Immigration: Thousands of fraudulent claims alleged
A solicitor and her practice manager husband jailed for legal aid fraud have failed in their bid to set aside a default judgment for nearly £5m obtained by the Ministry of Justice.
Master Thornett was highly critical of Astrid Halberstadt-Twum and Joseph Twum for the “gross delay” in pursuing their application and in any case found that their defence did not have a reasonable prospect of success.
Ms Halberstadt-Twum operated Cleveland & Co in East London for some 15 years until 2013. She employed her husband as a practice manager there.
The firm is unrelated to the law firm Cleveland & Co Associates, which provides an external in-house counsel service.
What was then the Legal Services Commission terminated Cleveland & Co’s civil legal aid contract in December 2013 over Ms Halberstadt-Twum’s failure to co-operate with an investigation into possible fraudulent claims.
In July 2018, the pair were convicted of conspiracy to defraud and of perverting the course of justice. Ms Halberstadt-Twum was sentenced to three years in prison, and her husband to two and a half years.
The prosecution related to approximately 50 immigration files where they had submitted claims for legal aid work allegedly conducted, but where either the person did not exist or the firm had not been instructed by the alleged client at any time and so no work had been carried out for them.
The Lord Chancellor then brought a civil claim alleging that there were 5,795 cases where there was no match between claims made for immigration work and records of any immigration application at the Home Office.
The claim sought £4.1m as the value of the claims wrongly paid to Ms Halberstadt-Twum as well as overpayments amounting to £758,000, and £40,000 from both of them relating specifically to the 50 cases evidenced at the criminal trial.
The claim was served on both while in prison in May 2019 and acknowledgements of service were filed by their solicitors. But no defences were filed and in August that year judgment was issued in default.
Master Thornett said he did not find Ms Halberstadt-Twum’s reasons for why the defences were not filed “at all convincing”.
He explained: “They seem largely a distraction from the admission [from a qualified solicitor] that inadequate steps were being taken to defend the claim.”
There was then a delay in applying to set aside the judgment and “what followed thereafter was also far from prompt”, the master found.
There was, he noted, “no developed or reasoned discussion [in Ms Halberstadt-Twum’s witness statement] about the various and considerable delays in the application at its various junctures”.
Master Thornett was also unconvinced by the proposed defences, including the fact that the pair said they were trying to appeal, out of time, the conspiracy to defraud convictions.
Their alleged co-conspirators were acquitted at a retrial in December 2019 and they argue that, under the Criminal Law Act 1977, a person cannot be guilty of conspiracy to commit an offence if the only other person with whom he agrees is his spouse.
The master said: “One would have thought that if the defendants have strength in their conviction of a proposed appeal, it would have been lodged (or permission for it sought) before now… It is telling, I find, that no such process has been commenced.
“I agree with the claimant’s further submissions that (i) even if such appeals have merit on grounds of criminal law, this hardly undermines the conclusion from the convictions that they each defrauded the claimant; (ii) the defendants had also been convicted of perverting the course of justice and such convictions related to the falsification of costs as submitted to the claimant.
“The prospect of a potential criminal appeal does not, I am satisfied, of itself establish a defence to the civil claim; nor still one that has a realistic prospect of success.”
He also rejected the “bare assertion” of a limitation defence as well as an argument over post-contractual reliance on the terms of the legal aid contract.
Master Thornett concluded: “The defendants do not present a defence or defences that have reasonable prospects of success.
“They have not made their application promptly. The gross delay in this case is such that even if points of proposed defence might have reasonable prospect, the case is such that I am satisfied it would not be just that liability be re-opened and the judgment set aside even if the proposed defence or defences might have some prospect of success.”
Ms Halberstadt-Twum was struck off by the Solicitors Disciplinary Tribunal in November 2019, and Mr Twum made subject to an order under section 43 of the Solicitors Act 1974, which means he cannot work at a law firm without the approval of the Solicitors Regulation Authority.
What is equally disturbing is that it has taken so long to audit these people. How on earth have almost 6,000 false claims managed to go without any audit? How can such a gross misconduct from a position of trust be so under punished?