Solicitors banned from being directors after clients lose £1.8m
- Credit: Matthew Usher
Two solicitors have been banned from being company directors for more than 10 years after investors lost almost £2m.
Richard and Sharon Mallett, who ran Malletts Solicitors Ltd on King's Lynn's Tuesday Market Place, were trusted with more than £1.3m of clients' money between December 2013 and August 2015.
They told people their cash would be invested in a legal venture. But they used the money to cover day-to-day business expenses, including paying staff and to pay off tax debts to keep their business afloat.
Both have now been banned from holding directorships for 13 years. The Insolvency service launched an investigation into the Malletts' conduct after the law firm was wound up in December 2016.
Mr and Mrs Mallett have signed disqualification undertakings in which they did not dispute that they had allowed Malletts Solicitors Limited to use misleading marketing and financial material to attract investment to develop a business product that was never made.
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Mark Bruce, the service's chief investigator, said: "It is important that investors are provided with the right details before they spend any money. Sharon and Richard, however, disregarded this when they used misleading information to solicit close to £1.4m before spending it on the company's debts rather than develop the product they had promised.
"Thiteen year bans each for Sharon and Richard are substantial disqualifications, near the maximum allowable under the legislation, and should serve as a stark warning to other directors that they shouldn't attempt to hoodwink their investors."
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Mr Mallett's last-known address is on West Way, Wimbotsham. Mrs Mallett's is Churchgate Mews, Gedney.
A notice on the Insolvency Service's website says: "Mr Mallett allowed Malletts Solicitors Ltd to use misleading marketing and financial material to attract investment between December 2013 and August 2015 by members of the public and some of the company's clients in the total sum of £1,380,915 by way of loan notes which were marketed - or which investors were led to believe were marketed - for the sole purpose of a specific part of the company, but which were used by the company generally and not as intended or promoted by the marketing materials.
"As a result of this investment being placed in the company generally, the company was able to continue trading to the risk of these investors, causing losses totalling £1,844,091 (including interest/return on investments)." Of Mrs Mallett, it says: "Sharon Rosemary Mallett caused or allowed the use of false and misleading marketing and financial material between December 2013 and August 2015 to entice members of the public and some of the law firm's clients to invest funds totalling at least £1,380,915 by way of "loan notes" and failed to ensure that it was used for the purpose it was invested for, instead using it to facilitate the company's continued trading at the risk and ultimate detriment of those investors, causing losses to those investors/loan note creditors of at least £1,844,091 (as per the Statement of Affairs and which includes interest/return on investments)."