A solicitor who acted for promoters of investment schemes as his firm sought new avenues of income has been fined by the Solicitors Disciplinary Tribunal despite no suggestion of dishonesty.
Mandeep Dhariwal, formerly a sole practitioner, allowed his firm to act as escrow agent for companies to facilitate the purchase of investments in diamonds, oil contracts and film productions, the tribunal heard.
The SRA said that while there was no improper or unauthorised use of clients’ funds, and no suggestion of dishonesty, Dhariwal’s conduct in letting the client account be used as a banking facility represented a ‘serious departure’ from the standards expected of him.
The 741 transactions he facilitated, which processed £9.437m through the client account, had the hallmarks of ’dubious’ financial investment schemes, the SRA said, and Dhariwal’s involvement ‘lent credibility’ to the schemes. The solicitor, who was admitted to the roll 20 years ago, admitted this charge.
Dhariwal also admitted failing to have regard to the SRA’s warning notice issued in respect of high-yield investment fraud in 2013.
The tribunal heard Dhariwal’s lawyers state he had made it clear to the investors he was not giving legal or financial advice in respect of the investments, that the firm was acting as an escrow agent and that they should take independent advice.
The judgment noted that before commencing a majority of the relevant work in 2013 Dhariwal checked the position with another law firm, his reporting accountant and the SRA. He believed the investment schemes in question had mostly been devised by large regulatory law firms and were genuine, with warning notices specifically on the banking facility being made after he had ceased this type of work.
He had decided voluntarily to conclude conduct of the escrow schemes and accepted that with hindsight he should have considered that there was a risk he was breaking solicitors rules.
His current firm, London and Hampshire practice Lawcommercial Trading Limited where he is an equity partner, has had a ‘cloud’ over it while the investigation was ongoing, the tribunal heard.
The tribunal said Dhariwal, who had previously been fined £5,000 in 2007 over another matter jointly with two others, was not someone desperate for the work and sucked into the schemes, but instead a ‘confident individual who was prepared to push the boundaries in order to expand his firm’.
‘A very significant amount of money had passed through the firm’s client account received from a large number of investors,’ the judgment stated.
‘The tribunal considered that public perception of this matter was particularly important where the involvement of a respectable law firm had given a veneer of respectability to this sort of transaction and made the investors feel their investment was safe.’
Dhariwal was fined £40,000 and ordered to pay SRA costs of £20,250.