13m shortfall, 2,500 dissatisfied clients: former members of legal firm Wolstenholmes get combined 70 years director disqualifications.

Former members of Wolstenholmes LLP disqualified as directors for trading fraudulently and failing to keep proper books and records.

The latest disqualifications in June, range from 5 to the maximum 15 years and follow an investigation managed by the Insolvency Service.

Four members of the company had been banned as directors in 2012 and 2013 (one on 2012 and three in 2013).

Two of the latest disqualifications followed court orders in the Manchester District Registry and in other instances, the officers gave undertakings to the Secretary of State for Business, Innovation & Skills not be involved in the management of a limited company for the duration of their bans.

The details of the bans are as follows:
Mr Nasir Ilyas undertaking accepted for 15 years on 6 June 2014;
Mr Waseem Saddique disqualified by court order on 10 June 2014 for 15 years;
Mr Mario Cardinali disqualified by court order on 10 June 2014 for 15 years;
Mr Imran Hussain undertaking accepted for 9 years on 4 June 2013;
Mr Bilal Khawaja undertaking accepted for 6 years on 13 June 2013;
Ms Helen Murgatroyd undertaking accepted for 5 years on 24 February 2012;
Mr Shabbir undertaking accepted for 5 years on 24 January 2013;

In sentencing Mr Saddique and Mr Cardinali, HHJ Bird, said:

The defendants involved themselves in a business in which members of the public are entitled to place absolute trust. That trust was abused at great cost to members of the public and at great cost to the Solicitors Regulation Authority and to the Solicitors Compensation Fund.

Fraud of the kind which was rife under their management in my judgment justifies a disqualification period of the maximum that the law allows, that is the period of 15 years.

Commenting on the disqualifications, Joanne Covell, of the Insolvency Services Investigations team said:

The actions of these individuals led to significant losses for clients as they misused money they had been entrusted with.

These disqualifications show that we will not hesitate to investigate wrongdoing and sends a clear message that we will take appropriate enforcement action to maintain business confidence.

The Company operated as a solicitors practice, primarily based in Heald Green, Cheshire but with a separate office in Birmingham. The practice had been carried on as a partnership since 1818 and under the Company from 2005.

Following clients complaints about the practices conveyancing department, the Solicitors Regulation Authority (the SRA) conducted an investigation which found significant and serious accounting irregularities and that non-solicitor third parties had inappropriate control and influence over the activities of the company, which led to an intervention and closure of the practice in December 2009. The Company was formally put into administration in February 2010.

As a result of the companys actions and the shortfall on its clients account, the Solicitors Compensation Fund has paid out has paid out more than 13m relating to more than 2,500 former clients claims.

The investigation found or it was not disputed that:
Two unqualified individuals, Mr Saddique and Mr Cardinali, acted as a member or in the management of the practice which was subject to strict regulatory control, and exercised an inappropriate degree of control and influence over its affairs to the ultimate detriment of the SRA and the practices clients;
The practice traded fraudulently and/or with inadequate financial controls and procedures in place to stop fraud occurring, to the ultimate detriment of the SRA and the Companys clients;
The practice failed to maintain and/or preserve adequate accounting records. As a result of these inadequate records it has not been possible for the SRA to verify how and exactly when the full amount of the shortfall of approximately 8m on the practices client account accrued or the destination of a significant amount of the misappropriated funds.

In addition, the company filed false Stamp Duty Land Transfer returns with HM Land Registry.

The SRA brought proceedings before the Solicitors Disciplinary Tribunal and on 3 May 2013, and orders were made against Mr Imran Hussain, Mrs Asma Qayum – both struck off the roll of solicitors – and Mr Bilal Khawaja and Ms Helen Murgatroyd (suspended for 1 year and 2 years respectively).

The case against Mr Nasir Ilyas was adjourned and is due to be heard in October 2014.

The SRA had previously made orders against Mr Waseem Saddique, Mr Mario Cardinali, Mr Mohammed Kazi and Mr Iftab Hussain as a result of their involvement with the company that none of them can be employed or remunerated in connection with a solicitors practice without the permission of the SRA.

Commenting on Tribunal decisions, David Middleton, Executive Director, Legal at the Solicitors Regulation Authority said:

The Tribunal recorded the fact that this was perhaps the most serious case it had ever dealt with and that there had been significant harm to the profession, to an extent mitigated by the prompt action of the SRA, the Compensation Fund and the intervention agents.

The Tribunal heard from clients who had suffered significant hurt by what had happened. It was to the credit of the Compensation Fund that the losses had been made good.