A solicitor who risked almost £11m of client money in high risk property schemes has been fined by the Solicitors Disciplinary Tribunal and banned from sole practice for three years.
James Mawbey-Shaw, admitted in 2008, failed to advise his clients about the ‘obvious potential pitfalls’ of three off-plan property schemes, in which investors were asked for deposits of up to 50% for accomodation that had yet to be built. All three schemes failed to complete when the developers went into administration.
According to the tribunal’s judgment, the respondent also failed to carry out due diligence on the company that effectively insured clients’ deposits, and suggested it had billions of pounds worth of assets. It later emerged that the firm – referred to as ‘Company 6’ – was based in a shopping centre in the West Indies, had no UK registration, and was not regulated by the Financial Services Authority (as it then was).
Mawbey-Shaw was a partner at Yorkshire-based Wilsons Solicitors and its successor firm Law Offices at the time in question. The property projects involved 205 individual clients and £10,903,120 of deposits passed through client account. The firm generated approximately £140,500 of fees in total.
In a statement of agreed outcome, Mawbey-Shaw admitted that he failed to advise his clients about the pitfalls in the schemes, in particular that Company 6’s insurance bond might be inadequate. He also admitted that, despite representations to the contrary, he had carried out no due diligence of Company 6.
In judgment, the tribunal found the misconduct to be very serious. ‘The admitted breaches were of fundamental and basic obligations, however none of the allegations included acting without integrity,’ it said.
Mawbey-Shaw’s firm, Law Offices UK Ltd, was also prosecuted by the Solicitors Regulation Authority. In a separate allegation the firm admitted that, since 2013, it acted for both seller and buyer in sales of private homes and failed to have in place adequate systems and controls for assessing conflicts of interests.
The firm and Mawbey-Shaw were jointly fined £17,500 and ordered to pay costs of £36,650. Mawbey-Shaw was also banned from practising as a sole practitioner or sole manager or sole owner of an authorised or recognised body for three years.