Solicitor judge misappropriated £288,000 from law firms


SDT: Solicitor offered no excuses

A head of commercial property and deputy district judge has been struck off for dishonestly misappropriating over £288,000 from two Essex law firms and their clients over a period of 16 years.

The Solicitors Regulation Authority (SRA) described Sean Michael Callaghan’s misconduct as “deplorable for any solicitor” and “particularly egregious” for a part-time judge.

In an agreed outcome approved by the Solicitors Disciplinary Tribunal (SDT), the regulator said Mr Callaghan was able to siphon off money belonging to BTMK Solicitors, where he worked from 2003 to 2019, and then Palmers Solicitors, where he was head of commercial property for 10 months.

He made payments either into bank accounts controlled by him or for his benefit, the majority of the misappropriation taking place through 33 separate transactions between 2003 and 2018.

Mr Callaghan used a variety of methods, such as doctoring invoices so that he would be paid personally, overstating how much a client was required to pay to settle litigation and taking the surplus, and transferring money from client account to a company doing building works on his house.

“Not only was the respondent prepared to misappropriate funds belonging either to his employer or their clients with such frequency, he was also, in a number of instances, willing to provide false information to his employer and the clients,” the agreed outcome said.

In May 2020, the COLP at Palmers told the SRA the solicitor had provided an invoice to a client, requesting payment to a bank account in his name, rather than the firm’s.

During a Zoom call two days earlier, Mr Callaghan had “not sought to deny the allegations”, had apologised and been dismissed. The following month, the COLP alerted the SRA to “further issues”; the regulator calculated that the total amount misappropriated from Palmers was £37,500.

Palmers alerted BTMK, which contacted Mr Callaghan over another questionable invoice. He sent the firm “a document which purported to account for his actions”, in which he described himself as “having a breakdown” and “in shock, and pressing a self-destruct button again”.

However, the SRA said he had not provided any medical evidence about his mental health.

BTMK launched civil proceedings against Mr Callaghan, seeking over £200,000 in damages for, among other things, fraud, making secret profits and negligence. Mr Callaghan made an interim payment of £105,000. The SRA calculated that he had misappropriated over £248,000 from BTMK.

Mr Callaghan admitted acting dishonestly. He offered no mitigation and instead apologised. The agreement recounted that he has been reported to the police.

The SRA said his misconduct was aggravated by his dishonesty, by the fact it involved a “fraudulent, criminal offence”, the fact it occurred over “a significant period of time and was repeated” and he tried to conceal it.

Mr Callaghan harmed clients by overstating amounts due by them and law firms by “causing significant financial loss to both firms”. His misconduct was “further exacerbated” by providing “false information” to BTMK and its clients to create a surplus in client account.

The regulator said Mr Callaghan had confirmed he was bankrupt and provided evidence on his financial means.

The SDT struck off the solicitor and ordered him to pay costs of £1,500 plus VAT.




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


Economic turbulence and the impact on law firm risk and protection

What does a slowing economy mean for various practice areas – from conveyancing and immigration to crime and family – and firms’ professional indemnity insurance prospects?


Time in context – understanding the time you have and how to accept it

For those who haven’t yet read Oliver Burkeman’s Four Thousand Weeks, you need to know this: it’s a time-management book like no other, already a classic.


Client money theft – how bad is the problem?

PII brokers’ raison d’être is to deal with complex and life-changing matters which threaten the existence of a law firm or its members’ future standard of living.


Loading animation