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Solicitor who fled country after SRA began investigation struck off

SRA: investigation made solicitor nervous [1]

SRA: investigation made solicitor nervous

A solicitor who absconded the day after the Solicitors Regulation Authority (SRA) began investigating his firm has been struck off in his absence for overbilling and for taking money from client accounts.

One of Selcuk Karatas’s partners told the Solicitors Disciplinary Tribunal (SDT) that after an SRA officer first visited the firm in early 2013, the solicitor, “who was normally easy-going and quite relaxed, had started to behave erratically and looked very nervous and stressed”.

According to its recently published ruling [2], the SDT heard that the officer asked Mr Karatas, 47, who co-founded east London firm Stuart Karatas in 2004, for a specific file. The solicitor said he could not find it and the following day travelled to Turkey. The scope of the investigation was then widened, after which the firm told the SRA that Mr Karatas had left the partnership.

The SRA’s investigation found a client account shortfall of £148,475 from a series of matters conducted by Mr Karatas, while he overbilled a total of £47,534. It was said to be a classic case of ‘teeming and lading’, an accounting fraud where cash received from one client is credited to another to hide the fact that money is being taken from the latter. The SDT was told there had been a “very clever manipulation of the accounts”.

The SDT recorded: “The firm has corrected the overbilling and made good the shortfall through a payment of £50,000 from partners and £138,000 from Aon Insurance.”

Mr Karatas did not appear before the tribunal but in an e-mail strenuously denied the allegations and that he had left the firm due to the investigation, while criticising the SRA for the way it conducted the case.

In finding almost all of the allegations – including one that Mr Karatas had acted dishonestly – proven, the SDT said: “The tribunal believed that the expression ‘abscond’ was not too strong a word for what the respondent had done. He had left at the time of the investigation because he knew irregularities in the accounts were likely to emerge.

“The tribunal accordingly determined that the respondent had left because of the investigation and had deliberately severed contact with the firm because of the irregularities. The tribunal had seen nothing that would rebut that determination or which would explain it retrospectively. The tribunal was entirely satisfied that the problems lay with the respondent’s files and there was not a shred of suggestion that anyone else had been involved.

“The tribunal found that the respondent’s replies were vague, not particularised and did not explain his actions. His defence was simply not plausible.”

Striking him off and making a costs order for £33,000, the SDT added: “The harm caused by the respondent to the clients involved was not as great as it might have been due to the corrective actions of his former partners to their undoubted expense.

“However, there was also significant reputational harm to his partners and to that of the profession and that harm was reasonably foreseeable by the respondent whilst he was trying to cover his tracks.

“The respondent had been an experienced solicitor but his actions had been carefully planned and executed and had involved a complex web of deceit. There was a breach of trust involving his partners and his clients.”