SDT finds solicitor missed multiple warning signs in two high-value loan frauds
A solicitor has been fined £15000 after failing to identify clear warning signs in two high-value loan transactions that the tribunal said showed the hallmarks of fraud. Paul Edmund Levy, who qualified in September 1999, was working at international firm Singhania and Co when he acted on loans worth £464000 during the final months of 2019.
The first loan involved a sum of £199000. According to the Solicitors Disciplinary Tribunal, the solicitors acting for the borrower changed partway through the transaction without any explanation. Levy was instructed to send the loan funds to a trust corporation and to two individuals. This directly contradicted the facility agreement, which required the money to be paid into a solicitor-client account.
The second loan was for approximately £265000. The tribunal found that the solicitors who appeared to represent the borrower were in fact imposters. Levy was again directed to transfer funds to a party who was not the borrower and not to a solicitor-client account. Both scenarios should have prompted further checks and a refusal to proceed until the irregularities were resolved.
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Levy admitted that he failed to identify and respond to multiple indicators of potential fraud and money laundering. The tribunal concluded that his actions effectively facilitated transactions that displayed recognisable signs of financial wrongdoing, regardless of whether he intended that outcome. It said that the level of care and attention he exercised fell below the standard expected of a reasonably competent solicitor and risked undermining public confidence in the profession.
In mitigation, Levy argued that no client had suffered financial loss. He said that charges had been placed over properties connected to the loans and that professional indemnity insurance would have offered protection in the event of fraud. He submitted that any potential harm to public trust was hypothetical. He also maintained that the schemes involved sophisticated elements and that he had taken steps to verify aspects of the second loan, including visiting the property and arranging insurance before completion.
The tribunal was not persuaded that these factors excused the failures it identified. It noted that Levy had full control over the transactions and should have reacted to repeated inconsistencies in instructions and documentation. It emphasised that red flags were present from an early stage and that solicitors must scrutinise such matters carefully, particularly where client funds are involved.
The Solicitors Disciplinary Tribunal imposed a fine of £15000 and ordered Levy to pay costs of £35386.90. The ruling underscores the responsibility placed on solicitors to recognise and act on indications of fraud and to ensure that transactions proceed only with appropriate due diligence.