Horrific Childhood Did Not Mitigate Sanction

Revocation of license was ordered by the Tribunal Hearing Division of the Law Society of Upper Canada for misappropriation

The Licensee: (a) misappropriated over $300,000 in trust funds (Particular 4); (b) mishandled about $14,000 in trust funds (Particular 5); (c) did not maintain her books and records as required (Particular 6); and (d) misled the Law Society in annual reports filed with it (Particular 7). The other particulars originally contained in the Notice of Application were withdrawn at the hearing.

With respect to the misappropriation of trust funds, the total of the improper transfers made by the Licensee over a two-year period from July 2011 to July 2013 was about $308,200. These transfers were misappropriations as they were improper withdrawals from the trust account. These transfers from trust were “borrowed” to keep the Licensee’s practice afloat. She intended to cover the shortages later. She knew it was wrong to transfer money out of trust, even if it was for earned fees, without first rendering accounts. 

Some of the transfers did represent earned fees that the Licensee intended to bill but she did not get around to preparing the invoices for clients. She did ultimately prepare client accounts totaling $20,024.84 and these accounts were posted to PC Law.

She may have been willfully blind initially to the fact that her unauthorized withdrawals from her trust account were creating a shortage. However, by November 2011 at the latest, she knew that her unauthorized transfers were creating a shortage in the trust account. Despite this knowledge, she continued the improper transferring of trust funds and even continued taking the trust funds after she had deposited $200,000 into trust, in November 2011, in an effort to correct the shortage.

The Licensee made a payment of $200,000 into the trust account in November 2012. She made a further payment of $105,000 in June 2013, for a total of $305,000. She made a further payment of $1,341.18 to the trust account on October 31, 2013 as a result of a miscommunication with her accountant. The total paid to the trust account was $306,341.18.

As to sanction

The mitigating evidence in this case, other than the medical evidence, does not qualify as exceptional. In this case, the Licensee ultimately made restitution by two installments during the course of the investigation, co-operated by signing the ASF, recognized what she had done was wrong, expressed remorse, and provided extensive character evidence from people in the legal community and the Barrie community at large. She is held in high regard by the authors of the letters. In the face of a presumptive penalty, however, this type of evidence is considered common.

The misappropriation in this case brings with it a presumptive penalty. For evidence to mitigate against the penalty here, it must qualify as exceptional.

Ms. Adams had a very difficult childhood, marred by sexual abuse, being raped when she was in grade two, racism and being in and out of nine foster care placements. Her treating therapist, who has over 40 years’ experience as a therapist, described her childhood experiences as the “most horrific situation I have seen for a young person to go through.”

Ms. Adams had been diagnosed with severe anemia, which resulted in her having to undergo an emergency hysterectomy and required a blood transfusion. She was also diagnosed as suffering from major depression exacerbated by the death of a number of family members between 2007 and 2013. In 2007, her foster mother died. In 2008, her foster father died. In 2011, her foster brother, with whom she was close, was killed in a car accident. In January 2012, her niece died. In July 2012, her biological mother died. In February 2013, her nephew drowned at sea. A week later her biological father died. She also lost her two beloved pets – her cat in the fall of 2011 and her dog, in 2012.

The medical evidence from three medical professionals is compelling and consistent. Those professionals were qualified as experts; each provided written reports and testified.

Psychologist, Dr. Giorgio Ilacqua, and treating therapist, Dr. Howard Irving, testified for Ms. Adams. Forensic psychiatrist, Dr. Lisa Ramshaw testified for the Law Society. All three experts agree that the lawyer suffered, at the relevant time from major depression. All three experts agree that the physical illness, her anemia, and the mental illness (the major depression) contributed to creating a connection to and the climate in which the misconduct occurred. All three experts generally agree that with changed circumstances, medical intervention, and ongoing therapy, it is unlikely that Ms. Adams will repeat the misconduct in the future. Her risk of re-offending is low. When he testified, however, Dr. Irving said that he was winding down his intensive ongoing treatment. This raises some concern that ongoing treatment is not in the picture for the future, particularly since ongoing intensive treatment was a key component in Dr. Ramshaw’s plan to lessen the risk of re-offending.

Dr. Ramshaw diagnosed the Lawyer as likely suffering a Major Depressive Episode (as part of a Major Depressive disorder) between 2011 and 2013, this was exacerbated by numerous losses and the moderate to severe iron deficiency anemia.

[Dr. Ramshaw explained that the ongoing bereavement caused by the loss of seven family members before and during the misappropriations, was the most likely stressor precipitating the Major Depressive Episode. The Lawyer was rendered more vulnerable to depression as a result of her traumatic childhood, marked as it was by instability, sexual assault and rape, rejection and racism. In addition, the Lawyer’s need to succeed, developed from her years of rejection and abuse in foster care, prevented her from being able to effectively problem-solve when she got into financial difficulty.

In response to questions concerning the risk of mental health relapse, Dr. Ramshaw said that while her childhood is always going to be with her, Ms. Adams “has a lot of strengths and resilience and now support to decrease that risk.”

Dr. Ramshaw highly recommended that Ms. Adams continue in therapy and that given the degree of her vulnerabilities, Ms. Adams will always need to have some form of therapeutic support to ensure she is functioning and at a low risk to having depression again. While she does not need to have therapy for the rest of her life on a monthly or weekly basis, she would need access to therapy when there are any “perceived difficulties or decline or times of stress.” Dr. Ramshaw said that the mental illness “prevented her from being able to effectively problem-solve when she got into financial difficulty”. But her clouded judgment did not affect her ability to have control over her actions. Once the extent of the trust misappropriations were apparent she was quickly able to replace those funds from her own resources and from borrowed funds. She was unable to explain why she did not do this in the beginning when she began experiencing financial difficulty in her practice.

Notwithstanding the above

Notwithstanding the medical evidence, and considering it from the point of view of a well-informed member of the public who understands that expert evidence, the panel is of the opinion that the public’s confidence in the legal profession would be significantly undermined if Ms. Adams were permitted to continue to practise. In addition, and importantly, the confidence of the legal profession in its own collective reputation would be seriously undermined if, after misappropriating over $300,000 in multiple transactions over a two-year period, and misleading the regulator about her trust account for three years, Ms. Adams were permitted to keep her licence to practise.

Dissent

I should briefly allude to the underlying exceptional circumstances Ms. Adams experienced. They include an unimaginably horrific childhood: being shunted in and out of nine foster care homes; experiencing sexual abuse; and being raped when she was in grade two. Between 2011 and 2013, roughly coinciding with the two-year period when the impugned conduct occurred, Ms. Adams suffered a Major Depressive Episode (part of a pre-existing Major Depressive Disorder), severe and debilitating iron deficiency anemia, and an emergency hysterectomy requiring a blood transfusion. All of this was exacerbated by the deaths of seven close family members. Those losses include the deaths of both foster parents, both biological parents, an extremely close foster brother who died in a car accident, a nephew who drowned at sea, a niece and two of her beloved pets. One of the medical experts who gave evidence described the circumstances Ms. Adams suffered through as being a “perfect storm.”

The unchallenged and unanimous opinion of the three medical experts who examined Ms. Adams, provided written reports and testified at the hearing, found a direct causal relationship between the impugned conduct, Ms. Adams’ medical problems and these unimaginable underlying circumstances.

The expert evidence…confirms the direct causal relationship between Ms. Adams’ impugned conduct and all those underlying exceptional circumstances.

When Ms. Adams realized that the unauthorized transfers from trust had created a trust account shortage, she deposited $200,000 into her trust account in November 2012 from money she raised by mortgaging properties, deposited another $105,000, borrowed from friends, and then deposited a final $14,043.87 into her trust account in October 2013. As a result of these deposits, Ms. Adams had made full restitution by June 25, 2013.

The majority notes that the presumptive penalty for mortgage fraud and misappropriation is revocation. The reasons refer to jurisprudence that shows that a licensee’s psychiatric, psychological, and physical condition, together with individual circumstances involving extreme duress or desperation, have been held to warrant a departure from the presumptive penalty in cases where the impugned conduct not only is out of character and unlikely to recur, but explains why the misconduct occurred.

The dissent would allow her to resume practice with conditions. (Mike Frisch)