Mishcon de Reya has been accused of ‘turning a blind eye’ to the source of almost £3m of ‘potentially tainted’ cash paid by a client later found to have misappropriated millions from a property investment business, according to a document filed at the High Court.
The London firm is said to have accepted 14 payments from Edward Wojakovski, who wrongfully extracted around £13m from companies in the Tonstate Group of which he was a director.
Wojakovski paid just over £2.9m to Mishcon, which briefly represented him in bitter litigation brought by the Tonstate Group – which involved his former father-in-law and co-owner of the group Arthur Matyas, who admitted also wrongfully extracting money from the group.
Eleven companies in the Tonstate Group, all now in liquidation, are suing Mishcon de Reya for the return of the payments, which they say ‘belonged in equity’ to them at the time they were made.
The claimants rely on a WhatsApp message said to have been sent by Mishcon’s former managing partner Kevin Gold to Wojakovski’s then wife in 2017. It said that money in a Bank of Singapore (BoS) account, from which Mishcon was paid, was ‘potentially tainted’. They alternatively allege that Mishcon received the payments with ‘actual and/or constructive knowledge that the … payments were or were probably the proceeds of Mr Wojakovski’s breaches of fiduciary duty’.
Mishcon does not admit that any of the payments ‘originated from the extractions [from the Tonstate Group] or their traceable proceeds’ and says the firm was instructed that ‘all the monies in the BoS Account were [Wojakovski’s] family/personal monies’.
Gold, now Mishcon’s executive chair, ‘believed what [Wojakovski] told him to be true’ and was therefore ‘satisfied on the basis of those instructions that the funds in the BoS Account could properly be applied towards Mishcon’s anticipated fees’, the firm said in its written defence. ‘Throughout the period when Mishcon was receiving the … payments, it remained [Gold’s] genuine belief and that of Mishcon’s litigation team that the BoS Account contained only [Wojakovski’s] family/personal monies,’ Mishcon added.
The claimants said in their written reply: ‘No honest and reasonable solicitor would in those circumstances have been “satisfied” (as Mr Gold claims to have been) with the self-serving, purely oral assurances of Mr Wojakovski that his Bank of Singapore account contained only family and personal monies.’
‘The inescapable inference is that Mishcon refrained from insisting upon documents [about the source of the BoS funds] because of their knowledge or suspicion of what those documents would reveal about the source of the funds being used to pay their fees,’ the claimants allege.
The claimants also rely on ‘the weaknesses of Mishcon’s customer due diligence processes and record-keeping’, said to be ‘serious shortcomings which Mishcon admitted’ to the Solicitors Regulation Authority in unrelated proceedings which led to a £232,500 fine last month.
Their solicitor Shlomo Rechtschaffen of London firm Rechtschaffen Law said it is ‘surprising that, in this circumstance, Mishcon felt it is sufficient to rely on an oral explanation from their client’. Mishcon declined to comment.
