Three solicitors who became embroiled in a investment scheme in which there was a ‘significant risk of conflict’ have been suspended and ordered to pay more than £60,000 in costs. Michael John Davies, Clare Louise Taman and Charles Valentine Fraser-Macnamara failed to act with integrity, according to a ruling handed down by the Solicitors Disciplinary Tribunal.
The three worked at Black Country-based Sanders & Co. They faced a common allegation, that they ‘acted or permitted Sanders & Co to act for Brazil-based Ecohouse Developments in relation to a complex overseas investment scheme for more than 800 individuals'.
According to the ruling, individuals invested in the scheme, 'despite there being a conflict between the interests of the client, the interests of each individual investor, and the interests of the firm’.
Davies and Taman both faced another charge that they became involved in a scheme outside their area of expertise and ‘where there was no legitimate need’ for solicitors to be involved. Both were also accused of permitting payments into, and transfers or withdrawals from, the firm’s client account.
Upholding the first allegation, the SDT said Davies, Taman and Fraser-Macnamara failed to act with integrity or behave in a way that maintains the public trust.
The same was found for the second allegation. The SDT said the pair failed to act with integrity but did allow their independence to become compromised.
Davies was ordered to pay £35,000 in costs while Taman was ordered to pay £17,500 and Fraser-Macnamara £10,000. All three were suspended for a year.
However, the tribunal accepted the solicitors’ arguments that they should not be struck off, because Fraser-Macnamara had failed to disclose his involvement with Ecohouse.
As a nominee director at the company, Fraser-Macnamara was paid £200 per day. The tribunal added that every time Sanders & Co signed up an investor, Fraser-Macnamara ‘would receive money’ at the same time as being a nominee director of Ecohouse.
A fourth defendant, Katherine May Fraser-Macnamara, Charles Fraser-Mancamara’s daughter, was handed no order.
Under the scheme, an investor would make an investment linked to a specific unit on a development and would receive a percentage profit on the investment plus the return of investment monies, to be paid 12 months after the initial investment.
Ecohouse suspended its worldwide operations in November 2014, following the intervention of the Brazilian police, the SDT said.
Around 849 people invested in the scheme but then complained about the release of their money at a time when the investors believed the relevant stage of construction had not been reached.
The judgment comes at a time when the SRA is sending out warning notices informing the public about solicitors involved in ‘get-rich-quick’ investment schemes.