Two Norfolk solicitors have been banned from running a company after misleading investors into putting £1.38m into a phantom business opportunity.
Richard and Sharon Mallett, registered directors of Malletts Solicitors based in Kings Lynn, used the funds to pay historic tax debts and stop authorities winding up the company, as well as to pay staff wages on several occasions.
According to the Insolvency Service, Richard Mallett, 49, has now signed a disqualification undertaking in which he did not dispute allowing the firm to use misleading marketing material to attract investment to develop a business product that was never made.
Sharon Mallett, also 49, had previously signed a similar disqualification undertaking, and the two are now prevented from being involved, directly or indirectly, in the formation, promotion or management of a company without the court’s permission.
Malletts Solicitors entered into creditors voluntary liquidation in November 2016 after which the Insolvency Service investigated Sharon and Richard’s conduct as directors of that company.
Investigators found the pair had also misled investors when they issued loan notes that promised unrealistic returns on investments. Initially the promised return was 8%, but when investment slowed down they increased it to 20%.
The pair could not provide any evidence to support their assertions that a national bank had signed up to partner in the scheme or that additional solicitors had been appointed.
Mark Bruce, chief investigator for the Insolvency Service, 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.’
Both Richard and Sharon Mallett remain on the roll and practising, with conditions. A spokesperson for the Solicitors Regulation Authority said: ‘We’re aware of this issue and are collating all necessary information before deciding on any next steps.’
