Just a fraction of £3.1m “misused” by a solicitor, who has been struck off, has been repaid, according to a tribunal which found “dishonesty proved multiple times.”
Paul Stott, until recently a senior partner at Hessle-based Ingrams Solicitors and assistant deputy coroner for Hull and the East Riding, used the money to keep his firm afloat when it was in serious financial difficulty in 2012.
The money was loaned from Caymans Islands-based Axiom Fund to law firms to fund cases in the hope of higher returns when their cases were successful. But £250,000 was used to pay Mr Scott’s personal tax liabilities, £151,000 for PAYE and the firm’s national insurance and £2.3m to pay the firm’s bills, overheads and other costs. Of the funding only £102,000 was spent on eligible legal expenses. In September 2012 Axiom was repaid £308,591.
The Solicitors Disciplinary Tribunal, a court which adjudicates on breaches of rules and has to prove allegations beyond reasonable doubt, struck off Mr Stott in October. He is the sixth solicitor to have been struck off in connection with the Axiom Fund.
In its judgement, it said Mr Stott’s conduct was “aggravated by his proven dishonesty, which was deliberate, calculated and repeated.” Striking off was necessary to “protect the public and maintain public confidence in the integrity of the profession.”
According to an agreement signed by Mr Stott in 2012, all loans were to be insured and repaid on the completion of each case. However the tribunal found Mr Stott “knew from the outset” that the contract “contained terms for the protection of investors and their investments, with which he did not intend to comply.”
Mr Stott claimed that the Axiom representative was “not at all alarmed” by the firm’s financial plight and they were in agreement that the money would be used to pay down debts.
In another breach Mr Stott also used £70,000 of client monies to pay staff salaries in 2011, but the money was later repaid.
The tribunal concluded: “Over £3m was drawn down and misused by the firm. Including facilitation fees and interest, the Axiom Fund lost in excess of £4.5m. At the date of the hearing only a small proportion of the monies owed had been repaid. Substantial harm had been caused to the fund and investors, as well as to the reputation of the profession.”
It said Mr Stott had “shown very little insight into his conduct.”
In a statement Mr Stott said they disagreed with the tribunal’s findings and would be appealing: “We are adamant that we acted within the law and there was no dishonesty whatsoever. The claim the SRA had to strike me off to protect the public is ludicrous.” He said he had been free to practice for the past five years and no problems had arisen and clients had been unnaffected.
Kellie Noble is now running the firm and Mr Stott is no longer connected with the business. Ingrams has a counter claim against the Axiom Fund.