JUDICIAL CAPITAL: Court clash over £400m Heather Capital collapse reveals suspended judge received £200K from Gibraltar law firm involved in £28.4m offshore cash transfers

Court hears Sheriff received £200K from law firm. DETAILS of a £200,000 payment made to a suspended Scottish judge have emerged in a court clash between liquidators of the collapsed £400m Heather Capital Hedge Fund & Glasgow based law firm Levy & Mcrae – who are being sued for £28.4million in relation to transfers of cash to offshore companies.

In an opinion issued by Lord Woolman at the Court of Session, it was revealed suspended Sheriff Peter Black Watson (61) – a former partner in Levy & McRae - received £200,000 from the client account of Hassans – a Gibraltar based law firm on 23 December 2008.

The payment to the suspended Sheriff came to light in court documents which also revealed a trail of cash transfers from Levy & Mcrae to offshore companies based in Panama, Monaco & Gibraltar.

The court also heard Gibraltar based Hassans- acted in the transfer of funds to companies incorporated in Gibraltar that were owned or controlled by Gregory King – who launched Heather Capital in 2004.

Details from the court opinion further revealed “One of the transactions concerned a company called Westernbrook Properties Limited. On 4 January 2007 the sum of £19 million was paid into the first defender’s client account. It was paid out 5 days later to an account with HSBC Private Bank in Monaco held by a Panamanian company. On 24 January the sum of £9.412 million was paid into the first defender’s client account. It was paid out on 28 March to the client account of Hassans.”

Liquidators of the now defunct hedge fund contend Heather Capital was defrauded of a sum of about £90 million. The court also heard claims Levy & McRae provided "dishonest assistance" to Heather Capital’s founder - Gregory King – now based in Spain.

Paul Duffy of Ernst & Young – who are handling Heather Capital’s affairs - is demanding  £28.4million from Levy & McRae, Mr Watson and other partners of the firm

During the hearing, legal agents acting for the liquidators also sought to obtain an order requiring suspended Sheriff Watson to disclose his involvement with Heather Capital.

However, Lord Woolman refused the request, expressing fears that granting the order would ‘encourage litigation’.

Lord Woolman said in his opinion: "I decline to do so. The details of insurance are a private matter between the insured and insurers. There are major questions involved in disclosure, including the likelihood that it would encourage speculative 'deep pocket' litigation."

Since 2010, Ernst & Young have been battling to recover investors cash from the demise of Heather Capital.

In court documents filed in the Isle of Man as part of a negligence claim against accountants KPMG over their role in Heather Capital - it is claimed Heather Capital were operating a Ponzi scheme to dupe investors.

Documents allege that as early as 2006, senior KPMG staff feared Heather Capital “may have been perpetrating a fraud”.

And in August 2007, KPMG employee Raymond Gawne told a colleague that he was “very uncomfortable" acting for the fund which “may have acted in a criminal manner".

The claim also alleges that millions of pounds of loans passed through the client account of Glasgow lawyer Frank Cannon who acted for Heather.

KPMG senior executive David McGarry sent an email to Gregory King stating: “Frank Cannon has been uncooperative, either in providing some form of explanation for all of the security documentation prepared by his firm, or in agreeing to facilitate access to Cannon’s clients’ money account".

In July 2011, the Scottish Crime & Drug Enforcement Agency obtained search warrants to recover material from the Glasgow based Cannon Law Practice – run by Frank Cannon - as part of an investigation into the alleged embezzlement of millions of pounds of cash. Much of the allegedly stolen money passed through Cannon's client account.

The move by Police followed a financial audit of Cannon’s Law Practice - conducted by the Law Society of Scotland in 2010, during which it was discovered millions of pounds had passed through Cannon’s client account in relation to a series of offshore transactions involving their client - Gregory King, a director of Mathon Ltd & Heather Capital.

It is unknown at this time if the Law Society of Scotland have conducted any financial audit of law firms mentioned in the latest court proceedings – where it is alleged tens of millions of pounds have passed through client accounts to offshore companies.

A report from Police Scotland naming Gregory King, Andrew Sobolewski, Andrew Millar & Scott Carmichael is still being considered by the Lord Advocate Frank Mulholland & Scotland’s Crown Office. However, no decision has yet been made public on the case since the Crown Office confirmed it was considering Police reports filed with prosecutors some time during 2014.

SHERIFF, SUSPENDED:

Peter Black Watson (61) – a partner in Levy & Mcrae at the time of the transactions - was suspended from judicial position of Sheriff by Scotland’s top judge Lord Brian Gill earlier this year - after an investigation by the Scottish Sun newspaper prompted the Lord President to demand sight of a multi million pound writ against Glasgow law firm Levy & Mcrae.

As no register of interests for members of Scotland's judiciary currently exists, top judge Lord Gill was unaware of Sheriff Watson’s involvement in Heather Capital until the Scottish Sun newspaper contacted the Judicial Office directly.

Watson offered to temporarily step aside from his judicial duties – while the litigation concluded – however a spokesperson for the Judicial Office told the media: “The Lord President concluded that in the circumstances a voluntary de-rostering was not appropriate and that suspension was necessary in order to maintain public confidence in the judiciary.”

A statement from the Judicial Office for Scotland read: Sheriff Peter Watson was suspended from the office of part-time sheriff on 16 February 2015, in terms of section 34 of the Judiciary and Courts (Scotland) Act 2008.

“On Friday 13 February the Judicial Office was made aware of the existence of a summons containing certain allegations against a number of individuals including part-time sheriff Peter Watson.

The Lord President’s Private Office immediately contacted Mr Watson and he offered not to sit as a part-time sheriff on a voluntary basis, pending the outcome of those proceedings. Mr Watson e-mailed a copy of the summons to the Lord President’s Private Office on Saturday 14 February.

On Monday 16 February the Lord President considered the matter. Having been shown the summons, the Lord President concluded that in the circumstances a voluntary de-rostering was not appropriate and that suspension was necessary in order to maintain public confidence in the judiciary. Mr Watson was therefore duly suspended from office on Monday 16 February 2015.”

Watson – who remains suspended from the judicial bench, was a director of Mathon Ltd - a key part of the Heather empire. The suspended Sheriff who now works out of PBW Law, also held shares in Aarkad PLC - a company based in the Isle of Man which channelled money into Heather Capital.

Watson was also a director of a “King & Company” – a Private Bank set up by Gregory King in Gibraltar. However, Gibraltar’s Financial Services watchdog revealed the banking license application for “King & Company” was withdrawn after two years in 2010.

In his capacity as a solicitor, and during the time Watson acted as a Sheriff – his clients included former First Minister Alex Salmond, former Rangers owners Sir David Murray, ex-Glasgow City Council leader Stephen Purcell and former Lord Advocate Elish Angiolini.

The full opinion from Lord Woolman in the latest round of litigation in the Heather Capital case at Scotland’s Court of Session:

OUTER HOUSE, COURT OF SESSION [2015] CSOH 115: CA207/14

NOTE BY LORD WOOLMAN

In the cause

HEATHER CAPITAL LIMITED (IN LIQUIDATION) Pursuers; against

LEVY & McRAE AND OTHERS Defenders:

Pursuer:  Lord Davidson of Glen Clova QC;  Shepherd & Wedderburn LLP
Defenders:  Clark QC, J Brown;  Simpson & Marwick
14 August 2015

Introduction

[1]        Heather Capital Ltd (‘HC’) was incorporated in the Isle of Man in 2005.  Prior to its liquidation in 2010 it had received investments exceeding $400 million. The present action has been raised in its name by the liquidator. The first defender is the firm of Levy & McRae. The other defenders are eight individuals, who were partners in the firm in the period from 1 January 2007 to 31 December 2008.

[2]        The liquidator contends that the company was defrauded of a sum of about £90 million. The scheme involved the transfer of funds to companies incorporated in Gibraltar that were owned or controlled by one of HC’s directors, Gregory King.  A firm of solicitors in Gibraltar, Hassans, acted in these transactions.

[3]        According to the liquidator, in early 2007 HC’s auditors raised queries about these transactions.  Subsequently, Mr King sought to conceal their true nature.

[4]        One of the transactions concerned a company called Westernbrook Properties Limited. On 4 January 2007 the sum of £19 million was paid into the first defender’s client account.  It was paid out 5 days later to an account with HSBC Private Bank in Monaco held by a Panamanian company.  On 24 January the sum of £9.412 million was paid into the first defender’s client account.  It was paid out on 28 March to the client account of Hassans.

[5]        On 23 December 2008 a payment of £200,000 was made to the eighth defender, Mr Peter Watson, from Hassans’ client account.

[6]        The liquidator pleads that HC was the client of the first defender at the material time. Accordingly, the defenders owed HC certain fiduciary duties, together with an obligation to exercise the knowledge, skill and care of reasonably competent solicitors.

[7]        It is also important to notice the terms of the pursuer’s ninth plea-in-law. It states:

“the pursuer having suffered loss, injury and damage by reasons of the defenders’ dishonest assistance of Gregory King in the latter committing breach of his fiduciary duties owed to the pursuer … decree should be pronounced”

[8]        The liquidator seeks to recover the sum of £28.4 million from the defenders. He intimated the claim on 23 June 2013.  There followed extensive pre-action correspondence before the summons was served on 23 October 2014. During that period, the liquidator did not request clarification of the membership or constitution of the firm of Levy & McRae as it existed from time to time.

[9]        The summons called on 10 February 2015.  The defences were lodged a week later. They stated that three of the defenders had been wrongly convened, because they had been assumed as partners after June 2007.  They are Mr Alasdair Gillies (1 July 2007), Mr Andrew Sleigh (1 December 2008), and Mr Gary Booth (1 January 2011).

[10]      The defenders raised this matter at the preliminary hearing on 5 March, and the continued hearing on 8 May. They said it involved significant reputational damage to those three individuals. They asked for early disposal of this discrete issue.

[11]      I fixed a hearing to take place on 13 August.  About a week before the hearing, the liquidator enrolled a motion to allow a minute of amendment.  It sought to add five further individuals as defenders, on the footing that they had been partners in the first defender in the period from 4 January 2007 to date.

[12]      The liquidator gave the following reasons in support of his motion:

“The pursuer’s agents wrote to the agent for the defenders on 7 May 2015 and 7 July 2015. In those letters, the pursuer’s agent requested:

    confirmation that the defenders had adequate insurance cover in place to meet the pursuer’s claim if it was successful;
    copies of the partnership agreements for each defender that the defender’s agents maintain have been wrongly convened; and
    details of each defender’s capital contribution to the firm

The defenders have failed to provide any of this information to the pursuer. The pursuer has identified a further 5 current and former partners of the firm who require to be convened.

Without confirmation that the defenders have sufficient insurance cover, or evidence as to why the defenders do not incur personal liability (which depends on the circumstances of each case), the pursuer seeks to convene these partners and former partners to the action as they may be jointly and severally liable for the debts of the firm.” (emphasis added)

Liability of new partners

[13]      The liability of new partners is governed by section 17(1) of the Partnership Act 1890:

“A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before he became a partner.”

[14]      In their Joint Consultation Paper on Partnership Law (2000), the Law Commission and the Scottish Law Commission state in relation to Scots law (at 10.65):

“Where the business taken over is substantially the same as the old firm, and where that business is continued without interruption, there appears to be a general presumption that the new partnership takes over the whole liabilities as well as the assets.”

[15]      Lord Hodge considered this point in Sim v Howat & McLaren [2011] CSOH 115 at [31]:

“The presumption does not arise unless there are facts and circumstances which bring it into play. The continuation of substantially the same business without interruption is necessary for the presumption.”

He suggested a number of other relevant facts and circumstances. They included whether the new partner had made a substantial capital contribution, whether he had paid or acknowledged any of the prior debts, and whether separate accounts were kept for the new and the old firm.

[16]      Lord Hodge determined at paragraph [29] that the appropriate test was whether a new partner had “accepted liability either expressly or tacitly” for the claim.

[17]      Who is responsible for averring those facts and circumstances? The answer is clear. In Thomson Balfour v Boag & Son 1936 SC 2 Lord Fleming stated (at p16) that “it was for the pursuers to prove” that a new partner had accepted liability for the debts of the old business.

[18]      Similarly in Miller v Macleod 1973 SC 172 Lord Justice Clerk Wheatley stated (at p183):

“whether in the circumstances the pursuer has established by presumption or by proof of facts and circumstances that the new firm agreed to adopt the old debts and become liable for them. Of course, the establishment of the presumption itself is dependent upon sufficient facts being proved to sustain it, and this in my opinion entitles the Court to look at all the facts, whether they occurred before, at or after the establishment of the partnership.”

[19]      In the present case, the liquidator does not offer to prove such facts and circumstances.  Instead, he states in condescendence 1:

“the defenders have been called upon, but failed, to provide to the pursuer the evidence (including a copy of the relevant partnership agreement(s) and copies of the accounts showing capital contributions made by the partners joining the partnership after December 2008) that any new partners who joined the partnership of Levy & McRae have not, in fact, undertaken liabilities of the partnership which were in existence prior to them joining. Accordingly, all the defenders are properly convened.”

[20]      In my view, that averment fails to satisfy the test identified by the Inner House. There are no averments that would allow the liquidator to lead evidence that the three individuals either expressly or tacitly agreed to take over the existing liabilities of the previous firm.  It does not set out the basis upon which the three individuals are convened. Instead it inverts the normal rule that the pursuer must plead his case.

[21]      Given the serious nature of the allegations and the size of the claim, the liquidator required to identify the basis upon which each defender had been convened.  He also had to differentiate between the acts of those individuals who had been partners at the material time and those who had been assumed after 2007.

[22]      I shall therefore sustain the defenders’ first plea-in-law to the extent of dismissing the case, so far as laid against the third, sixth and seventh defenders.

[23]      In doing so, I observe that on 25 March, the defenders’ solicitors wrote three separate letters to the pursuer’s solicitors and stated:

“In terms of his partnership agreement, no obligation was imposed on [the relevant defender] in respect of acts or omissions prior to his assumption, nor did he provide any indemnity in respect of such matters.”

Minute of Amendment

[24]      In the minute of amendment, the pursuer seeks (a) to alter the dates for the partners called as defenders to 4 January 2007 to date; and (b) to add five individuals, all of whom have been partners of Levy & McRae at some stage in that period. The relevant dates are as follows: Anne Bennie (2000 – 2008), Calum Anderson (1 July 2014) Laura Salmond (3 November 2014), Graham Craik (5 January 2015), and Stephen Hay 2007 (c6 months in late 2007).

[25]      The minute does not include any substantive averments to indicate the basis upon which these individuals are said to have taken over prior liabilities.  Accordingly, for the same reasons as given in relation to Messrs Gillies, Sleigh and Booth, I refuse to allow receipt of the minute.

[26]      The pursuer has had ample opportunity to investigate the position. Standing the very serious nature of the allegations, and the absence of a proper basis for seeking to add the five individuals as partners, I hold that it is not in the interests of justice to follow that course.

Disclosure of the Insurance Position

[27]      The pursuer seeks an order requiring the defenders to answer questions about the insurance position.  First, will the policy cover the claim?  Second, have the defenders notified a claim to insurers?  Third, have the insurers accepted the claim?

[28]      At the May hearing, the pursuer’s then senior counsel accepted that he was not entitled to ask for that information.  Lord Davidson, however, explained that the application had been made to elide the difficulty of identifying the correct defenders.  If the claim is covered by insurance, then that issue is much less important.

[29]      There is no Scottish authority in point.  In England the matter has been considered in the context of the court’s powers under the Civil Procedure Rules.  In West London Pipeline & Storage Ltd v Total UK Ltd [2008] EWCH 1296 (Comm), David Steel J refused to allow disclosure, although he also stated at [30]:

“The trend is strongly towards a more open approach to litigation. Albeit the potential for prejudice to the defendant and his insurers must be borne in mind, in the modern age of ‘cards on the table’ the question is readily posed why should not the one factor which may be key to a claimant’s view of the merit of pursuing a claim, namely what is the limit of cover and will the costs eat it up anyway, be known?”

[30]      In XYZ v Various [2013] EWHC 3643 (QB) Thirwall J ordered very limited disclosure to demonstrate that the defendant had sufficient insurance to fund its participation to the end of the trial.  The Court of Appeal has indicated that the matter is not free from doubt: Dowling v Griffin [2014] EWCA Civ 1445.

[31]      Lord Davidson suggested that I could use the wide powers contained in rule of court 47 to order disclosure.  I decline to do so. The details of insurance are a private matter between the insured and insurers.  There are major questions involved in disclosure, including the likelihood that it would encourage speculative “deep pocket” litigation: West London at [30].

Further Procedure

[32]      I shall allow a further period of ten weeks for open adjustment, with the qualification that all substantive adjustment should be completed within eight weeks.

[33]      That lengthy period is justified by three factors.  First, there have been recent extensive adjustments to the pleadings. Second, a hearing is due to take place before the Supreme Court of Gibraltar on 24 September in respect of a Letter of Request to recover the files of Hassans.

[34]      Third Lord Tyre has reserved judgment following a recent debate in similar proceedings raised by the liquidator against Burness Paul. Mr Clark said that the decision may have a significant bearing on the present action, as the arguments on prescription and loss are very similar.

[35]      Having regard to that third factor, I shall also fix a diet of debate.  Mr Clark estimated that it would last three days. Apart from the plea of prescription, the defenders mount eleven separate challenges to the relevancy of the pursuer’s averments.  

[36]      If the defenders are successful and obtain dismissal, that may save each party a considerable sum of money. Mr Clark estimated that a proof before answer would last about six weeks and cost each side several hundred thousand pounds.

Request for a witness statement from Peter Watson

[37]      The pursuer asks the court to ordain Mr Watson to provide a witness statement to explain the circumstances in which the sum of £9.5 million was paid to Hassans and the purpose of the payment of £200,000, made to him from Hassans’ client account on 23 December 2008. The pursuer seeks the statement to make his own averments “more pointed”.

[38]      I would be slow to order one witness to produce a statement in advance of the other statements. I find no compelling reason in this case to depart from the normal rule that there should be a simultaneous exchange of witness statements.  I therefore refuse the application.

Law Society SCDEA ‘info sharing deal’ on mob lawyers wont affect 99% of Scotland’s crooked solicitors who rip-off, steal millions from clients

SCDEA signs ‘info sharing’ agreement with Law Society over crooked lawyers involved only in crime gangs. AFTER MANY YEARS of chasing ‘crooked lawyers’ linked to Scotland’s criminal underworld apparently without gaining one single conviction, the Scottish Crime & Drug Enforcement Agency (SCDEA) has signed an ‘information sharing’ agreement with the Law Society of Scotland which allegedly grants the Police access to information on lawyers otherwise not shared by the Law Society such as breaches of professional rules, standards or criminal activity. The deal is two-way, with the Law Society expecting Police to inform the notoriously corrupt regulator of information relating to information they gather on rogue lawyers.

However, while Police will supposedly get an “in” to the murky world of Law Society investigations into their own members, the remainder of solicitors clients, both corporate and the ordinary consumer or man on the street, will not be provided with any information on how crooked their lawyer really is or who among the criminal fraternity they are associated with.

If for instance, it turns out an unassuming High Street solicitor or accountant in, say Edinburgh, or even better still, the sleepy Scottish Borders, has been quietly laundering cash & property for Scottish crime & drug lords or even a former-gang-member-turned-informer-now-back-into-crime, other clients of this particular solicitor or accountant will not be told of their lawyer’s dealings & profiteering from the legal underworld. Hardly seems fair now, does it.

A copy of the Law Society-SCDEA information sharing deal can be downloaded at an external link, here : Information Sharing Protocol between Law Society of Scotland & Scottish Crime & Drug Enforcement Agency (pdf) and it is worth noting the Scottish Legal Complaints Commission (SLCC),who are now supposed to be the single gateway for complaints about the legal profession in Scotland, is not covered in the agreement.

Share thee not : Law Society of Scotland’s Regulation Chief Philip Yelland not one to share info on colleagues. Since at least 2009, the SCDEA has been issuing annual reports alleging it’s officers are investigating at least 291 "professionals” employed by Scotland’s crime gangs to organise their highly profitable criminal empires. These “professionals”, who are known to receive large amounts of money for their advice & work, apparently include lawyers, accountants, property agents and surveillance experts, all furthering the ends of crime. However no recorded prosecutions have appeared in the SCDEA’s annual announcements and this year’s latest take on the story, published in June, revealed the SCDEA had been chasing crooked lawyers attached to Scottish mobsters for at least two years, apparently without any success, because the Law Society of Scotland’s regulation department, under the command of Philip Yelland and the notoriously crooked Institute of Chartered Accountants for Scotland (ICAS) were “still investigating” the cases.

In a report published in the Herald newspaper on Monday 6 June, the SCDEA’s director general, Deputy Chief Constable Gordon Meldrum, is reported to have claimed 12 of the specialists “taken out” were key players acting as lynchpins for the top 20% of Scotland’s 360 organised crime groups.

The Herald went onto report “Mr Meldrum is unable to name any of the 12, because of ongoing proceedings against them involving the Crown Office, the Law Society of Scotland and the Institute of Chartered Accountants of Scotland.”

Since the June announcement by the SCDEA, which I reported on here : Two years later, Police Chief refuses to name crooked lawyers & accountants in SCDEA ‘swoop’ because Law Society & ICAS ‘are still investigating’, several insiders have told Diary of Injustice the Law Society & ICAS delays “were making a fool out of attempts to bring their members linked to organised crime, to justice”.

CRIME IS OK FOR SOME : Police & Crown Office refused to charge legal aid thief lawyers plundering millions from taxpayers. It has also emerged that while the Law Society of Scotland and the Scottish Crime & Drug Enforcement Agency are today eager for a bit of publicity, other elements of the legal profession linked back to the Law Society, such as the Legal Defence Union, have been ACTIVELY INTERVENING in criminal cases against solicitors and brokering deals with the Scottish Legal Board & Crown Office, deals which allowed up to FOURTEEN crooked lawyers to escape prosecution for LEGAL AID FRAUD, which I revealed in an earlier article published here : FOURTEEN lawyers accused of multi-million pound legal aid fraud escape justice as Scotland’s Crown Office fail to prosecute all cases in 5 years

The fact FOURTEEN crooked lawyers were not prosecuted for stealing MILLIONS OF POUNDS of taxpayers money after the Crown Office REFUSED to prosecute any of them, claiming there was insufficient evidence in each case, makes a mockery of the criminal justice system, the Police, regulation of the legal profession, and attempts to protect public money from fraudsters in the legal establishment.

It is worth noting not one single Police Chief or Scottish Government Minister has criticised any of the Crown Office FOURTEEN REFUSALS to prosecute legal aid fraudster lawyers.

Commenting in the agreement between the SCDEA and the Law Society, Deputy Chief Constable Gordon Meldrum, Director General of the SCDEA said in a Press Release published by the Law Society of Scotland : "We know that serious organised crime groups use the services of specialists, including lawyers, to support their criminal enterprises. Their role is crucial to the ongoing operation of criminal enterprises by providing the means necessary to launder money, acquire property and make other financial investments. Without this expert advice, crime groups would find it very difficult to operate.”

Mr Meldrum continued : "The vast majority of professionals are law abiding citizens, but there are a small number of unscrupulous lawyers, as well as professionals in other sectors, who are operating on behalf of organised crime. Some professionals may find themselves drawn into the criminal underworld through lack of awareness, or they may be subject to threats and blackmail by criminals. Their involvement can lead to reputational damage, loss of employment, a criminal record and even a custodial sentence.That's why our new collaborative agreement with the Law Society of Scotland is so important. We need to know more about who is involved and the nature of their involvement so that we can take steps to disrupt criminal activity."

Cameron Ritchie, president of the Law Society of Scotland, speaking on the smoke & mirrors agreement with the SCDEA for public consumption, said: "This is an important step for both organisations in ensuring the sharing of relevant information which will assist in the detection and disruption of organised crime in Scotland. It is absolutely vital for maintaining public trust and the reputation of the profession that we take the necessary action to ensure that our members adhere to the high regulatory and ethical standards expected of all Scottish solicitors.”

More crooked lawyers than ever, yet Mr Ritchie trumpets the usual spin, claiming the Law Society operates a ‘robust regulatory regime’ Mr Ritchie continued : "We have a robust regulatory regime, including financial compliance systems, and know that the vast majority of our members are completely honest in their business practices and work very hard on behalf of legitimate clients. However those who are unscrupulous, those who are coerced into criminal activity or those who inadvertently serve organised crime, need to be identified and dealt with appropriately. "This initiative will further strengthen our financial compliance regime and we welcome the information sharing protocol as a deterrent to those involved in serious organised crime who would seek to use solicitors, or other professionals, to facilitate their activities."

However, all eight of Scotland’s Police forces do not appear to want to work together with the public when it comes to clients reporting their solicitor or accountant to the Police for theft, embezzlement or fraud in a growing number of instances where clients are usually given the cold shoulder by Police even when large sums of money or even property are reported stolen by their solicitors or accountants. In fact, in some cases, the Police have been positively hostile, and even threatening against members of the public who report corruption in the legal world.

In a rising, and perhaps ‘profitable’ (as an ongoing investigation appears to be revealing) trend for some Police Officers, it appears members of the Scottish legal profession are using the Police and even serving Sheriffs as a private army to threaten clients or creditors with grievances, as Scottish Law Reporter recently covered, here : Serving Sheriff’s law firm drafted in to defend Desmond Cheyne QC over French home work dispute, allegations builders ‘were threatened’ by Police

Neither the SCDEA or Law Society of Scotland are compliant with Freedom of Information legislation therefore the public will have to rely on less than believable media announcements from both organisations on how well this information scheme fares.

While the agreement between the Law Society & SCDEA is good for a few announcements, and perhaps Ministerial bragging rights at functions & evening dinners, the vast majority of ‘crooked lawyers’ who generate thousands of complaints from clients every year in Scotland will not be affected, nor will clients of crooked Scottish lawyers have any right to be informed of exactly what their lawyers are up to behind closed doors.

Just try reporting your crooked lawyer to your local Police and see how far you get. Nowhere, very fast, with the chance the solicitor will call in a favour and have the Police target you instead.

Two years later, Police Chief refuses to name crooked lawyers & accountants in SCDEA ‘swoop’ because Law Society & ICAS ‘are still investigating’

Scottish Crime & Drug Enforcement Agency have chased crooked lawyers for two years yet no names, no prosecutions. THE Director General of the Scottish Crime & Drug Enforcement Agency (SCDEA), Deputy Chief Constable Gordon Meldrum has been forced to admit to the media this week he cannot identify a so-far unnamed, mysterious group of crooked lawyers & crooked accountants who allegedly work for Scotland’s top crime gangs & bosses, because two self regulators, the Law Society of Scotland who regulate solicitors & the Institute of Chartered Accountants for Scotland (ICAS) who regulate Scottish accountants, are still investigating the allegations & complaints.

Since 2009, the SCDEA have claimed around 241 “specialists”, such as crooked lawyers and accountants, were linked to the organised crime groups operating in Scotland. To-date, not one crooked lawyer or accountant has been charged with criminal offences relating to the now yearly claims made by the Police organisations. However, this year, the figure has now apparently risen to 291 such individuals, as the SCDEA’s recently released crime map lists 360 gangs, 200 of them based in Strathclyde Region, and 4472 members, including the specialists.

In a report published in the Herald newspaper on Monday 6 June, the SCDEA’s director general, Deputy Chief Constable Gordon Meldrum, is reported as claiming 12 of the specialists “taken out” were key players acting as lynchpins for the top 20% of Scotland’s 360 organised crime groups.

Mr Meldrum is quoted : "We found out that these 12 undoubtedly operated on behalf of a number of gangs. By taking out one of the specialists, you can impact on, say, eight groups because they all draw a particular type of advice from one of the individuals. We know for a fact that a number of specialists sit as nexus points in a number of groups. We have got to a position where we have undertaken investigations in to all of them and we have undertaken some kind of action against all of them."

The Herald went onto report “Mr Meldrum is unable to name any of the 12, because of ongoing proceedings against them involving the Crown Office, the Law Society of Scotland and the Institute of Chartered Accountants of Scotland.”

Secret investigations or simple cover-up ? Law Society of Scotland ‘are investigating’ claims of lawyers working for gangsters yet none have yet been identified. Today, it can be revealed the cases before the Law Society of Scotland have been held up over the concerns of the legal profession that the rot involving the so-far unnamed crooked lawyers allegedly working for gangland kingpins goes a lot further than the Law Society would like made public. Some within the Law Society are concerned the numbers of crooked lawyers eager represent gangs has risen, due to falling profits of law firms in what is one of the worst business periods for decades for Scotland’s law firms used to bringing in vast profits for their partners.

A legal insider speaking this afternoon on the two year old scandal said it was unusual that solicitors accused of involvement with criminal gangs were able to remain anonymous and at large, while also endangering the reputation of the Scottish legal profession as a whole. He also questioned why no arrests had taken place.

He said : “We have reached a dangerous state of affairs where one of Scotland’s top Police organisations have alleged criminal activity on the part of members of the Scottish legal profession yet not one single member of the legal profession has yet been identified in public, along with any of the allegations they face.”

He continued : “These individuals are still at large which, in the light of the SCDEA’s claims must be a threat to the reputation of Scotland’s legal services industry. If the Police have the evidence against them, then why have these solicitors or advocates not been charged with criminal offences and why has it been left to their own regulatory bodies to deal with the cases which now seem to be developing a life of their own.”

A justice campaigner pointed out innocent clients may end up being caught up in the long running saga if no action is taken. He said : “If these alleged crooked lawyers or accountants have been using innocent clients to front their criminal activities, the Law Society, Police and accountants regulators should have taken action a long time ago otherwise innocent people are going to be dragged into this mess.”

A Government insider commenting on the long running saga of gangland crooked lawyers said today he feared a rerun of the Niels Lockhart-Scottish Legal Aid Board scandal, where serious complaints of Legal Aid irregularities made by the Scottish Legal Aid Board (SLAB) against solicitor Mr Lockhart were negotiated away by the Legal Defence Union and the Law Society of Scotland and the case closed without any charges after the Law Society took FOUR YEARS to investigate complaints made by SLAB against Mr Lockhart.

I reported on the Lockhart case in an earlier articles HERE, and exposed the involvement of the Legal Defence Union in the case, which the Law Society closed without a result, here : One law for lawyers : Secret Report reveals Legal Aid Board, Law Society & Legal Defence Union ‘cosy relationship’ in Lockhart case

The insider said : “I fear the SCDEA may well end up with egg on their face if organisations such as the Legal Defence Union take the upper hand in representing the interests of members of the legal profession who are being investigated by the Law Society of Scotland over allegations of criminal behaviour. I think any ordinary person would be justified in asking why are the Law Society involved in this anyway, given the consideration of accusations of crime is clearly a subject the Law Society tend to avoid in complaints handling.”

Asked to confirm whether the Legal Defence Union had been involved in previous Law Society investigations where allegations of criminality against solicitors had been made, the official said : “I believe so. Put it this way, if there are no announcements from the Law Society it has struck off a handful of lawyers acting for gangsters as a result of the SCDEA’s claims, it wont be the first time a solicitor accused of criminal activity has been let off.”

Scots accountants regulator ICAS equally useless in regulation, did nothing over accountant Norman Howitt filing false statements with Police to cover up embezzlement and attempt to swindle. The Institute of Chartered Accountants of Scotland (ICAS) are as poor at regulating crooked accountants as the Law Society are at regulating crooked lawyers. In my own experience, a Borders Accountant, Norman Howitt now of the JRW Group accountants, filed a false statement with Lothian & Borders Police to cover up his actions in taking money from my late father’s estate to his business accounts, possession of my late mother’s pension and an attempt to take control over her entire assets. Even though the Police were satisfied Mr Howitt’s statement was false, without foundation, and they received evidence of his actings in my late father’s estate, nothing was done. ICAS and its investigator, Dr TM McMorrow, initially found Mr Howitt to blame yet refused to act or punish the crooked accountant, who remains in practice as an accountant in the Scottish Borders to this day.

An individual familiar with the practices of ICAS regulation said : “As for ICAS, don't expect much from them. They are a law unto themselves like the rest of the financial regulators unless there is a bit of PR in it for their end to claim they finally did something.”

No one at the SCDEA was available for comment. The Crown Office have not issued any statement on any charges or investigations concerning these mysterious crooked lawyers & accountants so far not publicly identified by the Scottish Crime & Drug Enforcement Agency.

If any readers have worries their solicitors or accountants may be involved in criminal activities,they should contact Scottish Law Reporter at scottishlawreporter@gmail.com with their suspicions.

Australian Police arrest suspect in connection with 2006 murder bid on Law Society of Scotland Chief Accountant Leslie Cumming

Law Society Chief Accountant Leslie Cumming (now retired) was attacked in January 2006. AUSTRALIAN POLICE have arrested a 45 year old man on an international arrest warrant in connection with an attempt on the life of the now retired Chief Accountant of the Law Society of Scotland, Leslie Cumming, which took place at Mr Cumming’s home in Edinburgh in late January 2006. The 45 year old man now under arrest in Australia cannot be named for legal reasons, as the Crown Office have launched proceedings to extradite him back to Scotland to face charges.

According to newspaper reports at the time, Mr Cumming was attacked outside his home by a man wearing a balaclava, receiving serious injuries to his face. Mr Cumming subsequently retired from his role at the Law Society of Scotland and set up his own consultancy business, Leslie Cumming Consultancy Services

Douglas Mill claimed Law Society critics were responsible for ‘murder hit’, while Mr Cumming felt it was crooked lawyers. While some senior figures at the Law Society of Scotland publicly blamed critics of the Law Society itself for the attack, rumours at the time and several press reports on the case since 2006, including interviews with Mr Cumming himself appeared to point the finger of suspicion to rogue elements within the legal profession, or crooked lawyers, as Mr Cumming’s role as Chief Accountant gave him responsibility for detecting & rooting out the enormous swathe of money-laundering and corruption endemic in Scotland’s legal profession. Mr Cumming was in charge of auditing law firms accounts and investigating complaints concerning investment business carried out by law firms.

Law Society maintained they do such a fine job, there are no crooked lawyers – Police report revealed otherwise. Most of the Law Society of Scotland’s top brass maintain they do such an excellent job of protecting the public from crooked lawyers, there are very few, or even none in existence. However, a Scottish Crime & Drug Enforcement Agency mapping project of 2009 led by Gordon Meldrum, the director-general of the SCDEA reported hundreds of crooked lawyers & accountants assisting organised crime gangs, claiming almost 250 crooked lawyers, accountants and other "specialists" give criminals professional help – something which certainly pours cold water on the Law Society’s claims to be an effective policeman of the Scottish legal profession. Subsequently, claims were made to law journalists that several of Scotland's ‘leading law firms & solicitors’ were involved in financial dealings in such fine, reputable tax havens countries such as Jersey, Guernsey, the Cayman Islands, Monaco & Lichtenstein.

The 2008-2009 SCDEA Annual Report (pdf) stated : “Organised criminals are highly sophisticated when it comes to hiding the profits of their criminal behaviour and they change their methods constantly in response to preventative methods put in place by the authorities. They will enlist the services of ‘specialists’ - accountants, lawyers and financial advisers—to help them legitimise their ill-gotten cash” … leading to questions over the Law Society of Scotland’s public attitude of ‘This couldn’t possibly happen in Scotland as the Scottish legal profession is respected the world over’.

It was reported in the media later in 2006, Police believed a hitman was hired to carry out the attack on Mr Cumming,, and investigated a list of aggrieved clients and rogue lawyers who may have ordered the stabbing, which ended up as one of Lothian & Borders Police most high profile unsolved cases, and went onto feature on BBC Television’s Crimewatch programme.

News report on the attempted murder of Law Society Chief Accountant Leslie Cumming in January 2006 (click image below to view video)

I have previously reported on matters connected with the case, here : Leslie Cumming attack - The story so far

You can read more in the Scottish newspapers about the arrest in Australia, HERE and HERE.

Readers may wish to note as this is a criminal case, any comments should be kept to details already reported in the media.

Justice Secretary 'hush hush' on criminal records of lawyers as Crown Office claims its too costly to keep details on legal profession's crooks

Scotland's Crown Office & Procurator Fiscal Service ‘too busy to collect details’ of crooked lawyers. Despite the blaze of publicity sought by both the Justice Secretary Kenny MacAskill and the Scottish Crime & Drug Enforcement Agency on their joint announcement that over 4000 hardened criminals are roaming Scotland who for now cannot be caught, the Crown Office have revealed an extraordinary gaffe in their own procedures, where apparently there is no information routinely recorded of the previous or present occupations of accused or convicted persons - particularly when it comes to solicitors.

Diary of Injustice reported SCDEA's announcement that 250 crooked lawyers & 3000 criminals were on the loose. The Crown Office's policy on identifying the occupations of criminals compares unfavourably with the Scottish Crime & Drug Enforcement Agency's own investigation methods, who, as I reported on earlier, revealed that around 367 serious crime groups are active in Scotland involving 4,066 people, assisted by over 250 crooked lawyers, accountants and other "specialists" who are giving the criminals professional help.

Crown Office admit they don't gather statistics on how many crooked lawyers are prosecuted. In response to Freedom of Information queries to the Crown Office on the disclosure of statistics engathered relating to charges or prosecutions against members of the legal profession in Scotland, which includes paralegals, solicitors, and anyone working in a solicitor's office, it was disclosed that "The COPFS database has no information routinely recorded indentifying the present (or previous) occupation of accused persons reported for prosecution. We do not extract any information regarding cases in which the accused person is (or was) a solicitor, so do not hold any statistical information which would answer your question."

Solicitor Ian Donnelly convicted of sex offences but if the Crown Office have their way no one will ever find out Donnelly is a lawyer. The Crown Office indicated their database "is an operational database (not a statistical one) which is used to manage the processing of reports submitted to the Procurators Fiscal. The database is designed to meet the Service's business needs in relation to the processing of individual cases and information within it is structured accordingly. While some aggregate statistical information is extracted from the database, this can often be a complex and time -consuming process." It appears to be that its too time consuming an issue for the Crown Office to keep statistics on crooked lawyers, but not too time consuming that they cant hand over figures for other criminals & crimes for Kenny MacAskill to make sweeping announcements on …

You can read another article on some of the Scottish legal profession’s leading lights being charged with criminal offences here : Legal Aid Board 'brought into disrepute' by Legal Services Chief's criminal charges over rent boy scandal

Diary of Injustice reported earlier, the public in England & Wales can find out statistics on criminal records of lawyers but not in Scotland. The apparent lack of an initiative by Scotland’s Crown Office to engather statistics on crooked members of the Scots legal profession has today been condemned by a legal insider as "little more than pandering to Scotland's legal establishment who do not wish to see recordable statistics made available to the public on the criminal records of members of Scotland's legal profession.". However as I reported last month, the public in England & Wales do get a bit more information on the criminal antics of the legal profession in the rest of the UK : Criminal records of lawyers : Scots public kept in dark over convictions while England & Wales get ‘right to know’

Ever wondered why charges are dropped against lawyers and not against others ? – the Crown Office are the last people to tell. A Scottish Government source today admitted there was no appetite to divulge the statistics of prosecutions against members of the legal profession because of ‘Ministerial policies.’ He said : "As you know, it is not Ministerial policy to upset the legal fraternity, and it has been that way for a number of years even before the current administration took office in 2007. If statistics were collected on prosecutions against members of the legal profession, the public might start to wonder why so many criminal cases, some involving serious charges, are disproportionately dropped against lawyers, while there would be no question of not pursuing similarly serious charges to a conviction against ordinary members of the public."

He went on : "However, I fail to see how the Justice Secretary can claim to be tough on crime when he wont even allow the country's prosecution authorities to collect detailed statistics on the likes of prosecutions against members of the legal profession while on the other hand, being able to make grandiose announcements there are literally thousands of criminals and crime gangs roaming Scotland aided & abetted by many in the legal profession, who for varying reasons cannot be caught or identified."

Kenny MacAskill has politicised media releases on justice but remains hush hush on crooked lawyers identities. Coincidentally at the weekend, the former head of the SCDEA Graeme Pearson, appearing in the Sunday Mail newspaper, criticised the SCDEA's 'mapping investigation' announcement as "more a political event than a policing event." criticisms which many agree with, after recent Press releases & media events held by varying public bodies such as the Scottish Legal Aid Board, and Government funded consumer organisations have been in effect taken over for political means by the Justice Department, leading to as one serving Chief Executive yesterday claiming "Our Press Conferences & Press Releases are now little more than political theatre to promote the SNP rather than giving an impartial account of justice issues affecting Scotland".

There is of course, little need to wonder why the Crown Office refuses to keep statistics on the numbers of crooked lawyers prosecuted or sent to jail in Scotland …

The lack of statistics at the Crown Office is simply down to the influence of the legal profession who do not want the public being able to access such detailed information, and, perish the thought we should not be told who exactly are the SCDEA's least recommended solicitors & legal firms who made it to their recent investigation of all things crooked in Scotland, which has now been used mainly for political show by the Justice Secretary, rather than making the determined effort to lock up those who are allegedly the crooks among us ...

The Justice Secretary was asked for comment two weeks ago on his attitude & policy towards criminal prosecutions & criminal records of solicitors in Scotland .. so far, he has not replied …

Its a small thing though, if you consider it, taking a note of someone’s employment, considering that anyone who is charged with a criminal offence, is usually asked what they do, if of course, its not already on some file or Police record somewhere (which it must be, because the SCDEA say so) ... so why deny even the most simplest of tasks, to ensure the public know more about their legal representatives ?

Why must we not be able to know more about our legal representatives in Scotland ? Why the big hush hush Mr MacAskill ? Have you spent too much time defending your colleagues in the legal profession you now cannot see the wood for the trees ?

Scotland's Got Crooked : Police investigation reveals hundreds of crooked lawyers & accountants assisting organised crime gangs

Hundreds of Law Society of Scotland ‘crooked lawyers’ are helping crime gangs. A survey reported today in the Scotsman newspaper reveals what many inside & outside the legal profession already know - that organised crime gangs in Scotland are assisted by hundreds of crooked lawyers, crooked accountants and other "specialists" who help criminals evade justice.

Scottish lawyers & accountants self-regulate, allowing criminality to flourish in their professions. While the self regulating bodies of lawyers & accountants in Scotland - the Law Society of Scotland & the Institute of Chartered Accountants of Scotland profess to maintain their 'respective' professions in order, in reality hundreds of solicitors & accountants and their firms are in the pay of criminal gangs, with some of those concerned masquerading as small legal or accountancy firms, taking on innocent local clients & businesses to cover the profits generated from some of their less respectable associations.

Law Society chief Leslie Cumming suffered mafia style hit from his own crooked lawyer colleagues. While members of the public who trust their legal affairs to solicitors & legal firms who have an undisclosed darker side of clientele, even the Law Society of Scotland itself was hit in a mafia style assault in early 2006, when the solicitor's regulatory body's Chief Accountant, Leslie Cumming was attacked in a 'hit' arranged from within Scotland's crooked legal establishment over what some claim were investigations which involved big legal names,

Law Society Chief Exec Douglas Mill tried to pin blame on campaigners in newspaper reports on Cumming attack but real culprits were crooked lawyers. To-date, the assault on Mr Cumming, apparently arranged by colleagues from within the legal profession itself, remains unresolved, with Lothian & Borders Police still looking for clues. However, several legal insiders say the investigation into the attack on Cumming “was heavily compromised” after the then Law Society of Scotland's Chief Executive Douglas Mill viciously tried to implicate campaigners & law reformers in the mafia style hit on Mr Cumming, to deflect attention away from critical legislative reforms which were due later in 2006 and which ultimately led to Mill's subsequent downfall and resignation from the Law Society after a serious parliamentary confrontation with Cabinet Secretary for Business, John Swinney.

Lothian & Borders Police still looking for crooked lawyers who arranged attack on Law Society Chief :

With an ever growing criminal element within Scotland’s legal profession, we are of course, back to the problem of 'self regulation' where, specifically on the matter of 'crooked lawyers', the Law Society of Scotland has failed to maintain standards within Scotland's legal profession, and all the while has operated a closed shop, highly corrupt system of self regulation where the criminal element of Scotland's 10,000 solicitors can basically get away with criminality, as long as they pay their subscription fees to the Law Society, which help the Society continue to maintain its power of self regulation over the profession.

Scottish Legal Complaints Commission is as protective of crooked lawyers as the Law Society of Scotland. The £650 a year to the Law Society of Scotland in annual subscriptions, and the £400 complaints levy to the SLCC which solicitors willingly pay, keeps self regulation of the legal profession going, which allows solicitors to assist the likes of criminal gangs, or fleece clients at will, mostly without fear of a criminal prosecution because the Law Society, and as we see now, the new ‘independent’ Scottish Legal Complaints Commission, are both so incompetent or closed minded at investigating corruption within the legal profession that the evidence which the Police & Crown Office would have to rely on to prosecute solicitors for stealing from their clients is more often than not, covered up by the solicitors regulators.

£650 a year to fund Law Society ‘ in-house complaints system’ guarantees lawyers will face no charges over widespread criminality in handling client affairs or law breaking. Its as simple as that - pay £650 a year in subscription fees, and a crooked lawyer can go do what they please, overcharge, embezzle, steal, bend the law, bribe, act as drug dealers, threaten clients, blackmail, anything, and not get sent to jail, unless of course, whatever they are doing and whoever they are representing becomes just too public and attracts too much media attention.

It may well be the case you are unknowingly entrusting your life savings, last will & testament, or funds for a house purchase or sale to a solicitor who is little more than a convicted criminal, and you will never know it unless the law is changed, and there is considerable resistance from the legal profession in Scotland to changing the law to disclose the criminal records of solicitors, although in England & Wales, you do stand a greater chance of finding out, as I reported earlier, here : Criminal records of lawyers : Scots public kept in dark over convictions while England & Wales get ‘right to know’

Sadly the Scots legal profession, as crooked as it is, has far too many key supporters & defenders in high places, as Scotland’s own Justice Secretary, Kenny MacAskill himself demonstrated in outrageous comments during a Scottish Parliament debate, even claiming the SNP controlled minority Scottish Government owed the legal profession a mysterious ‘great debt’ :

Would Justice Secretary Kenny MacAskill be so quick to defend the criminal element of Scotland’s legal profession ?

This is the reality of self regulation, nothing more than a cover for criminality, and with business & profits on the slide in Scotland's legal & accounting professions, expect to see a lot more crooked lawyers, accountants and other so-called 'professionals' out there who might also just be your solicitor or accountant too.

Those who defend self regulation are, these days, in the wake of the Westminster expenses scandals, generally viewed as defending unacceptable, often morally wrong conduct, cronyism & criminality, and in my view, have no place in public life.

The Scotsman reports :

The gangster map: 3,000 hardcore criminals and their crooked lawyers