Fladgate pays £7.8m to settle fraud claim

Fladgate has settled a fraud claim brought against it by collapsed dot com Izodia, agreeing to pay it £7.8m.

Craig Shuttleworth
Craig Shuttleworth

The claim, which was launched in August 2008 by Jones Day partner Craig Shuttleworth on behalf of ­Izodia, alleged dishonest breach of fiduciary duty and breach of retainer.

In 2006 Izodia director Gerald Smith pleaded guilty to defrauding the company of £36m after theft and false accounting charges were brought against him by
the Serious Fraud Office.

Fladgate was alleged to have breached its fiduciary duties as it acted for both Izodia and Smith.

Izodia claimed the firm failed to disclose fraudulent misconduct by Smith to ­Izodia, attempted to cover up the fraud, resisted the appointment of independent solicitors to investigate the fraud and deliberately misled an independent adviser appointed to Izodia.

Shuttleworth said: “This settlement brings to an end the latest in a series of legal proceedings that have succeeded in recovering for Izodia a significant amount of monies stolen by Gerald Smith.”

In a separate case, Jones Day launched proceedings against Izodia’s former director, Edward Vandyk, and one of his associated companies, Corporate Synergy Holdings, on 21 May.

The claim for £4.25m relates to losses arising from the assignment of leases to Orb Estates, a company controlled by Smith.