Friday, October 09, 2015

TRIAL BALLOON: Lord Advocate deflects calls for inquiry on Crown Office handling of mortgage fraud allegations against solicitor who represented MP Michelle Thomson

‘Unconvincing’ Lord Advocate raises fears of cover up. DURING one of the worst performances ever by a Lord Advocate before the Scottish Parliament – top prosecutor Frank Mulholland said he did not think there should be an inquiry into the handling of an investigation of a lawyer who was struck off over property deals involving SNP MP Michelle Thomson.

Responding to questions on when the Crown Office & Procurator Fiscal Service (COPFS) was informed of allegations of mortgage fraud involving solicitor Christopher Hales – Frank Mulholland told MSPs that he does not believe there should be an inquiry into when prosecutors knew and how the case has since been handled - after it emerged the Law Society briefly informed the Crown Office of the ‘issue’ in December 2014.

Hales, who once listed his occupation as “Police Constable” – and is now struck off by the Scottish Solicitors Discipline Tribunal from working as a solicitor - handled numerous property deals for his client – SNP MP Michelle Thomson. Mr Hales acted for Ms Thomson before she was elected as an SNP MP.

According to a ruling by the Scottish Solicitors’ Discipline Tribunal, a full version of which has been published by the Sunday Times, Mr Hales failed to provide key information to mortgage lenders in breach of guidelines designed to prevent fraud in numerous cases.

In the Scottish Parliament on Thursday, Labour MSP Jackie Baillie asked Mr Mulholland about the timeline in the case.

During the 10 minute session, Lord Advocate Frank Mulholland presented a timeline of events as the Crown Office saw it:

18 December, 2014 - The issue of solicitor Christopher Hales was raised "informally" by the Law Society of Scotland with the Crown Office. Neither the clients nor properties were named.

28 April, 2015 - The issue was raised again and it was noted that the matter of referral to the Crown Office was still under consideration by the Law Society. Neither the clients nor properties were named.

1 July, 2015 - The Crown was advised by the Law Society that it was required to obtain authorisation from its Guarantee Fund Sub Committee to formally refer the case.

3 July, 2015 - Referral was received by the Crown following the required authorisation. Documents were handed over to the Crown Office and in those documents the names of clients and properties were disclosed.

9 July, 2015 - A formal referral was made to the Crown Office and instructions were issued to Police Scotland.

Frank Mulholland  questioned by MSPs about when the Crown Office was first notified of allegations of mortgage fraud against Christopher Hales.

Mr Mulholland said: "As the Crown has made clear on a number of occasions, the case of Christopher Hales was first brought to its attention by the Law Society of Scotland at a meeting on 18 December, 2014."

Ms Baillie asked if Mr Mulholland believed there should be an investigation into the processing of information between the Law Society and the Crown Office.

She asked if he would order such an inquiry, given that there may have been "additional opportunities for alleged mortgage fraud" due to the delay.

Mr Mulholland responded: "I don't have the power to order an inquiry, and I don't think there should be an inquiry."

He said Police Scotland were instructed to investigate the allegations on 3 July 2015 and formally issued officers to do so on 9 July.

He said the issue was raised at routine quarterly meetings between the Law Society and the Crown Office.

Mr Mullholland said the Crown Office was first made aware on 18 December 2014 that the case was under consideration for referral. The issue was raised again on 28 April.
Image copyright PA Image caption Ms Thomson denies acting illegally

Mr Mulholland added: "The first time the Crown was made aware of the identity of the clients and the properties, was the 3rd of July."

Mulholland was also asked by Jackie Baillie if the Crown Office had begun any Proceeds of Crime actions against those involved.

Embarrassingly for the Lord Advocate, and appearing to have little clue as to the sequence of events, he responded “not yet”.

Police Scotland launched an inquiry only after the Crown Office was finally handed the detailed case files in the Hales case by the Law Society, some seven months from the day it first alerted prosecutors to the case.

Hales was banned from the legal profession in May 2014 over 13 property deals linked to Thomson and her business partners. The transactions involved “back to back” sales, where homes – often owned by vulnerable people – were bought at below full market value and then resold at far higher prices, in some cases on the same day; where large cash sums were transferred between the parties involved; where mortgage loans were sought that were higher than the price paid for the home, and where higher prices than those actually paid were recorded in the Scottish land registry.

Mortgage companies involved in those transactions, including Lloyds, which gave loans through its subsidiary Birmingham Midshires, and Virgin Money, which now owns the mortgage book for Northern Rock, which lent money for one sale, have confirmed they are now in contact with the police.

The Sunday Times disclosed it had submitted new evidence of an unusual property transaction to Police Scotland detectives after a couple who sold a home to Thomson alleged they had £32,000 deducted from the sale proceeds to pay off a loan they had no knowledge of.

The solicitor involved in that transaction, James Craig, had been found guilty of professional misconduct in February 2014 by the Scottish Solicitors Disciplinary Tribunal (SSDT), the body that struck off Hales three months later, and fined £2,500 for breaching money laundering regulations. There was no evidence that Craig acted improperly in the case reported by the Sunday Times.

The Sunday Mail reported that a second lawyer named in the SSDT judgment on Hales called Christopher Tulips, whose firms Strefford Tulips was involved in several deals for Thomson’s firm M&F Property Solutions, had also been censured and fined £2,500 for his role in back-to-back property deals. The published ruling by the SSDT on Tulips is anonymised, so it remains unclear whether his case involved transactions linked to Thomson.

Last week, the Law Society said its director of financial compliance Ian Messer "informally" raised concerns about the case of Mr Hales during two separate meetings with prosecutors in December 2014 and April 2015.

However, the Law Society did not "formally" submit its evidence to the Crown until July 2015, two months after Ms Thomson was elected SNP MP for Edinburgh West.

Law Society chief executive Lorna Jack gave an "absolute and categorical assurance" last week that the election played no part in the timings of the case.

She said Mr Messer would have seen Ms Thomson's name in the unredacted report into Mr Hales but may not have been aware she was a Westminster candidate.

The secretary to the Law Society committee that struck Mr Hales off, Sheila Kirkwood, is said to be a personal acquaintance of Ms Thomson with close links to the SNP.

Lorna Jack has pledged to look more deeply into Ms Kirkwood's links with Ms Thomson, but said she has received an assurance the secretary was unaware of the MP's links to Mr Hales until she read about it in media reports.

Ms Thomson is linked to 13 transactions Mr Hales conducted in 2010-11 where properties were said to have been bought cheaply from clients looking for a quick sale and then sold at a huge mark-up on the same day.

Complicated "cashback" deals were said to have been used to artificially inflate property prices in order to secure bigger loans from lenders.

Ms Thomson has denied acting illegally.Ms Thomson has surrendered the SNP party whip and has also stood down as the party's business spokeswoman at Westminster until the investigation into Mr Hales has concluded.

Previously, First Minister Nicola Sturgeon denied having any prior knowledge of a scandal which led to one of her most prominent MPs stepping down from the party.

During First Minister’s Questions last Thursday, 1 October,  Nicola Sturgeon said in response to questions that "serious issues" had been raised around the conduct of Michelle Thomson. The First Minister said that a police investigation should be allowed to take its course.


The House of Commons Register of Members’ Interests lists 16 SNP MPs as holding property interests from which most receive rental income.

Under the rules, Members of Parliament are required to list a property if (i) its value is over £100,000 and (ii) if they receive rental income of at least £10,000 a year.

Tasmina Ahmed-Sheikh(Ochil and South Perthshire): Three flats in Glasgow and a house in Kingussie, Highlands and Islands (i/ii).

Richard Arkless(Dumfries and Galloway): A house in Broxburn, West Lothian, and a flat in Glasgow (i/ii).

Ian Blackford(Ross, Skye and Lochaber): Croft, including two holiday rental properties on the Isle of Skye (i/ii). A house in Lanark (i),

Deidre Brock(Edinburgh North and Leith): A half share in two Edinburgh flats (i).

Lisa Cameron(East Kilbride, Strathaven and Lesmahagow): A house in South Lanarkshire (i/ii). Five residential and holiday let apartments in Edinburgh and South Lanarkshire (i/ii).

Martyn Day(Linlithgow and East Falkirk): A house in West Lothian (i).

Patricia Gibson(North Ayrshire and Arran): A flat in Edinburgh (i).

Calum Kerr(Berwickshire, Roxburgh and Selkirk): A house in Wester Ross (i/ii).

Chris Law(Dundee West): A flat in Dundee (i) and a flat in Aberdeen (i).

Angus Brendan MacNeil(Na h-Eileanan an Iar): Jointly owns a house in Fort William plus a flat in Glasgow and a flat in London (i/ii).

Stuart McDonald(Cumbernauld, Kilsyth and Kirkintilloch East): A flat in East Dunbartonshire (i).

John McNally(Falkirk): Owns a hair salon, The Barber Shop, from which he receives £600 a month in rent.

John Nicolson(East Dunbartonshire): A terrace house in London’s Tower Hamlets (i/ii). He occasionally receives income for renting it out for photoshoots.

Steven Paterson(Stirling): A half share in a flat in Stirling (i).

Tommy Sheppard(Edinburgh East): Commercial premises and residential property in Edinburgh (i) owned by entertainment company Salt ‘n’ Sauce Promotions of which he is a shareholder.
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Michelle Thomson(Edinburgh West): Two residential properties in Edinburgh, one in Falkirk, one on the Isle of Bute, one in East Calder, one in Stirling, one in Dollar, a half share of a property in Edinburgh and a quarter share of a property in Edinburgh (i/ii). She is a shareholder in the property management firm Your Property Shop.

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