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QLS: bankruptcy was undetectable

QLS: bankruptcy was undetectable

The undetected bankruptcy of a Gold Coast solicitor who admitted to defrauding clients of hundreds of thousands of dollars, which went unnoticed despite audits by the Queensland Law Society…

The undetected bankruptcy of a Gold Coast solicitor who admitted to defrauding clients of hundreds of thousands of dollars, which went unnoticed despite audits by the Queensland Law Society (QLS) was a result of further dishonesty by the solicitor.

Apparent oversights by the Society called into question the competence of its audits, which determine, among other things, whether something affects a solicitor’s abilities to practise effectively. But these oversights were in fact a result of deception by the Gold Coat solicitor.

Speaking to Lawyers Weekly, Law Society president Glenn Ferguson said the solicitor had “lied on the statutory declaration which asked whether he was under a bankruptcy order or whether there were any proceedings against him”. He “just lied on the form,” Ferguson said.

The QLS is now bringing charges against the solicitor, has taken over his practice and all his files, and has appointed itself receiver to his practice.

Noting that it is impossible for a Law Society to do bankruptcy checks on all of its members, Ferguson said that “we didn’t have the power to look through the accounts relating to his business. There are privacy issues in banks.”

“[The solicitor] had to swear that he was not bankrupt and that there was nothing affecting his ability to practise. Auditors don’t check into these matters and we can’t ask every bank of every lawyer to tell us everything about them,” Ferguson explained.

Highlighting the fact that the matter concerned a sworn officer of the courts, Ferguson said that “there is not much you can do when they start lying”.

Acknowledging also that the solicitor had been declared bankrupt in April last year, Ferguson said the Society was “never notified by his bankruptcy trustee of this fact, and he had just lied on the form”.

The issue has now also been referred to the Crime and Misconduct Commission as well as the police.

The solicitor’s previous illegal activities were detailed in the 30 January edition of Lawyers Weekly. It was reported that his practising certificate had been cancelled and his practice at Bundall on the Gold Coast had been placed into receivership following his own admissions of fraud.

The solicitor had admitted that he had forged his clients’ signatures on mortgages, borrowed money against the security of clients’ properties without their knowledge or consent, and had taken money for his own use as well as misappropriating funds received for stamp duty payments. Adding this background to the recently discovered bankruptcy and related lies, Ferguson emphasised that “this is real criminal behaviour”.

The QLS is currently examining options to prevent such cases in the future, though Ferguson stressed neither the fraud nor the bankruptcy could have been detected earlier.

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