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Saturday 15 December 2018

Tax scam solicitors escape legal ban

Dearbhail McDonald and Tim Healy

TWO solicitors yesterday escaped being banned from practising law -- despite admitting they operated a secret €32m bank account to deliberately evade tax.

In the latest in a series of scandals to affect the legal profession, Dublin solicitors Henry Colley -- son of the late Fianna Fail deputy leader George Colley -- and Colm Carroll were suspended from practice for a year.

The charges against them included:

l Setting up a secret bank account to evade tax

l Withholding legal fees owed to barristers

l Operating hidden bank accounts l 'Doctoring' practice accounts. The men, who ran one of the largest health board practices in the country, cannot act as sole practitioners for three years once their suspension is lifted. And they have to pay €50,000 each to the solicitors' compensation fund.

Yesterday the High Court upheld a recommendation by the Solicitors' Disciplinary Tribunal not to block the solicitors from practising again.

This was despite pleas by the Law Society they should receive the ultimate sanction of being struck off.

Mr Justice Liam McKechnie, who heard that much of the funds moved into secret bank accounts were legal fees paid by health boards, said the only reason he did not strike off the solicitors was because clients were not exposed.

Mr Colley and Mr Carroll, who admitted to around 50 charges of professional misconduct, have already made a significant but undisclosed settlement with the Revenue Commissioners after self-confessed "wrongful" tax evasion.

The latest solicitor scandal will further undermine confidence in the legal profession at a time when it is still reeling from the fallout involving solicitors Michael Lynn, Thomas Byrne and Niall Colfer.

Yesterday the judge said he believed his decision not to strike off the solicitors would help maintain public confidence in the legal profession and uphold the good name of the Law Society.

Mr Carroll, who is in his 50s, no longer practices as a solicitor, but Mr Colley (51) is still working at Roger Greene and Sons, Bridge Street, Dublin.

The practice lost much of its lucrative health board work to rival firm, BCM Hanby Wallace, following the 2004 tribunal hearing.

Both solicitors admitted misconduct, including deliberate non-compliance with the solicitors' account regulations and deliberately falsifying books of account to evade paying tax.

The High Court heard that accounts were doctored in an effort to deliberately mislead the Law Society into thinking substantial fees had been paid to barristers when the money was actually lodged to a secret account.

And both solicitors had withheld information from the society for some time after it began its investigation.

This included information about an account in Ulster Bank, O'Connell Street, Dublin, in which some 46pc of monies paid to the firm were held, and from which large cash withdrawals by were made by both solicitors.

Funds were used for personal use and to renovate Mr Carroll's wife's farm.

The Law Society also said its investigation revealed a list of accounts maintained by both solicitors, including an account in the name of a defunct company and a Swiss bank account in the name of Mr Colley and his wife. James O'Driscoll, for Mr Carroll, sought the costs of yesterday's proceedings against the society on the grounds the court had refused to strike off his client.

But Mr Justice McKechnie replied: "Not a chance'', and awarded costs to the society.

He said both men were guilty of multiple and extremely serious breaches of the solicitors' account regulations and, for much of the society's investigation, were "downright misleading''.

Earlier Shane Murphy, said the society's application was based on an affidavit from Mary Devereux, a chartered accountant with the society's regulatory department, who was appointed to investigate the firm's practice in June 2003.

She was unable for some time to complete her investigation because of the lack of information in the firm's books and records and said her investigation continued to be obstructed until the society got a court order in May 2004.

She said there was an apparent shortfall of some €197,000 in the clients account in June 2003.

She was later told the two solicitors had operated the Ulster Bank deposit account but had not disclosed that to their own accountants. A review of the accounts showed that €32m was lodged into it between January 1, 2000 and June 30, 2003.

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