A sole practitioner who entrusted his wife to look after client accounts - only for her to make improper transfers - has been suspended from practising for a year.
Abdul Aziz Hafezi allowed five-figure cash shortages to build up in his office account and failed to rectify the shortfall even when investigators flagged up problems.
The Solicitors Disciplinary Tribunal heard that Hafezi employed his wife, Naseem Hafezi, but failed to supervise her sufficiently and allowed her to withdraw and transfer money from the client account without permission.
When the Solicitors Regulation Authority first reported on the firm’s accounts in May 2013, the regulator discovered a client account cash shortage of more than £18,000. Around two-thirds was paid back during the course of the investigation.
Later that year, a minimum cash shortage of £85,824 was discovered, of which £80,000 was later restored.
The SDT heard Abdul Hafezi was ‘locked out’ of the client account by his wife, and he had not authorised the transfers to the office account. He admitted his wife was responsible for all their personal banking and he had not seen a bank statement for the joint account since January 2013.
Abdul Hafezi, a solicitor for 30 years, took ‘full responsibility’ for the accounts breaches and said he had put trust and confidence in his wife.
The solicitor, who admitted eight accounts rules breaches, denied a charge of recklessness, saying he had acted after May 2013 to bring in a legal cashier and new accountants.
But despite a ‘red flag’ from inspectors, he continued to employ his wife and the tribunal found his response to be ‘wholly inadequate’. Naseem Hafezi was dismissed by the firm only in 2014, months before the firm itself closed.
‘The respondent was aware of the risk of NH improperly transferring client money from 3 May 2013, but did nothing to mitigate or prevent that risk,’ said the tribunal.
Abdul Hafezi said in mitigation there was no suggestion he was aware of what his wife was doing or when she was doing it.
He had shown a ‘misplaced trust’ in her, and when the full picture became known ‘he did not hesitate’ to dismiss her.
The tribunal said the solicitor had undertaken no risk assessment and no checks and balances were put in place to minimise the opportunity for future misconduct.
‘His clients placed great trust in him. He breached that trust by not undertaking proper stewardship of their money.’
The tribunal said his conduct was ‘deliberate’ as it had been a ‘conscious strategy’ to put his wife in a position of trust and control over the firm’s finances.
Abdul Hafezi was suspended from practising as a solicitor for 12 months, after which he may not be a sole practitioner or law firm owner. He was also ordered to pay £16,250 prosecution costs.
In a separate judgment, a regulatory settlement agreement was made between the SRA and Naseem Hafezi to withdraw proceedings against her on health grounds. She must pay £5,500 in SRA costs.