Karen Humphries (pictured) has admitted overpaying her husband by £75,000
A solicitors’ secretary facing jail for fiddling her firm’s books to overpay her husband allegedly gained more than £500,000 through illegitimate transactions.
Karen Humphries appeared at Stirling Sheriff Court today, which heard her job included paying some three dozen self-employed financial sales advisors working for mortgage and investment brokers Solicitors Financial Services.
The 47-year-old’s duties included doling out and recording the commission due to members of the freelance sales team, which included her 50-year-old husband John.
In July 2016 the company’s annual accounts – expected to show a healthy profit – suddenly swung into loss.
Auditors found that between February 2013 and July 2016, Humphries overpaid her husband £75,000.
When she was confronted about overpayments being found, Humphries replied after being cautioned: ‘That would be correct.’
She resigned from her position when she was first told that the payments had been uncovered.
Today Humphries pleaded guilty to embezzling the £75,000. She had originally been charged with embezzling more than £106,000, but the court was told that her guilty plea to the smaller sum had been accepted by the Crown after ‘long and complicated negotiations’.
The Crown is seeking a confiscation order of more than £500,000 it says was ill-gotten by Humphries (pictured, with her husband, John, outside court)
Sentence was deferred for reports, and Humphries was warned she faced jail. The court heard her plea triggered parallel civil action under the Proceeds of Crime Act.
She wept as she was was served with papers under the Act alleging even greater financial irregularities.
The Crown is seeking a confiscation order for more than £500,000 allegedly ill-gotten by Humphries, who had worked for Solicitors’ Financial Servies, also known as SFS, for 13 years.
The company – based in Alloa, Clackmannanshire – is owned and run by two enrolled solicitors.
Sheriff Wyllie Robertson described the terms of the confiscation order sought as ‘astonishing’.
Ruaraidh Ferguson, prosecuting, said SFS used another firm, financial technology organisation True Potential LLP, or TP, to receive clients’ payments, which TP then passed on to SFS having calculated ‘to the penny’ how much commission was due to each financial advisor.
‘Over the time Karen Humphries worked for SFS, she exclusively had responsibility for making payments to the financial advisors, amongst making other transactions,’ he said.
‘The offence was discovered as a result of the annual accounts being checked in July 2016. Despite SFS expecting to have generated a profit, the accounts showed a loss and an investigation was launched.
‘It revealed that one financial advisor had been significantly overpaid. This was John Humphries, the husband of the accused. He was the only financial advisor to be overpaid.’
Husband John, 50, was overpayed £75,000
Mr Ferguson said a further analysis of transactions completed by Humphries showed money being transferred from SFS to a number of accounts, some in her name, some in her husband’s name, some held jointly. Some payments were split between various accounts.
Humphries was arrested at her home in McAlpine Court, Tullibody, Clackmannanshire, and taken to Falkirk Police Station. The court heard some £54,000 had since been repaid.
Sheriff Robertson said: ‘The astonishing thing to me is that having agreed the embezzlement – in this case of £75,000 – the [Crown] statement says that the recoverable amount is over half a million pounds.’
Mr Ferguson replied: ‘The recoverable amount relates to funds that the Crown allege comes from general criminal conduct.’
Deferring sentence until October 10th, Sheriff Robertson warned Humphries to take nothing from the fact that her bail was being continued while criminal justice social work reports are prepared.
‘This offence involved an inherent breach of trust, and a custodial sentence is at the forefront of the court’s considerations,’ he said.
Defence solicitor David Kinloch will address the court in mitigation at the sentencing hearing.
The Proceedings of Crime action was continued until November 12th for Humphries’ legal team to prepare rebuttals to the Crown’s allegations that her criminal conducted netted such a large sum.