SDT: Solicitor made sterling efforts to make good the problems
A solicitor who had a “misplaced belief” in the honesty and integrity of another solicitor jailed for fraud has been fined £30,000 over multiple rule breaches that resulted.
While describing John Davis as “eminently reckless”, the Solicitors Disciplinary Tribunal (SDT) acknowledged that – once he appreciated that Rodney Whiston-Dew had acted dishonestly – he then made “sterling efforts” to make good the harm to clients, “which was hugely to his credit”.
Mr Whiston-Dew was jailed for 10 years in November 2017 for his part in a crime gang which committed a £108m tax fraud. He was convicted of conspiracy to cheat the public revenue and cheating the public revenue.
He was struck off, while proclaiming his innocence, in 2019.
Mr Davis, admitted in 1978, is a solicitor-advocate and principal of Davis-Law Associates in Buckinghamshire.
The SDT heard that he first met Mr Whiston-Dew around 30 years ago. When the latter decided in 2011/12 to retire as a solicitor and work as a consultant advising on offshore companies, trusts and tax affairs, he instructed Mr Davis to “act for him in respect of his consultancy as he did not have a client account”.
Between 2012 and 2018, Mr Whiston-Dew used Davis-Law Associates’ client account in respect of his clients’ transactions. There was often not an underlying legal transaction, breaching the rule prohibiting solicitors from providing clients with a banking facility.
Mr Davis said he agreed to this because he thought it was safer for the clients.
Though he knew Mr Whiston-Dew was facing allegations, Mr Davis said he was not concerned at the time because he believed him to be innocent – he even initially thought Mr Whiston-Dew was wrongfully convicted.
Mr Davis also admitted breaching the anti-money laundering regulations by failing to establish the source of funds, receiving and transferring funds from third parties without verifying their identity and disregarding ‘red flag’ indicators.
In its evidence, the Solicitors Regulation Authority (SRA) said the size of some of the sums involved was “substantial”, running to many millions of pounds; Mr Davis said he had trusted Mr Whitson-Dew “implicitly” about the sources of funds.
Further, Mr Davis “approved correspondence drafted by or at the behest of Mr Whiston Dew”, and sent in his firm’s name, which purported to give assurances or confirm the truth of facts to third parties.
One set of allegations concerned his work for one of Mr Whiston-Dew’s clients, Client A. After the conviction, Mr Davis “immediately contacted” her to say he acted on behalf of the ex-solicitor’s companies and trusts – but not Mr Whiston Dew himself – and that he was “willing to assist Client A (free of charge) to establish where her money had been invested”.
He made similar representations to others who had invested with Mr Whiston Dew.
Mr Davis admitted to the SDT that there was a conflict of interest between his decision to act for Client A and the fact that, in April 2018, he took over from Mr Whiston-Dew the roles of director and sole shareholder in GBT Global Ltd, the vehicle through which Client A’s money had been handled. He again said he did this to protect clients.
The solicitor admitted visiting Mr Whitson-Dew in prison but said this was to obtain information to assist the clients who had lost money.
Mr Davis admitted acting recklessly with regard to all the allegations. The SDT accepted that he had not benefitted in any way from Mr Whiston Dew’s fraud and that Mr Davis had taken remedial steps to improve procedures at his firm.
The SDT said Mr Davis was “motivated by the misplaced belief in the honesty and integrity of Mr Whiston-Dew as well as his misguided intention to help clients recover their lost money”.
The regulatory breaches were “serious and abundant”, but they were “predicated on recklessness as opposed to dishonesty”.
When he “belatedly” appreciated Mr Whiston Dew’s conduct was fraudulent, his response was to “expend the firm’s resources and finances to investigate the same, which was hugely to his credit”.
He spent as many as 500 hours on Client A’s case and his efforts were noted recently by the High Court.
The SDT said Mr Davis was “treading his way through the mess caused by Mr Whiston Dew in a way that was not planned or anticipated but which quickly began to unravel”.
He was “eminently reckless” in the number of rule breaches that followed but was not “directly responsible” for the harm caused to clients.
Mr Davis was fined £30,000, ordered to pay £35,000 in costs and made subject to conditions on his practising certificate preventing him being a COLP, COFA or money laundering reporting officer, from acting as a manager or owner of any firm apart from Davis-Law Associates or being a freelance solicitor.
The tribunal also slashed the costs sought by the SRA from £61,470 to £35,000 on the basis that, when the case was passed to the regulator’s external solicitors, Capsticks, there was not that much work for it to do – as such a further 70 hours of work was not needed.
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