License revoked by the Tribunal Hearing Division of the Upper Canada Law Society
The Lawyer is a sole practitioner with no discipline history, aged 60 and called to the bar in 2009. He has been administratively suspended from practice since September 19, 2014, and had not resumed the practice of law at the time of the hearing on January 4, 2018.
He represented a client in a divorce that became an estate matter when the other spouse died
In response to an inquiry from [client] LB, the Lawyer suggested that the money being held in his trust account could earn interest at the rate of 12% per year if loaned to a third party. He made arrangements for a loan to LF, whom he described as a “woman from his office,” but who was actually his fiancée and later became his wife.
In August 2011, February 2012 and August 2012, three separate loans, each in the principal amount of $40,000, were made to LF, the Lawyer’s wife, and secured by promissory notes. The Lawyer was aware that the Rules of Professional Conduct prohibit borrowing money from clients but admits that the three loans were actually made to him, not his wife. He put the loans in LF’s name because he knew he was not allowed to borrow money from a client.
The Lawyer transferred a total of $120,000 from the funds he held in trust for LB to his wife’s trust ledger, then moved the funds to his general account for his personal and business use, therefore indirectly borrowing money from his client.
And
In August 2011, the Lawyer was retained by BI in a matrimonial matter, the final disposition of which left BI with ownership of a hotel property previously owned and operated by BI and her ex-husband.
Operating under a power of attorney granted to him by BI, the Lawyer used some of the money he was holding in trust for LB to pay the hotel’s debts, finance repairs and buy new furniture.
In July 2013, BI died, rendering the power of attorney invalid. Her children, executors of her will, promptly demanded return of all property and documentation relating to the hotel. They cancelled the real estate listing and transferred the property to their father, thus frustrating the Lawyer’s plan to replenish his trust account for LB from the proceeds of sale of the hotel property.
The Lawyer’s trust ledger for BI was overdrawn. On December 31, 2013, he transferred $21,535.93 from the funds he was holding in trust for LB to the BI trust ledger, thereby misapplying the trust funds he was holding for one client for the purposes of another client.
Between September 2012 and July 2013, the Lawyer repaid $80,000 of the money that he had indirectly borrowed from LB, replacing these funds in his trust account. However, on May 3, 2013, the Lawyer began a series of transfers to his general account from the funds he held in trust for LB. These transfers were made without LB’s knowledge or consent and without any entitlement to them. The transfers continued steadily until April 14, 2014, when the funds held in trust, including his repayment of $80,000, were drained to zero dollars.
The Lawyer made two payments to LB totalling $10,400, said to represent interest on the loans of which she was aware. The source of these interest payments, however, was the very funds the Lawyer was holding in trust for LB. He gave her some of her own money and represented it to her as interest paid by the borrower.
Therefore, of the $137,617.34 that the Lawyer was holding in trust pending the completion of LB’s matrimonial matter, he misappropriated $105,681.41…
(Mike Frisch)