201611.29

Solicitor Pays £4.65 Million Price of Facilitating Mortgage Fraud

Professional people are expected to behave with absolute integrity and can expect no mercy from the law if they fail to do so. In one case, a solicitor who was led into dishonesty by financial pressures and her desire to keep her job was left facing a multi-million-pound bill for her wrongdoing, without the benefit of insurance.

The woman had held herself out as a partner in a law firm, the boss of which was engaged in systematic mortgage fraud and was ultimately jailed for four years. A number of mortgage lenders who had lost very substantial sums as a result of his deceit had obtained judgments against her totalling over £4.65 million.

She launched High Court proceedings against her professional indemnity insurers after they refused to indemnify her in respect of those judgments on the basis that she had been dishonest. She argued that she had at all times acted at her boss’s behest, had not been involved in his fraudulent activities and had gained nothing personally from his deceit.

In ruling on the case, the Court noted that she was deserving of some sympathy. She was a single mother and divorcee who was under intense financial strain at the relevant time and desperate to keep her position with the firm.

However, in dismissing her claim, the Court noted that, whether or not she was a true partner in the firm, she had appeared as such and her name had appeared on its headed notepaper. She had acted dishonestly in facilitating and condoning her boss’s frauds in relation to numerous property transactions. The insurers were thus entitled to repudiate liability under her policy.

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