SDT: Solicitor knew William Donaldson was convicted fraudster
A solicitor involved in an advance fee fraud has been suspended for a year on the basis that it was mainly the fault of a convicted fraudster he worked with.
The Solicitors Disciplinary Tribunal (SDT) also found Simon Paget-Brown had taken 30 months to comply with an undertaking he had given.
Once he returns to practice, Mr Paget-Brown, who qualified in 2000 and was practising on his own at London firm Paget-Brown (UK), will be subject to a host of restrictions, including that he cannot give undertakings. The firm closed in 2020.
The SDT approved a statement of agreed facts and outcome between the Solicitors Regulation Authority (SRA) and Mr Paget-Brown, in which he admitted recklessly participating in or facilitating transactions “which bore hallmarks of advance fee fraud and/or failed to be alert to its suspicious features”.
He was acting for Wraith Capital and Wraith Capital Group, companies of which he was also a director, and admitted there was an own-interest conflict as a result.
The SRA said that a Winston Donaldson – also known as William Donaldson and William Davidson – worked for Wraith. A disqualified director, he was convicted of fraud and money laundering in 2014, which reports said related to an advance fee fraud in respect of loan facilities. He was jailed for four and a half years.
The regulator laid out the details of three matters where Wraith offered a funding facility arranged by Mr Donaldson and received fees for doing so in advance. In each case, the funding was not forthcoming and almost all of the fees – totalling around £450,000 – were not returned.
Mr Paget-Brown gave the undertaking while acting for a client over bridging finance she was taking out. Under it, he agreed to pay the lender £200,000 if the client did not repay the loan by 6 January 2018.
The undertaking was triggered but he only paid £30,000 in May 2018, with the rest paid in two instalments in January and October 2020.
Mr Paget-Brown also admitted to allowing his firm’s client account to be used as a banking facility. Around £2m passed through two ledgers and the SRA could find no evidence of underlying transactions.
He further admitted to failing to maintain proper accounting records – there were ledgers for each client but no individual matters were separately recorded, for example – while accountant’s reports were required for the firm’s last three years but not obtained.
In mitigation, Mr Paget-Brown insisted that there was no dishonesty on his part throughout, while the conflict only materialised as a result of Mr Donaldson’s “fraudulent endeavours”.
He said he used his “best endeavours” to comply with the undertaking within the relevant timeframe. “The undertaking was eventually satisfied in full with further interest added to the same. He made considerable losses as a result of this breach, in excess of £500,000.”
Mr Paget-Brown said he used the client account to assist two clients going through a divorce. The failure to obtain accountant’s reports “came about as a result of a genuine mistake as to when such reports were necessary and required”.
The SDT noted two witness statements obtained by the solicitor that suggested his misconduct “had arisen as a result of the deception by a third party (Mr Donaldson)”.
It went on: “The tribunal agreed with the [SRA} that whilst this could be said to mitigate the seriousness of the respondent’s misconduct, the respondent had been aware that Mr Donaldson was a convicted fraudster.
“The tribunal was also satisfied that the respondent had satisfied his undertaking but only after some 30 months after he had initially failed to perform it.”
By admitting the misconduct, Mr Paget-Brown had shown “some level of genuine insight”, but the full admission was only made a day before the SDT hearing.
“The tribunal determined that, given the serious and repeated nature of the respondent’s misconduct, there is a need to protect both the public and the reputation of the legal professional from future harm from the respondent by removing his ability to practise for a fixed period but neither the protection of the public nor the protection of the reputation of the legal profession justifies striking the respondent off the roll of solicitors.”
The agreed suspension of 12 months was “adequate and proportionate and in the public interest”, with the conditions imposed on his return to practise.
Mr Paget-Brown must obtain the SRA’s permission to work as a solicitor. He cannot be a sole practitioner, freelance solicitor, solicitor in an unregulated organisation, law firm partner or compliance officer. He cannot hold client money, be a signatory on any client account or give a solicitor’s undertaking.
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