Law Firm Axiom Ince's Collapse has Opened a Can of Worms Revealing Fraud; Here's All About it
Law firm involved in unlawful conduct?
The Serious Fraud Office (SFO) UK arrested seven people in a criminal investigation into collapsed law firm Axiom Ince, The Independent UK reported. The firm was shut down by the Solicitors Regulation Authority (SRA) in October 2023 after $82 million clients' money was found to be missing. The SFO did not provide the names of those who were arrested, and the identities of the individuals are expected to be revealed after charges are filed.
🚨BREAKING: SFO searches 9 sites and arrests 7 individuals as part of new investigation into collapsed law firm Axiom Ince.
— Serious Fraud Office (SFO) (@UKSFO) November 14, 2023
Read the full story here: https://t.co/4Nm6MYjh22 pic.twitter.com/lP3KDoBmNL
What is Axiom Ince?
Axiom Ince was founded in May 2023 when the law firm Axiom DWFM bought out the corporate and commercial law firm Ince Group to rescue it. Two months later, Axiom Ince also bought struggling insurance law firm Plexus. The three firms were merged into the new entity Axiom Ince. The London-headquartered Axiom DWFM had 19 partners and fewer than 150 staff before it bought the larger London rival Ince Group.
The collapse of Axiom Ince
The first signs of trouble for Axiom Ince were visible in August 2023 when the Solicitors Regulation Authority (SRA) suspended sole shareholder and managing partner Pragnesh Modhwadia’s practice alleging suspected dishonesty. The SRA uncovered the alleged misuse of client money, resulting in an account shortage of more than $82 million. Soon an investigation was launched by the Metropolitan Police in September 2023. This was followed by an exodus from Axiom Ince with teams of lawyers, tax groups, and private clients leaving the firm.
In October 2023, the SRA finally intervened and closed all of the law firm's 14 offices with immediate effect. The intervention was deemed as possibly the largest and potentially the most expensive in SRA's history. After the arrests by the SFO, the SRA released a statement saying that it had uncovered the suspected dishonesty and missing client money in late July. The fraud was pulled off using falsified bank statements and letters according to the SRA, as per The Global Legal Post.
SRA defends itself over not picking up on the Axiom Ince crisis sooner: https://t.co/xwYtMlfnQd
— Law Society Gazette (@lawsocgazette) November 15, 2023
What happened to the three directors?
Axiom Ince's former managing partner, Pragnesh Modhwadia admitted to using $79.4 million from client accounts to fund the acquisitions of other law firms and six properties of his own. He also spent money on renovating seven of his properties, as per Little Law. Modhwadia's assets are frozen, but his lawyer has confirmed that he was not one of the seven arrested by the SFO, as per a report by Nasdaq.
https://t.co/17ngoIPJxO
— Mark Alfred Clarkson (@MarkAClarkson) November 9, 2023
"Axiom Ince has told a London court that its former MD forged letters about the law firm's finances in a bid to thwart an investigation into suspicions that he had misappropriated clients' money to pay for acquisitions and property investments".
The ongoing investigation
The SFO conducted a total of nine dawn raids across the South East early on Nov 15, 2023. The SFO said that over 80 of its investigators accompanied by Metropolitan Police officers conducted the raids to search for possible evidence and bring in people for questioning. They will further investigate how the funds passed from Axiom’s client accounts held with banking giant Barclays to the State of India to fund the purchases made by Modhwadia using money belonging to clients. Both the SFO and the Metropolitan Police will continue to work together in the investigation.
