£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 Service’s 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 practice’s 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 company’s 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 practice’s 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 Company’s 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 practice’s 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 solicitor’s 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.
Notes to Editors
Wolstenholmes LLP (CRO No. OC320144) was founded in 1818 as a legal partnership and was incorporated as a company on 5 June 2006. The company ceased trading on 24 December 2009 and was formally put into administration on 9 February 2010.
- Waseem Saddique, was latterly of Sutton Coldfied and his date of birth is 9 August 1977
- Mario Cardinali is reportedly now in Brazil and his date of birth is 11 June 1959
- Nasir Ilyas is of Greater Manchester
- Bilal Khawaja is of Greater Manchester: date of birth is 16 May 1979
- Imran Hussain is of Manchester: date of birth is 12 January 1973
- Bobby Naghman Shabbir is of Manchester: date of birth is 1 June 1974
- Helen Murgatroyd is of Oldham: date of birth is 31 July 1976.
A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:
- act as a director of a company
- take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
- act as an insolvency practitioner; or
- be a receiver of a company’s property.
In addition many other restrictions are placed on disqualified directors by other regulations.
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.
The SRA brought proceedings before the Solicitors Disciplinary Tribunal and on 3 May 2013, the Tribunal made the following orders:
- Mr Imran Hussain – struck off the Roll of Solicitors
- Mrs Asma Qayum– struck off the Roll of Solicitors
- Mr Bilal Khawaja – suspended from practice for 1 year and subsequently can only be employed as a solicitor with the approval of the SRA
- Ms Helen Murgatroyd – suspended from practice for 2 years and subsequently can only be employed as a solicitor with the approval of the SRA
- Mr Bobby Shabbir– suspended from practice for 6 months and subsequently can only be employed as a solicitor with the approval of the SRA
The case against Mr Nasir Ilyas was adjourned and is due to be heard in October 2014.
The Tribunal recorded the fact that this was perhaps the most serious case the Tribunal had ever dealt with. 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 had heard from three 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.
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 solicitor’s practice without the permission of the SRA.
Further information on director disqualifications and restrictions can be found on our website.
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice. Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available here.
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