The Solicitors Regulation Authority (SRA) is taking the unusual step of prosecuting a solicitor for the second time over the same issue.
Having already taken action against Charles Valentine Fraser-Macnamara for acting in a conflict of interest while a consultant to a law firm, it appears now to have brought proceedings in the Solicitors Disciplinary Tribunal (SDT) for his actions on the other side of the conflict.
He was suspended for 12 months in 2016, one of three solicitors sanctioned for their involvement in a collapsed overseas investment scheme.
He was a consultant to now-defunct Midlands law firm Sanders & Co, and worked with its senior partner Michael John Davies, and managing partner Clare Louise Taman.
They were acting for both a company called Ecohouse Developments and 849 individual investors, over five developments in Brazil.
The individual investor would make an investment, linked to a specific unit on a development, and would receive a set percentage profit on the investment in addition to the return of investment monies, a year later.
The firm operated an escrow account on behalf of Ecohouse in which it received, held and distributed money on behalf of investors following the receipt of ‘triggering’ documents from Ecohouse.
Over two and a half years it received £33.7m into the escrow account and deducted a total of £714,730 in fees from the investors. Some 163 received the investment back plus the expected profit, of whom 71 reinvested in Ecohouse.
Ecohouse suspended its worldwide operations in November 2014, following the intervention of the Brazilian police. A statement filed at Companies House by liquidators in January 2015 recorded the company’s debts as over £21.4m.
The trio were found to have acted where there were conflicts of interest. Mr Davies and Ms Taman were also suspended for a year, but their sanctions were increased by the High Court to three years on appeal by the SRA in 2017. It did not appeal Mr Fraser-Macnamara’s sanction.
The SDT had accepted Mr Davies and Ms Taman’s arguments that they should not be struck off because of an “element of concealment” on the part of Mr Fraser-Macnamara of his involvement with Ecohouse.
Mr Fraser-Macnamara had been a sole practitioner before his firm was bought by Sanders & Co in January 2012, and he became a self-employed consultant. By May 2013, his consultancy agreement with the firm was terminated.
Mr Fraser-Macnamara received £200 for every day he worked for Ecohouse, “as well as receiving £49,000 in consultancy fees from the firm relating to Ecohouse work”, calculated on a per file basis.
The tribunal said every time Sanders & Co signed up an investor, Mr Fraser-Macnamara “would receive money”, at the same time as being a nominee director of Ecohouse.
“In assessing the level of harm caused, the tribunal noted that it was [Mr Fraser-Macnamara] who had introduced investors to the scheme. However, he had taken a step back and the collapse of the scheme itself was not directly attributable to him.
“There was inevitably harm caused the reputation of the profession by his lack of integrity in circumstances where he had been paid by both sides. The potential for harm to be caused to individuals was obvious.”
Mr Fraser-Macnamara was found to have acted without integrity because of the conflict of interest.
The new allegations against him are in his capacity as the sole director of Ecohouse Developments and/or Black Country Legal Consultancy and/or a director of Black Country Business Consultants.
The SRA alleges that he caused or allowed misrepresentations to be made to potential Ecohouse investors, failed to maintain, preserve or deliver up adequate Ecohouse’s accounting records, and “involved himself in a dubious scheme and/or dubious transactions and/or caused or allowed transactions which bore the hallmarks of fraud and/or money laundering”.
Further, the regulator alleges that Mr Fraser-Macnamara profited from, and/or misled members of the public into investing in the scheme, and that he provided false information about the amount he was paid by Ecohouse and whether he could access its bank accounts before May 2014.
The allegations are subject to a tribunal hearing and as yet unproven.