Money: Solicitor was not entitled to cash
A solicitor has been struck off for taking money from a friend while he was a trainee and then suing her for more.
According to the Solicitors Disciplinary Tribunal (SDT), John Martin Gao “misappropriated” £19,500 from ‘Client A’ and then sued her for a further £1,500.
A complaint he then made about her solicitors to the Solicitors Regulation Authority (SRA) ultimately led to its investigation into him.
It was accepted that the SRA principles applied to Mr Gao’s conduct before he qualified in September 2015 at First Choice Solicitors in West London.
The SDT heard that Client A was in a “close relationship” with Mr Gao, who claimed that the £1,500 was due to him for work done as a personal assistant between 2009 and 2014, in addition to £20,500 he said had already been paid to him.
Client A’s defended the claim – which began in March 2015 – and counterclaimed on the basis that she had never employed Mr Gao and was not indebted to him at all.
She sought to recover £19,500 she claimed to have “inadvertently” paid him.
Client A said Mr Gao had requested two cheques from her: £19,000 for tax on work relating to the estate of a former partner of hers, and £500 on account of the firm’s costs.
She said Mr Gao had told her to leave the payee blank on both cheques, and in September 2014 he made them out to himself and cashed them.
In his reply, Mr Gao accepted that he received the money personally and asserted that Client A had asked him to keep the money as a gift to avoid liability to HM Revenue & Customs.
The proceedings settled in March 2016 with Mr Gao paying £19,500 and costs of £20,500 to Client A, who died shortly afterwards.
The SRA put forward written evidence from Client A that she felt she had been “swindled” by Mr Gao, and the regulator said evidence from other witnesses in the civil claim corroborated her account.
The tribunal said it accepted Mr Gao’s evidence that he had carried out a lot of non-legal work for Client A over several years and that they had been close friends.
“Client A’s written evidence was that she considered the respondent undertook these tasks as her friend. In his live evidence, the respondent had described a period of living rent-free with Client A and being short of money.”
It was “implausible” given Mr Gao’s circumstances at the time, the SDT said, that he would have let so much money accrue had there been an agreement for payment.
Client A argued that she had never employed Mr Gao “for reward”, but in April 2014 had instructed him as her solicitor on a probate matter, even though Mr Gao had only started his training contract earlier that year.
The tribunal found “significant” errors on invoices produced by Mr Gao to justify his claim to the money, which “strongly indicated” they had been produced for his legal proceedings.
“The errors were so marked that the tribunal considered any recipient would have challenged or queried the invoices.
“The tribunal found that the invoices had been created retrospectively by the respondent to support his entitlement to the £19,500 he had received.”
The SDT described Mr Gao’s evidence about the money being gifted to him as “confusing and unpersuasive” and it “did not make any sense” for Client A to seek to minimise her tax exposure in that way.
The tribunal found that the solicitor had obtained the cheques by telling Client A that “a tax was payable on the estate in respect of which the firm was carrying out probate work and that a further sum on account of costs was required”.
Mr Gao, who denied all the allegations against him, was found to have misappropriated the £19,500 and failed to return the money on request.
He was also found to have issued proceedings against Client A which were without merit and “brought in order to extract further monies from her”.
In doing all of these things, the solicitor was found to have acted dishonestly. He was struck off and ordered to pay £23,000 in costs.