Failed Gatekeeper Laundered $25 Million Through Trust Account

A hearing panel of the British Columbia Law Society imposed a six-month suspension of an experienced attorney

Between May 2013 and November 2013, you [the Respondent] used your trust account to receive and disburse a total of $25,845,489.87 on behalf of your client C Inc. without making reasonable inquiries about the circumstances, including the subject matter and objectives of your retainer, and without providing any substantial legal services in connection with the trust matters…

The Respondent was found to have breached his duty as a gatekeeper of his trust account.  Given the fact that a lawyer’s trust account is subject to solicitor-client privilege, a lawyer has a positive obligation to ensure that it is not misused.  The Respondent failed in his duty to make reasonable inquiries with regard to the source of the excess of $25 million in Canadian funds deposited into his trust account.  This is in conjunction with the fact that the Respondent did not provide any substantial legal services.

The Law Society takes the position that the failure on the part of the Respondent in his duty posed a serious risk to the public interest.

The Respondent takes the position that, while the Respondent is the gatekeeper of his trust account, and must be on guard to ensure he is not a dupe, the Respondent did not breach any written rules of the Law Society.  Furthermore, the Respondent argues that all he did was fail to make reasonable inquiries.

The Respondent’s conduct is serious in that it involved the breach of one the fundamental obligations of a lawyer in the operation of his trust account, and that is to make reasonable inquiries as to the source of the funds being deposited into his trust account.  A lawyer’s trust account is impressed with solicitor-client privilege, and the failure of the Respondent in his duty to act as a gatekeeper of his trust account creates serious risk to the public interest.  The Respondent’s breach of his professional obligations is serious.

He was admitted in 1968

 The Respondent argued that schemes such as money laundering were relatively new and had not been a risk during much of his career and so his age and experience would lead him to be less suspicious.  The Panel rejects this reasoning.  The Respondent’s experience at the bar, in particular the fact that he was an experienced solicitor, is an aggravating factor because those years of experience should have given him an appropriate appreciation of the importance of maintaining a trust account with integrity.  To put it simply, with his experience at the Bar the Respondent should have known better.

Unhelpfully to himself

At all times during the F&D hearing and this disciplinary action hearing, the Respondent maintained that he had done nothing wrong and characterized the Law Society’s case as unfair, abusive, a violation of the principles of natural justice and procedural fairness as well as a vendetta and a “protracted effort to smear EF.”

But

The Law Society argued that the press release of the Respondent is “worthy of rebuke” and shows that the Respondent fails to understand his gatekeeper function.  The Respondent stated that the press report shows that the Respondent was trying to manage the adverse media reporting caused by the Panel’s decision on F&D.  We accept that the press release issued by the Respondent is not an aggravating factor.  In the circumstances of the Respondent, we accept that the press release was an attempt at image management.

Bottom line

Given an analysis of the applicable Ogilvie factors, we find that the public interest is served by the Respondent being suspended from the practice of law for six months with the suspension to begin no sooner than on the last day of the month following the month in which these reasons are released, or on some earlier date as agreed to by the Law Society and the Respondent.

The professional misconduct of the Respondent constituted a serious breach of his professional obligation.  It was a breach in which he ignored the fundamental obligations of a lawyer to act as the gatekeeper of his trust account.  The fact that lawyers are constitutionally excluded from the Proceeds of Crime Regime means that the profession must ensure that all of its members comply with their duty to make reasonable inquiries in objectively suspicious circumstances.

(Mike Frisch)