White-collar crime: Disbarred lawyer off the hook because defrauded UK investor intended to avoid tax with Malta ruse
White-collar crime: Disbarred lawyer off the hook because defrauded UK investor intended to avoid tax with Malta ruse
Appeals Court stuns heirs of investor to overturn court order to Patrick Spiteri and Godwin Muscat Azzopardi to repay €700,000 invested for tax ruse
The heirs of a British investor have been left stunned by a Maltese court decision that annulled an order to disbarred lawyer Patrick Spiteri to repay them €700,000.
In a decree that has sparked controversy for overturning this order, the Appeals Court declared that since investor Ronald Luther Phillips had entrusted Spiteri with the cash in a bid to avoid paying tax in the United Kingdom, then the Maltese courts should not be used to give him any reprieve for the lost cash.
The reasoning of the Appeals Court has raised eyebrows in legal circles since it implies that similar arrangements may not be honoured if the scope of the fund transfer is for illicit reasons.
While the Phillips heirs were expecting the Appeals Court to confirm the order to Spiteri, and his former partner Godwin Muscat Azzopardi, a former judge, to pay back the invested money, they have now been left without a penny. Phillips had paid the cash to the defunct Muscat Azzopardi Spiteri law firm with a view to have the funds invested.
In its decision, the three-judge Appeals Court – presided by Chief Justice Mark Chetcuti – appeared to criticise the role of the two lawyers for aiding and abetting a tax ruse for Phillips.
But instead of confirming that the two men return the investment which Phillips had sued for repayment, the Appeals Court acquitted Muscat Azzopardi on his appeal. It turns out that Spiteri had already lost his chance to appeal the decision because it was time-barred, but by overturning the first court’s order, Spiteri too gets to avoid the penalty of returning the cash.
“The scope of this business was the creation of a long chain of transactions to help Phillips in his efforts to avoid paying tax in the United Kingdom, and to hide their real provenance... even though the evasion is not damaging to Malta, it takes nothing away from the gravity of this illicit act. Any fiscal avoidance is always unacceptable, wherever it takes place... even worse when it is used for money laundering, and then aided and abetted by lawyers,” the Appeals Court said.
However, it continued by berating any legal attempt by those who avoid tax using Malta, at expecting succour from the Maltese courts on a dispute that involves a tax avoidance scheme.
Godwin Muscat Azzopardi served as judge in the Commercial and Appeals Court before being appointed UN judge in Kosovo in 2004, serving there for six years.
Together with partner Patrick Spiteri – who in 2016 had to be extradited to Malta to face fraud charges – both men had to repay €700,000 to the heirs of Ronald Luther Phillips. Phillips had originally entrusted £557,543 to the law firm in 2000 but accused the lawyers of depositing the cash in their client account and then refused to give him any further information. Pleas for a statement of account and a record of investments made with his capital, were never met.
The first court had rebuffed the defendants’ arguments. Spiteri and Muscat Azzopardi pleaded that Phillips had to prove ownership of the funds, and that a due diligence exercise had to be carried out vis-a-vis their provenance. But the first court said any due diligence should have been carried out before accepting the money, and not insist upon it when their client was asking for restitution.
Muscat Azzopardi submitted that his only function in the law firm was to carry out litigation. He had denied any knowledge about funds deposited with the firm from clients of Spiteri, who has been repeatedly found guilty of financial fraud.
But the first court ruled that as equal partners in the law firm, Muscat Azzopardi was liable together with Spiteri. Even their clients’ account had both partners as signatories, meaning they shared responsibility for it.
Disbarred lawyer Patrick Spiteri is still facing fraud and misappropriation charges in a €7.4 million case dating back 20 years. He was arrested in Surrey, England in 2014 and later extradited to Malta. Spiteri was eventually granted bail on several conditions, amongst them that he does not leave the Maltese islands.
In October 2022, Spiteri was condemned to serve two years in jail for defrauding Leslie Bricusse, the double Oscar winner and international composer – who died at 90 in 2021 – of £150,000.
Earlier this year, Spiteri’s bid to have a retrial on an appeal that confirmed an order to return €1.5 million, was thrown out. Originally, the appeals court in August 2022 had dismissed his request to overturn a 2016 judgment condemning him to return over €1.5 million to a British, former solicitor, Stuart Creggy.