Graham’s latest disqualification, which follows an investigation by the Insolvency Service, runs concurrently with the first five-year ban which started in 2013. He cannot be involved in the control or management of a limited company until 2025 without leave of the court.
In October 2013, Graham, 38, who had been struck off as a solicitor in 2009 and made bankrupt in October 2009, was banned from being a director for five years after pleading guilty to seven counts of fraud at Newcastle upon Tyne Crown Court in respect of a Stamp Duty Land Tax scheme operated by SFM.
However, as SFM had gone into voluntary liquidation in August 2009, disclosing liabilities of £266,368 to creditors (which has subsequently increased to £1,111,190), the Secretary of State for Business, Innovation and Skills brought separate disqualification proceedings against Graham.
District Judge Kramer found that Graham, who did not attend the hearing, was unfit to be a company director, and disqualified him until 2025.
The court heard that Graham had caused or allowed SFM to misrepresent the nature of property transactions to a mortgagee, causing him to enter into transactions which resulted in an estimated shortfall of £29,359,457.
When SFM acted for a borrower who purchased two hotels for a combined total of £11,150,000, SFM advised the mortgagees that the borrower was purchasing one of 78 separate apartments located in the hotel buildings rather than a hotel. This enabled the borrower to receive funding totalling £16,799,124. SFM’s files showed that the company received fees of £644,417 for acting for the borrower in these transactions.
In a separate allegation against Graham, the court also heard that SFM operated a Stamp Duty Land Tax scheme devised by Graham, as a means of reducing tax on property purchases. SFM undertook that if the scheme was unsuccessful in avoiding SDLT, fees paid by clients would be refunded.
However, Graham failed to ensure that SFM made provision for repayments to clients, and when HM Revenue & Customs adjudged the SDLT scheme to be ineffective, SFM was left owing at least £571,495 to clients who had paid up-front fees. SFM’s accounts show that between 22 February 2006 and 31 March 2008, Graham received remuneration of £1,499,445, and dividends of £330,000, from SFM.
Furthermore, evidence was put before the court that a document provided by SFM to the Solicitors Regulation Authority, purporting to be a letter from HMRC giving clearance to a Capital Gains Tax mitigation scheme operated by SFM, was a forgery. SFM had used the forged document to convince a client that the CGT scheme was approved by HMRC. District Judge Kramer accepted that there was a high degree of probability that Graham was aware that the document was a forgery.
Vicky Bagnall, director of investigations at the Insolvency Service, said: “Although Mr Graham was disqualified as a director by the court after a fraud trial, the Insolvency Service pursued a second disqualification in the public interest as the misconduct was so severe.
“SFM deceived mortgage companies as well as clients, which ultimately funded Mr Graham’s lifestyle, and further protection for the public for a significant period was needed. He has now had to face the consequences.”
