Solicitor struck off after imposter uses his firm as a vehicle for fraud

In the matter of Solicitors Regulation Authority v Johnbosco Eberechuckwu Onyeme Johnbosco Onyeme was struck off the roll of solicitors by the Solicitors Disciplinary Tribunal ('SDT') for unwittingly allowing his firm to be used as a vehicle for fraud.

Mr Onyeme it was a sole practitioner at ‘World Secure Solicitors Limited’ ('the Firm').  Following an investigation in August 2018, there was an intervention by the Solicitors Regulation Authority ('SRA'). The SRA subsequently referred Mr Onyeme to the SDT.

The SRA’s case against Mr Onyeme to the Tribunal included allegations that he authorised improper transfers in conveyancing transactions totalling over £1.5m from the Firm’s client account when he knew or ought to have known that the transactions were ‘dubious’ and was thus in breach of the SRA Account Rules 2011 and the SRA Principles 2011.

Background

Mr Onyeme was approached by an individual who had stolen the identity of another solicitor (unbeknown to them) who specialised in criminal law (“Solicitor A”).  Mr Onyeme received a call from someone posing as Solicitor A, offering her legal services in residential conveyancing. During Mr Onyeme’s recorded interview with the SRA prior to the Tribunal hearing, Mr Onyeme confirmed he was aware, from his review of Solicitor A’s profile on the Law Society, that Solicitor A’s alleged ‘specialism’ was in criminal law, not conveyancing. Mr Onyeme did not obtain a copy of the imposter’s CV and did not ask her for professional references.  He nevertheless employed the imposter.  It was Mr Onyeme’s case that he was contacted by the imposter and he interviewed her to the best of his ability and believed her to be Solicitor A having found her name on the Roll of Solicitors.   The SRA asserted that these circumstances of employment were ‘implausible’.

The imposter went on to conduct four fraudulent property transactions worth over £1.5m through the firm’s client account, all authorised by Mr Onyeme.  The purchase prices of the first two properties were received in the Firm’s client account, but were paid out to various third party individuals connected to the imposter, instead of the sellers.  It was Mr Onyeme’s case that he authorised such transactions based on forged copies of Land Registry documents created by the imposter.  In relation to the third and fourth properties, Mr Onyeme further authorised the purchase prices of the properties to be transferred without having seen evidence verifying the transactions to be proper, such as Land Registry documents.  However, by that time the Firm’s bank had frozen the Firm’s bank accounts, preventing these transfers from taking effect.

The SRA asked the Tribunal to find that Mr Onyeme’s conduct in respect of the property transactions was dishonest as he realised or ought to have realised that the transactions  were ‘dubious’. There were numerous reasons why Mr Onyeme should have realised that the transactions were not proper, such as the fact Solicitor A did not provide Mr Onyeme with any explanation or evidence as to the entitlement of transfer of sums to third parties nor any information about the identity of the third parties. Moreover, completion statements were not properly prepared. The SRA alleged that Mr Onyeme knew that the Firm was being used as a vehicle for the fraudulent transactions and that this knowledge could be inferred by reason of Mr Onyeme’s failure to properly review the documentation in the transactions and his failure to properly consider Person A’s ‘expertise’. The SRA further alleged that the Respondent had knowledge of the clients and/or transactions which was not apparent from review of the client files maintained by the Firm. The SRA alleged that ‘Mr Onyeme tried to conceal his own involvement in the transactions by self-reporting [to the SRA] concerns about the imposter.

The legal tests

The SRA submitted the allegations of Mr Onyeme’s conduct to the Tribunal on the legal basis that his conduct was dishonest and/or reckless.

The test for dishonesty was set out in the case of Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 (see our blog here). The test has two limbs. The first limb is a subjective one, which requires the Tribunal to first ascertain ‘the actual state of the individual’s knowledge or belief as to the facts.’ This limb considers whether reasonable belief was genuinely held.  The question of ‘reasonableness’ is to be decided on the evidence put forward.  The second limb is an objective test, which requires the Tribunal to determine whether the conduct was ‘honest or dishonest’ by applying the standards of ‘ordinary decent people.’

The test for recklessness was set out in the case of R v G [2003] UKHL 50 and is defined as ‘a person acts recklessly… with respect to (i) a circumstances when he is aware of a risk that it exists or will exist; (ii) as a result when he is aware of a risk that it will occur and it is, in the circumstances known to him, unreasonable to take that risk.’

It was Mr Onyeme’s case that his conduct had not been dishonest or reckless. Mr Onyeme asserted that he was ‘the victim of a fraud perpetrated by Solicitor A’ and claimed that he authorised the transactions following his trust in Solicitor A’s instructions to him and the documents she presented to him.

The Tribunal’s findings

The Tribunal found that Mr Onyeme’s conduct was not in fact dishonest, but reckless and lacked integrity. This was on the basis that a reasonable and honest person would not consider Mr Onyeme to have acted dishonestly where he authorised transactions he thought to be proper. The Tribunal found that Mr Onyeme was aware of the risk that the transactions were not proper and was thus reckless in authorising the transfers. The Tribunal found that Mr Onyeme’s conduct in relation to the third and fourth properties lacked the necessary integrity, for authorising payments without having seen any of the underlying documents. Mr Onyeme’s conduct was not found to have lacked integrity in relation to the first and second properties, as he had authorised the transfers based on documents provided to him by Solicitor A, albeit they were fraudulent.

The principle of integrity, Principle 2 of the SRA Principles 2011, is defined as ‘a useful shorthand to express the higher standards which society expects from professional persons and which the professions expect from their own members… professionals are required to live up to their own professional standards … integrity connotes adherence to the ethical standards of one’s own profession’ (Wingate and Evans v SRA [2018] EWCA Civ 366). The SDT found that ‘no solicitor acting with integrity would authorise the release of significant amounts of client monies without first having the documentary evidence to demonstrate that to release those monies was proper.’ Mr Onyeme knew he should not have authorised the payments without having seen any verification.

Outcome

The Tribunal determined that, notwithstanding a finding of dishonesty was not made against him, due to the level of recklessness and lack of integrity, the only appropriate sanction was for Mr Onyeme to be struck off the Role of Solicitors. The Tribunal found that ‘Mr Onyeme was motivated by his desire to take advantage of an opportunity to add an income stream to the Firm from a solicitor that was unknown to him’. The Tribunal found that although Mr Onyeme was ‘in some respects a victim’ of Solicitor A’s fraud, he acted recklessly and lacked integrity.

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