International firm Dentons has been ordered to disclose documents about a client accused of running a fraudulent investment scheme after the High Court found that letters sent by the law firm fell outside the normal lawyer/client relationship and the scheme itself bore ‘classic hallmarks’ of fraud. The documents would otherwise have been legally privileged.
Lee Victor Addlesee and others v Dentons Europe LLP concerns an allegedly fraudulent scheme which invited ‘everyday folk’ to invest in gold dust. The scheme was run by Anabus – then a Dentons client – and was marketed as ‘essentially risk free’. In a document called ‘Your Questions Answered’, the company said that ‘£25k should become £100k within 4-5 months’.
The claimants – some 240 investors – said they collectively lost €6.5m in the scheme and alleged that Dentons ‘recklessly and/or negligently enabled the scheme, and induced many of the individual claimants to invest by affording the scheme apparent respectability by endorsing it as Anabus’ legal adviser.’ Master Clark was asked to decide whether the fraud exception to privilege applied to the files held by Dentons for its former client. Dentons stated its position was neutral.
In her judgment, Clark said: ‘I am satisfied…that the claimants have shown a strong prima facie case that the scheme was fraudulent. Indeed, I consider that they have shown a very strong and compelling case.’ She added that the scheme bore the ‘classic hallmarks’ of fraud such as the promise of impossibly high returns and reliance on exotic investments.
Clark also found that in 2010 Dentons sent letters ‘to encourage, directly or indirectly…investment in the scheme’ by ‘providing reassurance that Anabus had a valid contract to purchase gold dust’.
‘This is a purpose which falls outside the normal lawyer/client relationship. I am satisfied that the claimants have a strong prima facie case (and again a very strong and compelling case) that the defendant was instructed for the purpose of furthering the scheme,’ she said.
Clark concluded that the fraud exception applies to documents held by Dentons for Anabus which would otherwise be privileged.
Dentons told the Gazette it will provide the documentation as requested by the court.