_{Accountant Simon Needham (l), Pellys MD Andrew Arnold, and some large numbers.}

Essex law firm Pellys is being investigated by the SRA in connection with an alleged multimillion pound fraud involving its accountants, RollOnFriday can reveal.

Last summer the body of Simon Needham, the director of accountancy firm Croucher Needham, was found on railway tracks after he was hit by a train.

Following Needham's death, his company was unexpectedly subject to an extraordinary resolution to wind up.

Individuals and businesses which retained Croucher Needham to manage their finances appear to have discovered that eyewatering sums had disappeared from their bank accounts.

The statement of affairs filed by the liquidator at Companies House shows that at the point of its closure, Croucher Needham owed its clients a dizzying £24.7m.

Timber merchants Brooks Bros, represented by Taylor Wessing, appears to have lost £3.2m to the alleged fraud. DJ Hughes, represented by Trowers & Hamlins, is down £3.5m.

The largest creditor, apparently cleaned out to the tune of £8.9m, is described anonymously in the statement of affairs as ‘Creditor 1’.

Pellys is listed as the correspondence address for Creditor 1, as well as for ‘Creditor 2’, owed £150,000, and 'Creditor 3', owed £200,000.

_Ouch.

According to sources, Creditor 1 is Pellys itself, with the money comprising funds in its client account, although the firm did not confirm this when asked. The other anonymous entries are alleged to include at least one individual who entrusted Croucher Needham with managing his personal finances. 

The insiders allege that Croucher Needham, granted access to the firm’s client account, drained it as part of an audacious, Ponzi scheme-style fraud.

Pellys has attempted to call on its professional indemnity insurance to cover the massive losses but its claim has been resisted, sources told ROF.

The firm has not confirmed any aspect of its alleged predicament to RollOnFriday and there is no suggestion that it was involved in the alleged fraud other than as a victim. 

ROF's emailed enquires to Pellys and its managing director, Andrew Arnold, went unanswered. An attempt to speak to Arnold directly was rebuffed by his secretary who said he was "in a meeting".

People claiming to be dissatisfied Pellys clients alleged on business review website Trustpilot that the firm admitted to them that it had been defrauded after progress on their matters ground to a halt.

“After hundreds of calls, emails, denials, excuses and lies they have now told us there's been 'fraud at the company!'” said one individual trying to recover money from Pellys.

“We have reported them to the SRA”, said another person. “Due to ongoing investigation I cannot go into too much detail. But I can corroborate that our experience is similar to the last 4 most recent reviews. We have been kept in the dark regarding the progress of a probate, we have been told about fraud”, they said.

A third individual claimed that “after many months of unexplained delays” Pellys disclosed that it had “lost half of their client fund account to fraud”.

Essex Police confirmed to RollOnFriday that Croucher Needham was at the centre of a significant criminal investigation. A spokesperson for the force told ROF, “Officers with our Economic Crime Unit’s serious fraud team are investigating a number of allegations of suspected fraud”.

“This investigation relates to the dealings of an accountancy firm in Saffron Walden. Our enquiries are continuing in collaboration with cross-sector bodies.”

The SRA is also involved and has begun a probe into Pellys. An SRA spokesperson told ROF, “We are investigating this matter, but cannot comment on details at this point. It would only be if action was necessary that it would become a matter of public record”.

Pellys' potential liabilities threaten to add to the pressure on the beleaguered SRA Compensation Fund, which is paid for via a levy on solicitors and has already been stretched to breaking point by the giant Axiom fraud.

The Fund, a discretionary resource of last resort in cases of dishonesty or if a solicitor fails to account for client money, would apply in a situation where an indemnity insurer declined to pay out, according to the SRA's website.

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