A sole practitioner who failed to complete background checks on employees has been suspended after they turned out to be criminals.
Solicitor of almost 40 years, Nicholas John Huber had been running his firm since 1987 but was looking for a way to sell it.
Mr Huber was introduced to ZS, a non-practising solicitor, in January 2015. He believed Mr ZS had been looking to purchase a solicitor’s practice.
The Solicitors Disciplinary Tribunal (SDT) heard that with the intention of enabling Mr Huber to retire after six months, ZS subsequently brought in two further individuals known as ZR and MM, so a partnership could be formed.
However, the partnership never traded and ZR and MM were employed as fee earners by Mr Huber, who remained the sole practitioner.
Without taking any steps to confirm their identity, qualifications or employment history, Mr Huber permitted both ZS and a fourth individual to work at a new London branch office.
Shortly after this, however, a property transaction was improperly carried out by those Mr Huber had not supervised, leading the firm to fall victim to fraud.
ZS and the fourth individual in the London office had been acting for alleged sellers of a £2.6 million London property. However, they were not actually the real sellers.
The tribunal heard that Mr Huber, in regards to money laundering regulations, had not verified the identity of alleged clients in the property transaction and it later emerged that the individuals were not the real owners of the property. Mr Huber, the named compliance officer, had not ensured that the employees within the firm had taken the necessary anti-money laundering training.
In May 2015, Mr Huber had to email ZS in order to establish who was employed by the firm and where they were practising from. He did not have access to the website of the firm which ZS had set up.
From the law firm on the other side of the transaction, a cheque of £2.57 million was sent to Nicholas Huber & Co when the property sale was completed in May 2015. The firm did, however, raise concerns in June of the same year relating to a failure to redeem the mortgage. The SDT highlighted that although “prompt action” had been taken by Mr Huber, there remained “an element of sheer luck that the bank managed to stop the money from reaching its fraudulent destination.”
The purchaser’s money was not lost and, alongside costs and interests, was later returned, with a small portion of it being funded by Mr Huber’s indemnity insurer.
Although the practising status of ZR and MM had been confirmed by Mr Huber, the SDT highlighted that the same had not been done with ZS and the fourth employee.
Where the latter two individuals were concerned, Mr Huber had no evidence which could verify that the CVs he had been given related to them. He did not, however, take any additional steps to check their identity, qualifications or previous employment record.
Mr Huber told the SDT that due to finalising the sale of practice, he had been in a “complacent happy mode”. He admitted several allegations which included allowing the London office to be run unsupervised.
The tribunal rejected the allegation that Mr Huber had acted recklessly and despite highlighting that he had acted naively, were unable to conclude has had been aware of any risk in the London office.
“[Mr Huber] had been extremely naïve and gullible, and had blindly trusted both Mr ZS and Mr JS, but the tribunal could not conclude he had been aware of or had even given any thought to the risk of them running a branch office without proper supervision from him.”
The firm was subsequently closed in December 2015 by Mr Huber, as he was unable to secure indemnity insurance.
Although the tribunal described Mr Huber’s actions as “very serious”, it stated that it was not to an extent which meant he should be struck off.
They stated he should be instead suspended for an 18-month period, which would be subject to a restriction order. This would mean he would be unable to run a firm or deal with the money of clients. He was also ordered to be pay £7,500 in costs.
