Three law firm partners have been fined for allowing a paralegal to commit tax fraud under their noses for at least five years.
Anthony Maragh under-declared property values on 43 stamp duty land tax forms he submitted to HM Revenue & Customs.
Maragh, who had worked in the conveyancing department of Middlesex firm Johal & Co for 14 years, transferred around £333,000 to a personal bank account and to third parties.
An SRA regulatory settlement agreement stated that three partners of the firm, Bendika Johal, John Goodall and Tara Clifford, admitted allowing Maragh to make bank transfers from client accounts and failing to establish and maintain proper accounting systems. The failures lasted from January 2008 to April 2015, when Maragh’s employment was terminated.
The trio said Maragh was able to exploit the firm’s accounting system by completing the instructions to the bank and labelling them as ‘service charge’, ‘broker fee’ or ‘managing agent’s fee’. They had no reason to doubt the explanations and could not detect a pattern as instructions were sent only 10 times a year.
Maragh was a trusted and respected member of staff and the partners said they had no reason to doubt his integrity.
He was eventually convicted for making false statements with intent to defraud, and was sentenced in November 2015 to 40 months’ imprisonment. The general cash shortage was made good in June 2016.
The firm said it has changed its accounts procedures and payment procedures, with extra checks made in conveyancing matters before authorisation for payments is given. Clients have been reimbursed and did not complain – indeed some have continued to instruct the firm.
The SRA confirmed it had rescinded its decision to take the matter to the Solicitors Disciplinary Tribunal on the basis of the three entering the agreement.
Johal was rebuked and fined £2,000, while Goodall and Clifford were each rebuked and fined £1,000. They will pay £9,000 in costs between them.