SDT: faking ledger not a ‘moment of madness’
The Solicitors Disciplinary Tribunal has struck off a former partner for dishonestly misappropriating funds from estates and in one case overcharged by almost 1,000%.
Charles Rhodes, until June 2011 a partner at Gichard & Co in Rotherham, was charged with seven counts. They included providing a false spreadsheet to the SRA that purported to be the client account ledger but recorded transfers from client account to office account of £252,00 in respect of costs while actually investigation showed £437,000 was transferred.
Mr Rhodes – who was born in 1963 and at the beginning of the events giving rise to the allegations was 39, and 54 when the investigation began – admitted that the ledger given to the SRA was “a work of fiction” and that he had spent two or three days preparing it.
The misappropriations in relation to one client covered a nine-year period and involved 38 separate transactions. The allegation involving the largest sum was that he misappropriated client money to a value of £266,875 from one deceased’s estate. The Solicitors Regulation Authority (SRA) investigated when a beneficiary of the estate and a joint executor instructed another firm of solicitors over concerns about overcharging.
After the SRA intervened, a costs lawyer it instructed examined the files in relation to another client and found the respondent could have reasonably sought profit costs of £3,450. Instead he overcharged by £30,050, equal to 871%.
Appearing before the tribunal in person, Mr Rhodes admitted some of the allegations and agreed he had been a “monumental fool”, but claimed he was “a fool not a knave”. Although he had been “manifestly stupid”, he told the tribunal he had been under pressure in his personal life, may have panicked, was operating on “autopilot”, and was not thinking at all.
At the hearing last month, the tribunal found the charges of dishonesty proved. It said: “Misappropriating client funds in excess of quarter of £1 million… would be regarded as dishonest by the ordinary standards of reasonable and honest people.”
Similarly, in relation to the false ledger it said: “the production of a detailed and lengthy false document, drawn from and cross-referenced with 17 fake bills would be regarded as dishonest.” The motivation “behind the generation of false documents was to conceal his wrongdoing”.
It continued: “This was not a ‘moment of madness’ or an impulsive reaction to a situation and the tribunal rejected the suggestion that the respondent had been merely reckless. He had put care and effort into ensuring that the spreadsheet reflected the fake bills.”
Concluding the misconduct had been “at the highest level” and the only appropriate sanction was a strike-off, the tribunal said: “This was far from an isolated incident. The misconduct had taken place on an ongoing basis over a period of 12 years during which time estates had been repeatedly and deliberately overcharged, funds had been misappropriated and concealment had followed.”
The tribunal awarded costs against Mr Rhodes of £32,763.50.