Solicitor lost £230k of client money after falling for investment scam

SDT: Two instances of dishonesty

A solicitor who lost £230,000 of a client’s money by moving it into her personal bank account and then investing in a scheme which turned out to be a scam has been struck off.

Uyiosasere Ona Obaseki admitted that she had no financial services expertise and that her law firm was not regulated by the Financial Conduct Authority.

She then lied to her client for more than a year about losing the money, as well as to her professional indemnity insurer about the possibility of it leading to a claim.

Ms Obaseki, who qualified in 2004, ran North London firm Grazing Hill until the Solicitors Regulation Authority (SRA) revoked its authorisation in January 2021. The firm ceased trading four months later.

The events that led to the hearing only came to the regulator’s attention when the client, ‘STK’, made a claim on the SRA Compensation Fund.

She acted in 2017 for STK to recover funds following his sale of a property in Algeria. A few months later, without instructions, Ms Obaseki transferred £230,000 from the client account into her own personal account and then invested it with a scheme “which turned out to be fraudulent”.

It was not suggested that she was part of the fraud or knew about it.

There was a conflict between Ms Obaseki and STK over whether he had consented to her moving the money; she said he wanted a higher rate of return than the interest from client account.

The SDT made no finding on this; “the fact was that the transfers were improper” and the solicitor then invested the money knowing she was not authorised or qualified to advise the client on it.

She reported the matter to the police in June 2018 and only informed the client that the funds had been lost in April 2019. She admitted that she had “put her head in the sand and hoped beyond hope that the police would locate the missing funds” before having to do so.

“Her fear led her to tell a series of lies,” the SDT found. “The tribunal considered that of all the misconduct in the case this was the one about which the public would have been most concerned and that ordinary decent people would consider this conduct dishonest.”

The same month, Ms Obaseki had STK sign a loan agreement dealing with her repayment of the lost funds in instalments.

She did not advise him to seek independent advice and the SDT determined that she had a “clear conflict of interest” with the client.

Then, when completing her insurance renewal form in January 2020, Ms Obaseki answered “No” to the question of whether she was aware of any circumstances which may give rise to a claim.

She argued that, because her actions fell outside of legal practice, her insurance would not cover a claim and she did not have to declare it. She maintained this even after STK demanded repayment of the money in full in March, before the new policy took effect.

The SDT did not consider this a “credible explanation” – the reason she had failed to disclose the risk of claims was “in order, deliberately, to conceal that risk from the insurer”. This was dishonest.

This was Ms Obaseki’s second appearance before the SDT. In 2007, she was reprimanded after admitting producing two misleading letters and perpetuating a misleading costs invoice.

In considering sanction, the SDT noted that she had “firmly rejected” its questions about why she had not realised some of the “substantial” property she owned in order to repay the client in full immediately.

It said: “She seemed to think that she was owed an interest free loan from the client until it was convenient for her to make repayment.

“Her approach in evidence to concealing from the client that the money had been lost indicated that she still felt that as long as she could get the money back over a period of time before the client found out that was acceptable conduct.

“Her statements in mitigation concerning her approach to the insurance proposal form showed clearly that she still thought that as her misconduct occurred outside her role as a solicitor, she had been quite right not to disclose it to the insurer…

“Having regard to the number and seriousness of the allegations found proved, particularly the allegations of dishonesty, the tribunal did not consider that any of the lesser penalties than strike off would be appropriate.”

Ms Obaseki was also ordered to pay costs of £52,686.

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