City solicitor Kenneth Hunt jailed after £1m fraud

A TRUSTED solicitor has been jailed after he siphoned more than £1m from his clients’ accounts, “driven by pride and vanity”.

Kenneth Hunt has been jailed after he siphoned more than #1m from his clients' accounts
Kenneth Hunt has been jailed after he siphoned more than £1m from his clients' accounts

A TRUSTED solicitor has been jailed after he siphoned more than £1m from his clients’ accounts, “driven by pride and vanity”.

Kenneth Hunt and his legal firm Hunt Kidd LLP were caught in the “perfect storm” when the global economic crisis struck and the Government launched a bail-out package for the stricken Northern Rock.

The 64-year-old had built up a respected reputation with a portfolio of business ventures that included involvement in building the Copthorne Hotel, the development of Newcastle’s Quayside and helping to develop the Haymarket Hub.

But the entrepreneur – who claimed to have multi-million pound investments – could not bear to see his career implode and his plans were left in tatters when the banks restricted his finances. In a “stratospheric fall from grace” and in a bid to save his ailing practice, he began to transfer his clients’ cash into his company’s account over a 12-month period.

Now the experienced Northumberland solicitor has been sent to jail for four years after admitting fraud by abuse of position.

Hunt’s legal empire looked set to crumble when the banks slashed the firm’s overdraft to £250,000 and recalled a £150,000 loan.

But, along with his partner, Barbara Gayton, 54, of Gosforth, Newcastle, who was jailed for two years yesterday, he refused to close the practice, instead slimming down his workforce and cutting the company’s overheads by 50%.

During a hearing at Newcastle Crown Court, Judge Guy Whitburn heard Hunt was diagnosed with cancer and his poor health had “overshadowed” his financial difficulties.

Hunt took lump sums of £20,000 and £40,000 from the firms clients’ account to ensure his practice could keep functioning. He and Gayton transferred a total of more than £1,049,000 from their clients without their knowledge in a “flagrant breach of trust”.

It was only when the Solicitors Regulation Authority called the practice to inform the partners they were launching an investigation into irregularities that the full scale of their crime came to light.

Hunt claimed to have cut his earnings to just £3,000 a month, but questions were raised over the involvement of his wife in the business. Cashiers at the company said she worked just one day each week after retiring in 2004 but accounts showed that she was paid a lump sum of £30,000.

Despite his supposedly precarious financial situation, he maintained a “comfortable lifestyle” in which he enjoyed wine club membership, a string of trips aboard and shelled out £4,000 with a luxury travel agent. He was arrested in the Caribbean.

Paul Greaney, prosecuting, said: “The prosecution do accept that the defendants were driven in part by the desire to secure the future of the practice. The principle motivation was a desire, on the behalf of Mr Hunt, was to preserve his reputation.

“He’s a successful businessman and solicitor and he didn’t want to have presided over a failed venture.

“He himself said during interview, ‘I didn’t want to end my career in a mess. It’s a matter of personal failure at the end of your career which is pretty hard to take, to be honest’. This fraud was driven by pride and vanity of Mr Hunt to a large part.”

While Gayton ploughed more than £100,000 into the company to keep it afloat, Hunt paid in just £30,000 and spent cash on luxuries of “travel, dining and wine”.

When police went to arrest him in late 2009, he was enjoying a holiday in the sun-drenched Caribbean and accounts showed he paid more than £30,000 for the financing of his cars.

Hunt repeatedly claimed to have the means to repay the debts, stating that he had £5m invested in companies, £2.5m worth of assets and was a wealthy man.

By July 2010 – nearly 12 months after an investigation was first launched – he said that he was in due diligence to raise £10m which would repay his debts.

But he has never come up with the funds to repay the cash and is now facing a Proceeds of Crime Act hearing where officers will seize his assets.

Mr Greaney said: “When they were interviewed by the Solicitors Regulation Authority and Northumbria Police they both said that the banking crisis had hit Newcastle hard.

“They had made over £1.7m but that declined by 50% in a six-month period.”

During interviews, Gayton and Hunt told investigators they were “surviving on a day-to-day” basis.

Beth Nicholson, who joined the company in 1997 and went on to work in the company’s account department, was ordered to regularly transfer funds from the clients’ account to the company account to pay salaries.

Mr Greaney said: “In late September 2008 something wholly unconventional and contrary to the rules occurred. By this time the financial situation was dire. On September 24 the office account was overdrawn near the £250,000 limit.

“The staff salaries had to be paid and there was no way that could be made out of the office accounts.”

The fraud began when Hunt handed Mrs Nicholson a cheque for £35,000 from an account in the name of GK Business Services, belonging to Hunt and his wife.

But this account was also at its limit and – despite repeated attempts to cash it – the cheque could not be honoured.

The cheque left the account with a £35,000 hole and it was then that Hunt began funding the practice from cash he received from his clients.


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