Sector: Professional Services.
Assignment: fraud, forensic and insolvency.
Four office firm of chartered certified accountants based in North West London; Sandy, Bedfordshire; and Central London.
Under its previous ownership, the accounting firm was a four office firm of two principals, operating as a limited company. The initial assignment was an appointment as Administrators by the firm’s debenture holders, but it transpired that the two partners had been operating a Ponzi scheme – a fraudulent investing scam promising high rates of return with little risk to investors – which had been promoted to clients of the firm and others for more than two years before it collapsed.
During the course of the administration, the team led by Paul Davis received claims from clients regarding monies they had invested into a related company registered in Singapore. Financial statements of this company had, in turn, been heavily qualified by its auditors. These parties had been promised by the directors that monies in the firm’s client account could be invested at favourable rates of between 8% and 15%, with personal guarantees from the directors and company. The largest single investor had committed £2.5m. Working with police, the claims were investigated and verified by the team. A worldwide freezing order was obtained against the Singapore company and the two directors – one hiding in Thailand – requiring the individuals to provide information to the courts in respect of where the funds had been invested. Money was traced to a number of countries including Cyprus and Russia.
Both directors were found guilty and disciplinary action was taken by the Association of Chartered Certified Accountants, principally regarding non-satisfaction of personal guarantees and accounting for clients monies received. Although this is now being appealed, the firm was eventually sold to one of its employees.