By Ashley Young-
An experienced solicitor of almost 50 years practice has been fined a total of £26,000 in fines and costs after admitting a number of accounting mistakes.
Andrew Rugg, a sole practitioner based in Taunton, at one point presided over the transfer of £290,000 for a property purchase to the wrong account after being duped by a fake email account. The Solicitors Disciplinary Tribunal (pictured)heard that despite his bank raising suspicions about the transfer, Rugg was ‘quite relaxed’ about the situation and did not report the matter to the SRA or police for three months.
The shocking silence from the solicitor raised suspicion as to his complicity in the wrong transfer, although no evidence was ever found to suggest any foul play on his part.
The replacement of the missing funds by the firm’s insurers did not save his skin from culpability, although Rugg had consistently said he had the facility to replace the money.
Mr Rugg transferred £290,584.00 from the client account to the bank account details most recently provided by email.
On June 5, he received a response from one of the very slightly different email address, supposedly confirming receipt of the funds by the client. On 12 June 2018 Mr Rugg’s bank informed him they held suspicions about the account he had transferred the sale proceeds to. The client also confirmed he had not received the money and, on 13 June 2018, Mr Rugg reported the
matter to his insurers.
Breach
Mr Rugg did not report the matter to either the SRA or the police, but rather accepted that the payment of the money to an account controlled by a third party, who was not entitled to the money, was a breach of the requirement to protect client money and assets and of the Accounts Rules.
. Mr Rugg admitted failing to maintain proper accounting records to ensure compliance with the accounting rules, and carrying out client account reconciliations in accordance with the requirements.
The Tribunal ‘s ruling that he breached his position of trust in by not looking after it properly, justified the big fine imposed against him.
As part of its ruling, the Solicitors Disciplinary Tribunal said the shamed solicitor had full control over the circumstances giving rise to the misconduct, and knew or ought reasonably to have known that he was in material breach of his obligations to protect the public and the reputation of the legal profession.
The Tribunal considered that the one-off breaches related to the cybercrime matter, and the failure to insist on additional verification steps when instructions as to the payment of sale proceeds were received, was particularly troubling given the critical importance of such steps to counter attempted fraud and criminality.
Mr Rugg’s fine was given on the 29th of March, but it takes weeks for the judgement to be published. He added that ”there was no distinction between a small or high amount of money wrongfully handled”.
Mr Rugg also admitted removing £290,584 from the client account to an incorrect third party bank account on 4 June 2018, resulting in a shortage on the client account of £290,584 from 4 June
2018 until 3 September 2018. In doing so he breached any or all of:
Rugg, 74, who has been practising for 50 years was expected to know better. Instead, he also admitted not properly investigating or rectifying client debit balances of £129,000 across 109 matters and office credit balances of £36,000 across 115 matters, as at the end of August 2019.
Many of the client debit balances arose due to what were described as ‘basic administration problems’, with Rugg not updating ledgers across different matters and/or making or allowing posting errors.
Investigators reviewed a selection of 12 files, revealing shortages caused by duplicate transfers of costs on several matters, and on one file an overpayment to beneficiaries in error. On multiple occasions, the situation was not addressed for at least six months.
Rugg’s reporting accountants said that action has been taken to remedy issues and bookkeeping procedures have improved, with regular checks on client accounts.