SRA acknowledges that to be the case”.
Mr Ayub is also heading to the tribunal but Mr Riaz is not, as he is not a solicitor and was not working for the law firm, meaning he is beyond the SRA’s reach.