A solicitor used his status to give the veneer of respectability to a Ponzi-type scheme that would ultimately rob investors of their life savings, a tribunal has heard.
Charles Valentine Fraser-Macnamara, in his capacity as sole director of Ecohouse Developments, (EDL), is alleged to have allowed misrepresentations to be made to potential investors in property schemes that would were doomed to failure.
Working alongside an associate referred to as ‘person A’, the Solicitors Disciplinary Tribunal heard investors were encouraged to plough more than £30m into the social housing scheme, with less than £5m returned to them.
Addressing a hearing today, SRA counsel Rory Dunlop QC compared the Brazil-based scheme to the film The Producers – where the protagonists create a show that attracts investors but will inevitably be a flop.
‘They know they have no intention of selling the units as it is never going to get that far,’ said Dunlop. ‘It is a classic Ponzi-style loop.
‘[The scheme] is is no more real than the proverbial pot of gold at the end of a rainbow. It is just a ruse to suck people in.
‘You say ‘look at these investors and how much money they have all made – you too could be like them if only you had invested in our scheme’. It is precisely why you pay the early investors to trumpet your success. They didn’t even bother to come up with a consistent lie on how big it was.’
Dunlop said there was no independent evidence that the housing project at the heart of the scheme was even successfully completed.
Investors took ‘false comfort’ from Fraser-Macnamara’s status as a solicitor, which was the point of him being sole director of EDL.
Dunlop said Fraser-Macnamara had access to the company’s accounts and must have realised something suspicious was going on – indeed the SRA alleges he was ‘helping to obscure’ payments to person A.
‘They were so thoroughly involved in a dishonest enterprise with person A they frankly didn’t care,’ added Dunlop.
Fraser-Macnamara has not attended the tribunal hearing, stating he was acting on legal advice. He has submitted in writing that the SDT hearing could ‘muddy the waters’ or have an adverse impact on any potential future criminal trial.
Dunlop told the tribunal that Fraser-Macnamara should want to clear his name to prove he was an honest man.
‘The most likely reason he is not here is he fears his lies would be exposed all the more clearly if he was exposed to cross-examination,’ added Dunlop.
Fraser-Macnamara was suspended by the SDT in 2016 for his work in relation to the scheme while he was consultant to Midlands law firm Sanders & Co, which acted for EDL. The present case focuses on Fraser-Macnamara’s actions as a nominee director at the company.
The tribunal hearing concluded today. A decision is expected on Wednesday.