Beware of financial scams, top judge warns solicitors

COURT OF APPEAL: protect the 'good name of the profession'

Lawyers have been warned by the Court of Appeal to be careful of being suckered into financial swindles, following a fraud that caught out two solicitors.

Paul Simms, then a partner with London-based Bower Cotton, acted for Australian solicitor Malcolm Carr, in 1998 on a proposed investment of $4 million (2.5 million).

A company persuaded Mr Carr - acting for a consortium of small investors - that it could return monthly profits exceeding 200%.

The money was deposited with Bower Cotton, and Mr Simms - on the instructions of Mr Carr - transferred it to a Channel Islands bank account, from which it disappeared.

Mr Carr claimed he did not authorise any transfer.

That claim - rejected at first instance - has now been dismissed by the Court of Appeal.

Lady Justice Arden said: 'I find it extraordinary that a solicitor [Mr Simms] from, as the judge found, "a very long-established and highly respected firm" should have participated in these events at all.'

She said Mr Simms made hardly any notes of any meetings or telephone calls he had about the deal.

Remuneration of 1% of the gross profit made by the company was agreed in addition to the fees.

The judge added: 'I hope, in the interests of the good name of the legal profession, that solicitors, especially those from well-established firms with a high reputation, will resist becoming involved in the same manner in future.'

There was no suggestion he was a knowing party to the fraud.

Mr Carr, who she found was also 'duped', had been 'very foolish'.

The court said two directors of the company and a US lawyer have since pleaded guilty in Florida to a wire fraud, including the $4 million.

Mr Simms now works with London-based City Legal Consultants.

He declined to comment.

Mr Carr's solicitor, Joanna Kennedy, of London firm Collyer-Bristow, said: 'This was a very sad case because many small investors lost out.'

Bower Cotton senior partner Michael Conlon said that only Mr Simms at the firm had been involved in the case.

Jeremy Fleming