The former managing partner of national firm Axiom Ince has admitted that £64m removed from the client account has already largely disappeared.
Pragnesh Modhwadia responded this month to a claim, issued against him by the firm, with an affidavit confirming that client monies were used to acquire Ince and Plexus Law earlier this year.
The funds also paid for the purchase of six properties and for construction work on a further seven.
Modhwadia's current assets now amount to tens of thousands of pounds, his lawyer told the High Court this morning. A freezing order against Modhwadia was extended by Mr Justice Michael Green and extended to £64m.
Modhwadia was one of three Axiom Ince directors suspended by the Solicitors Regulation Authority last month (the firm remains open). The regulator said he was subject to intervention on the basis of suspected dishonesty and a failure to comply with Solicitors Act rules.
The High Court heard an application today from Axiom Ince to extend a freezing order on Modhwadia, ahead of the firm issuing a claim against him for alleged breach of fiduciary duty.
Simon Passfield, for Axiom Ince, said that ‘at least’ £57m was missing from the client account as of 30 June and since then there had been a further three transfers worth a total of £7m.
Passfield said the affidavit contained an ‘astonishingly frank admission’ that ‘not a single penny of [the £64m) is accounted for’.
The judge had previously issued the freezing order for a sum of £57m but agreed to extend this based on the update provided by Modhwadia.
‘There is a very large sum of money that has gone out of the client account and the claimants [Axiom Ince] are entitled to the fullest protection in relation to their claim and the recovery of those amounts,’ said Green. ‘It seems to me pretty obvious that the freezing order should cover the full amount of what is clearly going to be the claimants’ claim. In the light of the information provided by the defendant it is difficult to see how there can be any proper objection to the freezing order covering the full amount that appears to have been taken in all likelihood wrongfully from the client account.’
Green said the use of client monies to acquire firms and properties was ‘of course quite extraordinary’ but noted that Modhwadia intends to defend any claim against him brought by Axiom Ince.
The court heard that the properties purchased or upgraded were in the name of four companies of which Modhwadia is the sole director and shareholder and three companies controlled and owned by his brother. The court ordered that injunctions be placed on these properties to prevent them being sold.
Axiom Ince has no connection with the lawyers-on-demand specialist Axiom Law.
