A solicitor with an “implacable belief that he was RIGHT” is fined £45K(+£60k costs) for being WRONG.

KEY FACTS

1. Kenneth Felton Gerber, 64,
1. An experienced solicitor with an “implacable belief that he was right” and
2. Did not think he needed to check anti-money laundering (AML) rules,
3. Has been fined £45,000 and ordered to pay £60,000 in costs for breaching them
2. The Solicitors Disciplinary Tribunal (SDT) found Mr Gerber
1. “Simply believed that [the rules] did not apply to him, and
2. He adopted a cavalier approach to them.”
3. Mr Gerber, who qualified in 1991, ran the Kent firm Feltons Law. In August 2020, he made his staff redundant, leaving him as a sole practitioner.
4. Mr Gerber told the tribunal that,
1. With the burden of regulation on sole practitioners “extremely high”,
2. He was merging his firm with another, which “would now likely go ahead now that the spectre of dishonesty had gone”.

KEY STATEMENTS FROM THE TRIBUNAL

SDT SAID:-

• “To believe that experience alone is an ample substitute for formal training was misguided,”  
• This manifested itself, among other failures, in him falsely telling prospective professional indemnity insurers in 2021 that
• All current and former staff had received formal anti-money laundering training over the previous six years.

The SDT also found that, between 2017 and 2022,

• He did not have a firm-wide risk assessment (FWRA) in place – despite having told the Solicitors Regulation Authority in 20202 that he did – customer due diligence measures or AML policies, controls and procedures.
• He allowed the firm’s client account to be used as a banking facility for a month in 2020, with £4.4m passing through it, while he held residual client balances totalling nearly £34,000 on two matters that sat there for over two years.

The SDT said that “broadly speaking”, Mr Gerber.

• Admitted the factual context of all the allegations
• But NOT that his conduct lacked integrity, was dishonest or reckless.

Among other things, Mr Gerber said he genuinely believed

• His staff had been adequately trained on AML, “albeit their training was not formal.”
• While the FWRA “was in his head” – “as a sole practitioner, he saw no merit in reducing it in writing for himself to read”.

The SDT accepted that:-

• Although these beliefs were unreasonable, they had been “genuinely held”.
• It found that the false declarations made to the insurer and the SRA were reckless rather than dishonest.
• “In [Mr Gerber’s] world view, he had genuinely believed that he was justified in answering as he did; in his mind, he had been truthful and not dishonest, albeit others would have considered his belief unreasonable.”

The SDT ALSO SAID he lacked integrity:

• “The declarations he made were false, and he made no effort before or afterwards to review and reassess his practice in this regard.”
• The solicitor did not take opportunities to review his procedures, “and it took at least another two years” for him to take remedial action”.

THE RULING CONTINUED:

• “His approach was pedestrian in the extreme.
• Only when the SRA restricted the practising certificate did he finally take advice, put the written FWRA and AML policies in place, and attend relevant, formal training as required by the regulations. This placed his clients at risk…
• “His motivation, if it could be so characterised, had been his implacable belief that he was right and he had not needed to check the requirements imposed upon him by the AML regulations.
• “He simply believed that they did not apply to him, and he adopted a cavalier approach to them manifesting in his answers to the insurance application and his various declarations.”

SDT

• Accepted from his hitherto unblemished history and character references that Mr Gerber “was held in high regard by professional colleagues, his clients and others”.
• His remorse was “sincere and genuine, [and] he may have been struggling to some extent as a sole practitioner”.
• While Mr Gerber’s insight on the potential harm to which he had exposed clients was “limited”, there had been “no loss to any party, no unwarranted gains to the respondent and no one’s vulnerabilities exploited”.
• Mr Gerber had fallen “far short of the standards of integrity and probity expected of a solicitor, and in the circumstances, the seriousness of the misconduct was high”.

COST OF FAILURE

• The appropriate sanction was a fine of £45,000, along with conditions preventing him from practising as a sole practitioner or partner, taking a compliance management role, holding client money, and signing any client account.
• The SDT suspended the imposition of the conditions by 12 weeks to allow this to happen.
• Mr Gerber was also ordered to pay £60,000 in costs.

SOURCE

• https://www.legalfutures.co.uk/latest-news/fined-solicitor-had-implacable-belief-in-his-aml-knowledge