Monday, May 05, 2014

The Law Society of Manitoba by the numbers!


  • 236 lawyers were disciplined by the Law Society of Upper Canada for behaviours the Toronto Star characterized as criminal like
  • Of those, 41 were charged criminally
  • Of those, 12 served time in jail
  • $61,457,642 amount of client money those lawyers were responsible for misusing by stealing, defrauding, failing to account, overdrawings, improperly dispersing and other law society classifications, as found by the Toronto Star
  • All in the past 10-years (2003-2013)!


The Law Society of Manitoba by the numbers
Good Day Readers:

With rounding there are currently 40,000 lawyers in Ontario and 1,800 in Manitoba. Using advanced calculus and the latest mathematical theorems, while assuming lawyers here are just as and perhaps more dishonest than those elsewhere, here are the numbers CyberSmokeBlog calculated:

  • 10.6 number of lawyers disciplined by the Law Society of Manitoba for behaviours the Toronto Star would characterize as criminal like
  • Of those 1.8 should have been charged criminally
  • .52 should have done jail time
  • They should have stolen $2,765,593.89
  • All in the past 10-years ($2003-2013)!
At the end of the of Star article there are a couple easily found Winnipeg Free Press articles featuring legal all stars One stole (sorry LSM "misappropriated"/"misapplied" in your parlance) $10,000 from a client and fined $39,000 while another took $70,000 and rewarded with disbarment. What do you figure would have happened had the police caught you red handed? BTW, there are 11- all stars currently waiting on the Law Society of Manitoba's pending disciplinary list.

Would be interesting to do some Toronto Star quality research to find out the actual numbers for the Manitoba Law Society. While newspapers everywhere are cutting back on staff, it's still nice to see some excellent investigative journalism.

Sounds as though the Law Society of Upper Canada needs to build a bigger closet

Sincerely,
Clare L. Pieuk
Broken Trust

Theft. Fraud. Breach of trust. A Toronto Star investigation found the Law Society of Upper Canada failed to report the crimes of its members to police.

Former lawyer Lawrence Burns runs a North Toronto restaurant. He is also a disbarred lawyer found to have taken close to half a million dollars from his clients. Burns, like many lawyers caught with his hand in a trust account, escaped criminal prosecution. A Toronto Star investigation found most Canadian law societies report members to police. The Law Society of Upper Canada does not.




They treat client trust accounts as their personal piggy banks, facilitate multi-million-dollar frauds and drain retirement savings of the elderly.

While most lawyers caught stealing from their clients are reprimanded, suspended or disbarred by the profession’s regulator, the vast majority avoid criminal charges, a Star investigation reveals.

The Star found that more than 230 lawyers sanctioned for criminal-like activity by the Law Society of Upper Canada in the last decade, stole, defrauded or diverted some $61 million held in trust funds for clients.

Fewer than one in five were charged criminally. Most avoided jail.

“I truly believe there are two laws — a set of rules and regulations for lawyers and a different set for everyone else,” said Richard Bikowski, who was fleeced out of $87,500 by now-disbarred Toronto lawyer Lawrence Burns.

Unlike the law societies in most other provinces, the Law Society of Upper Canada does not, as a rule, report suspected criminal acts by its members to police, no matter how much money lawyers steal.
Ex-lawyer Lawrence Burns was disbarred by the Law Society of Canada in 2011 for "misappropriating" close to half a million dollars from clients. He did not face criminal charges for his actions. Here he steps out from his Nissan Rogue at the back of his restaurant, The Homeway, on Mount Pleasant Road just north of Eglinton. (Dale Brazao/Toronto Star)

In one case, a lawyer took $750,000, in part, because he apparently wanted to buy a Lexus. Another used money he was holding in trust for a client to buy an Ottawa condominium.

Lawyers play a vital role in society. They are supposed to keep our money safe, guard our secrets and oversee our estates when we die, among other responsibilities.

Those who betray this trust can do untold damage.

Despite “misappropriating” close to half a million dollars from four clients, Toronto lawyer Lawrence Burns, who was disbarred in 2011, has never faced criminal charges. During his discipline hearing, he blamed “undiagnosed depression” and a “minor cognitive impairment” for his thievery, according to law society documents.

Burns, now 64, lives in a North Toronto home, zips around town in his Rogue SUV, and dotes on customers at his restaurant, The Homeway, at the corner of Mount. Pleasant Road. and Erskine Avenue.

When the Star visited him at his restaurant to ask about his case, Burns, sporting slicked-back hair and a moustache, immediately escorted the reporters outside.

“I’m not giving you an interview,” Burns said outside the eatery, where breakfast is served until 3 p.m. daily and the shaved ham on a walnut raisin ciabatta loaf with honey mustard mayo goes for $11.

Other lawyers found guilty of professional misconduct by the law society, who evaded criminal charges, include:
Pradeep Pachai
A lawyer for a car insurance company who conspired with an executive of the firm to steal $1.5 million by grossly inflating insurance claim payouts. Pachai was disbarred, but avoided criminal prosecution after paying back his half of the take. When contacted by the Star, Pachai said he wanted to let “sleeping dogs lie.”

Luc Barrick
An Ottawa lawyer, took some $360,000 from his clients before moving to Paris three years ago. He has yet to return. Barrick told the Star he didn’t steal anything and had to go to France to seek treatment for hemophilia. The law society dismissed a doctor’s note as insufficient evidence of his illness and disbarred him in absentia.

Massimiliano Pecoraro
A Toronto criminal lawyer who was disbarred for overbilling Legal Aid Ontario by $30,000. An investigation showed there were reasonable grounds to believe that he actually overbilled Legal Aid more than $100,000, but that he paid most of it back before the law society got involved. Pecoraro fabricated trials and bail hearings that didn’t take place. When caught, he blamed stress from the breakdown of his marriage. Pecoraro did not respond to a letter from the Star or voicemail messages.

The Star found it was common for law-breaking lawyers like these to avoid criminal charges.

Of the more than 1,000 discipline decisions made by the law society in the last 10 years, the Star identified 236 cases in which lawyers were sanctioned for offences that were characterized by our analysis as criminal, including theft, fraud, breach of trust, forgery and perjury.

The Star could find criminal charges for only 41 of these lawyers. In more than half of cases where criminal charges were laid, the law society sanction came after. Of those bad lawyers sentenced criminally, the punishments were generally lenient, ranging from house arrest to community service. The Star found that only 12 went to jail.

Why do so many lawyers who steal from their clients avoid criminal justice?

A big reason is that the law society in practice does not report alleged criminal offences by its members to police.

The Star shared its findings with law society treasurer Thomas Conway, who said the solicitor-client-privilege, a principle he described as "sacrosanct," prevents the organization from reporting lawyers to police.
Thomas Conway, Treasurer of the Law Society of Upper Canada, said solicitor-client privilege prevents the organization from reporting lawyers to police. (Rene Johnston/Toronto Star)

The Star found victims are often reluctant to go to police, fearing being drawn into lengthy criminal proceedings that are unlikely to recover their stolen money. And police fraud squads are overburdened and often don’t have the resources to take on complex fraud investigations, say police officers and lawyers who handle financial cases.

The law society’s rationale for not reporting lawyers suspected of committing a crime to police is “overly simplistic” and “wrong” says Brampton crown attorney Steve Sherriff, who was in charge of disciplinary prosecutions at the law society from 1982 to 1989. Sherriff says reporting a lawyer to police in no way violates solicitor-client privilege.

In fact, he believes provincial legislation gives the law society all the power it needs to report bad lawyers to law enforcement.

“I am not confident that the public gets fair warning of criminal conduct by lawyers,” Sherriff said. “I continue to have serious concerns that the public is needlessly at risk.”

Like doctors and teachers, lawyers govern themselves.

The law society is responsible for regulating Ontario’s 46,000 lawyers and 5,000 licensed paralegals. Its website states that it has a duty to “protect the public interest” and to “act in a timely, open and efficient manner.”

Of the approximately 4,700 complaints received annually, about 3,100 are authorized for full investigation.
About 100 make it to a disciplinary hearing each year.

It can take years before the law society makes a decision on disciplinary action. In one case the Star found, it took more than five years to deal with two lawyers accused of fronting a $1.5-million advance-fee scam. One lawyer was disbarred, while the other was allowed to resign his licence to practice.

Disciplinary hearings are open to the public and are conducted by tribunals made up of “benchers” — mainly elected lawyers and paralegals and some appointed “lay” people.

When the Star asked the law society if it reports criminal acts by its members to law enforcement, spokesman Roy Thomas said the regulator encourages complainants to report offences to police, and discipline hearings and other evidence in the public record “can be accessed by police.”

“It would be a serious misrepresentation for you to suggest that the Law Society of Upper Canada does not cooperate proactively with all the law enforcement agencies in the province,” he said.

Detective Sergeant. Cameron Field of the Toronto Police Service’s financial crimes unit said the force does not “pick and choose” complaints posted on the websites of regulatory bodies.

“If one of these organizations became aware of criminal wrongdoing and did not report it to us then we would be very concerned,” he said. “It is essential for the well-being of these organizations and in maintaining public confidence in their ability to properly regulate their respective professions.

Sherriff said the “vast majority” of clients victimized by lawyer fraud would consent to the law society sharing their names and contact information with police.

“A report to the police from the law society, which invariably has the evidence, will carry greater weight than a report from a client,” he said.

In its decisions, the law society favours innocuous-sounding words like “misapply” and “misappropriate” in place of “steal” and “theft,” and in many cases, provides few details.

For instance, in one disciplinary case the Star found, the law society says that the lawyer is simply “suspended on an interlocutory basis” until a disciplinary panel “varies or cancels the order.” What it doesn’t say is that the lawyer is being investigated for her alleged role in a real estate scam that investors believe could cost them as much as $17 million.

Many discipline summaries also make reference to missing money but don’t include a dollar amount.

Defenders of the law society’s policy of not reporting alleged criminal activity to police argue that doing so could discourage bad lawyers from self-reporting their misconduct and cooperating with investigations.

“We call upon various members of our profession and members of the public to be frank and open with us,” said Toronto criminal lawyer Clayton Ruby, a life bencher of the law society and former chair of the professional regulation committee, which investigates and prosecutes lawyers. “Some of them would not come to us if in fact we were going to report them to police.”

Ruby added that in his opinion the cost of mounting expensive fraud prosecutions is not attractive to police.

Several benchers contacted for this story declined to comment, saying they had received a letter from the law society warning them not to talk to the Star.
Brampton Crown Attorney Steve Sheriff, who was in charge of disciplinary prosecutions at the law society from 1982-1989, says reporting a lawyer to police in no way violates solicitor-client privilege. (Dale Brazao/Toronto Star)
Dale Brazao (Toronto Star)

Reporting bad lawyers to law enforcement officials is not a problem for law societies in many other provinces. In fact, the majority have policies to report alleged criminal activity by their members to police.

Law societies in Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, PEI and Newfoundland and Labrador all report lawyers disciplined for suspected criminal behaviour to police or the province’s Minister of Justice or Attorney General.

The law society in British Columbia can report evidence of criminal offences to police, but how much they can share may be limited by solicitor-client privilege.

Meanwhile, the law society in Quebec says it is considering changing its professional code, currently under review, so that it can report lawyers’ suspected criminal activity to law enforcement.

In Nova Scotia, the legislation that governs the profession was changed in 2003 to allow the Head of the Barristers’ Society to release information to police if there is evidence of a criminal offence and “if it’s in the public interest,” said Executive Director Darrell Pink.

As Pink sees it, the fact that it may report alleged criminal conduct to police has not hindered the law society’s ability to discipline lawyers.

“They’re not people from whom we’re getting a hell of a lot of cooperation anyway,” he said.

Asked about the policy in Ontario, Pink said, “It sounds like the Law Society of Upper Canada has a statutory problem which prevents them from doing what’s reasonable.”

It hasn’t always been this way.

When Sherriff was in charge of disciplinary prosecutions at the Law Society of Upper Canada in the 1980s, he said he picked up the phone “countless times” to inform police about lawyers suspected of committing serious crimes, like theft and fraud.

In 1998, the Law Society Act was overhauled, and new regulations related to confidentiality were added under Section 49.12. This section prohibits the law society from disclosing information to any third party revealed as the result of an audit, investigation, review or seizure.

Following a 2005 Star investigation into the silencing effect of Section 49.12, an exception was added to allow the law society to report suspected criminal activity to police only when there is “a significant risk of harm” to the lawyer involved or another person and “making the disclosure is likely to reduce the risk.”

According to law society Treasurer Thomas Conway, officials “can and do” disclose information to law enforcement authorities in “limited circumstances” that fit this description. Despite repeated requests, the law society did not provide a single example of a case where it has reported a lawyer to police.

Sherriff says the exception added to Section 49.12 clearly gives the organization the power to report lawyers’ alleged criminal activity to police as long as it is likely to reduce the risk — which is almost always true in fraud cases.

In Sherriff’s view, the law society’s stance on the matter could, therefore, be summed up like this: “We could do it, but we choose not to.”

When bad lawyers are disciplined by the law society, but not charged criminally, the consequences can be disastrous.

Peel police officer Constable Michael MacDougall, who used to work in his force’s fraud squad, led an investigation into Mississauga real estate lawyer Mariano Mazzucco under the name “Project Dirty Lawyer,” beginning in 2008.

MacDougall said he was astounded to discover that Mazzucco was disciplined in 2000 by the law society for “misappropriating” — the organization’s preferred term for stealing — more than $300,000.

MacDougall, who left the financial crimes unit in 2010, said the law society never reached out to police during the investigation.

The law society gave Mazzucco a 30-month suspension back in 2000, and allowed him to return to work under the supervision of another lawyer. He continued running a Ponzi scheme that ultimately bilked dozens of people and banks out of nearly $10 million.

“He should have lost his license then (in 2000), and this should have been reported to the police back then and dealt with,” said MacDougall.

Mazzucco was ultimately disbarred in 2010, and sentenced to six years in jail in 2012. He was recently released from prison after serving a third of his sentence, and is currently living at a halfway house in downtown Toronto.

In an email to the Star, Mazzucco said he doesn’t believe that a police investigation into his trust account would have detected the Ponzi scheme, which he said he ran out of his personal bank account.

“The disbarment and public shaming that follows after detection of professional misconduct is a significant deterrent to lawyers,” Mazzucco said, adding he was treated fairly by the law society.

Mazzucco says he hasn’t made restitution to his victims because, “I currently have no income and no assets.”

While many disbarred lawyers go on to pursue fruitful second careers, victims often fight for years to get their money, and their lives, back.

Ontario lawyers are required to have malpractice insurance provided by LawPro, an insurance company owned principally by the law society. But LawPro covers only financial losses caused by negligence, errors and omissions and excludes dishonest behaviour, such as theft and fraud, except in rare cases.

The law society instead offers restitution for these types of losses through its victim compensation fund. Here’s the catch: the fund will not refund more than $150,000 per claim — one of the lowest and most stringent caps in the country. (The limit is currently under review by the law society’s compensation committee.)

And, unlike compensation funds in many other provinces, Ontario’s is considered a “fund of last resort,” meaning in many cases all other legal avenues must be exhausted before it can be accessed.

This could include anything from filing a police report to suing the lawyer — a remedy, which, as some victims have bitterly observed, generally requires hiring another lawyer and spending more money.

Just ask Richard Bikowski.

In 2004, he was expecting about $90,000 from the sale of the home he owned with his common-law partner following the breakdown of their relationship.


Lawrence Burns, the Toronto lawyer representing Bikowski’s common-law partner, was supposed to hold the money in trust until the separation proceedings were over. But Burns never paid the money out.
Richard Bikoswki who was fleeced out of nearly $90,000 by now disbarred lawyer Lawrence Burns, says he is angry that lawyers who steal from their clients seem to avoid criminal justice. (Dave Chidley/for Toronto Star)

Bikowski complained to the law society, prompting Burns to cut a cheque to the court. But the cheque bounced.

Four years after the ordeal began, Bikowski, now 50, received $87,500 from the law society’s victim compensation fund, but had to spend $50,000 on his own lawyer fighting to get it.

Under questioning by the law society, Burns said he had “no recollection” of what happened to Bikowski’s money. When presented with evidence showing the funds being transferred out of his trust account to another bank account he controlled, Burns refused to answer questions.

The law society’s investigation found that Burns used most of it for office expenses and payments to family members.

Despite facing questions from the law society after Bikowski’s complaint in the fall of 2007, Burns seemed undeterred. A few months later, in early 2008, he went on to steal $64,000 from a client who had received the money as part of a settlement following a car accident.

These two incidents were not isolated; Burns had “misappropriated” from two more clients dating back as far as 2004.

In one case from that year, Burns was unable to explain how $25,000 of settlement money deposited into his trust account on behalf of a client was whittled away to $2,200.
In April 2006, Burns deposited $300,000 into his trust account on behalf of a client who was going to use the money to pay off a mortgage. That money disappeared too.

During his disbarment proceedings, Burns blamed his actions on a “minor cognitive impairment” that affects his short-term memory and judgment, and as a result, his withdrawal of trust monies was “an honest, if negligent, mistake.” The discipline panel noted that Burns provided no medical evidence in support of his claims.

Burns was ordered to pay the compensation fund $93,000. The law society refuses to say if he ever did.

Burns keeps everything in his wife’s name — his restaurant, home, and SUV — a common tactic used to keep creditors at bay, according to fraud investigators.

Burns has never been charged criminally with theft or fraud.

“There are no winners in this situation,” said Bikowski. “It makes you really grind your teeth about how these people get away with it.”

Ultimate betrayal


It looked like a safe bet. Two Toronto lawyers vouched for a business who promised to help entrepreneurs obtain financing for exciting new ventures. Calgary's Michael Freedman put his trust in those lawyers along with 96 other entrepreneurs across North America. That trust was betrayed.

Michael Freedman trusted the lawyers.


Larry MacDougal/Canadian Press
Michael Freedman, a Calgary entrepreneur, was a victim of the advance-fee fraud fronted by ex-lawyers Peter Leich and Glenn Sacks. Freedman says he would not have forwarded more than $10,000 in “processing fees” had it not been for the assurances of the lawyers that the scheme was legitimate.
The Calgary entrepreneur with a dream of starting a smart card business believed he had struck a promising deal to obtain the financing he needed to get his idea off the ground.

The company that made the offer was directed by two Canadian businessmen, assisted by veteran Toronto lawyers, Peter Leich and Glenn Sacks. The lawyers were identified in company literature as “trustees” of the finances and Leich personally vouched for the legitimacy of the company.

Freedman said he took “great comfort in that.”

So did at least 96 other unsuspecting entrepreneurs from across North America, who were bilked out of $1.5 million in “processing fees” they wired directly to the lawyers’ trust account.

“Had it not been for the fact that their money was going into the lawyer’s trust account, (the entrepreneurs) would not have sent the processing fee,” the Law Society of Upper Canada submitted as part of its discipline case against the two lawyers.

As the law society would later conclude, Leich and Sacks fronted a textbook “advance-fee fraud,” orchestrated by one of their clients.

These entrepreneurs paid fees they were told were needed to access a pool of collateral that would help them obtain business loans. Too late, they learned the collateral was bogus. Leich and Sacks both benefited from the scheme, the law society panel concluded, though to what extent is unclear because they refused to produce full banking records to the investigators.

Leich and Sacks are among 236 lawyers sanctioned by the law society, which regulates the profession in Ontario, for criminal-like activity in the last decade. These 236 lawyers were found to have engaged in schemes that led to thefts, frauds and diversions that totaled more than $60 million in client funds. A Star investigation reveals that while most were reprimanded, suspended or disbarred by their professional organization, few were ever charged criminally, and only a handful sentenced to jail.

The law society does not, as a rule, report these lawyers to police.

Soon after Freedman’s processing fees disappeared, complaints to the law society about Leich and Sacks started rolling in. But the lawyers, both 30-year veterans operating out of a non-descript office on the Danforth, continued practicing for five more years, even as evidence mounted that the investment company they were vouching for was a sham.

In 2006, Leich was disbarred for “knowingly assisting” in the fraud and Sacks was deemed “willfully blind,” and allowed to resign his law licence. Neither has ever faced criminal charges.

The law society has said very little about the case. A spokesman refused to tell the Star whether investigators ever reported the lawyers to police.

Through interviews with victims, a review of civil court documents and law society case files, the Star has pieced together the story of a fraud that shattered business dreams, a regulator that did not take action to stop the scheme until it was too late, and two lawyers who escaped criminal charges.
Ex-lawyer Peter Leich was disbarred by the Law Society of Upper Canada for his role in an advance-fee scam that bilked $1.5 million from 97 businessmen across North America. (Dale Brazao/Toronto Star)
Glen Sacks was allowed to resign his lawyer's licence after he was found to have played a role with former partner, Peter Leich, in an advance-fee scam that bilked $1.5 from 97 businesspeople across North America. (Dale Brazao/Toronto Star)

For entrepreneurs like Freedman, looking for financing, the pitch from Equity Investments International was hard to resist.

Here’s how the program was supposed to work: An entrepreneur would submit a business plan. Equity Investments, run by one of the lawyers’clients, would approve the project. In exchange for a “processing fee” and a stake in the project, Equity would make collateral available so the entrepreneur could get a bank loan. Once a loan was secured, Equity promised to refund the fees held in the trust account of Leich and Sacks.

The processing fees from investors, sent to the lawyers between 1999 and 2002, ranged from $12,000 to $40,000 and were based on the amount of collateral that would be made available. (Freedman sent $12,500 in late 2000 for access to enough collateral to secure $1 million in financing.).

Equity, which was incorporated in the Bahamas and based in Milton, Ontontario targeted entrepreneurs having trouble getting traditional financing.

“We are in the epicenter of this erupting marketplace where opportunity abounds and the future is a golden glow,” the promotional materials read.

Equity said it could make it easier for a deserving project to get a loan because its US$100 million in collateral would reduce the risk perceived by lenders.

In the client introduction, the collateral was described as “gold, bonds, diamonds, etc.” But the bizarre hodgepodge also purportedly included Kazakhstan bonds, selenium contracts and Mexican timber tracts.
Bernd Moos, who was one of Leich’s longtime clients, was identified by the law society as the company’s principle. He signed collateral loan agreements and approved many of the applications, according to law society documents.

Lou Renaud (now deceased) was Equity’s “international Director,” and appears to have handled much of the communications with clients.

Successful applicants such as Freedman received a letter on Sacks & Leich letterhead, signed by Leich, and addressed “To Whom It May Concern.”

“This is to advise you that I act as Escrow Agent for the above captioned Corporation and as such, have personal knowledge of their business,” Leich wrote.

He claimed he possessed all documentation, rights and title to Equity’s collateral, which had been made available to support selected business ventures “in the past and present.”
Michael Freedman, a Calgary entrepreneur, was a victim of an advance-fee fraud fronted by ex-lawyers Peter Leich and Glenn Sacks. Freedman says he would not have forwarded more than $10,000 in "processing fees" had it not been for the assurances of the lawyers that the scheme was legitimate. (Larry MacDougall/The Canadian Press)

In fact, neither Leich nor Sacks independently verified the collateral, according to their statements to the law society. And none of the 97 entrepreneurs Equity approved was successful in using it to get a loan. Moos later testified he could not provide evidence of the collateral’s existence for fear that someone would use that information in a “fraudulent” manner.

Outside his home in a cul-de-sac in Scarborough’s established Rouge Hill neighborhood, Leich told a reporter he could not comment because he is “still bound by solicitor-client privilege.”

“I’d love to tell you all about it, but I can’t,” he said.

Sacks, who established his law practice with Leich in 1974, and lives in a detached house in the heart of the Beach, also declined to comment.

At the law society hearing, the panel heard testimony that Moos was the one who told the two lawyers what to do with the money collected from investors.

The Star located Moos, 69, at a Burlington office building, where Moos’s son, Jason, runs a company called Sandor Capital Corporation.

After a brief chat in the parking lot, Moos escorted a reporter into a utility room down the hall from his office. When asked why the interview couldn’t be conducted in his office, Moos said there were people in his office and that he went there “once in a while” to help his son.

He strongly refuted the law society’s findings, saying the organization was “triple-A wrong.”

Moos branded the late Renaud as “the fraudster.”

“I think he knew he was dying and he took the money,” he said.

(When Renaud died in Calgary in 2009, he was facing eight fraud-related charges in connection with another scheme.)

Moos described Leich as “fair and honest.” He said most of the processing fees went toward leasing the collateral, which he still claimed was “absolutely real.”

When Moos testified at Leich’s discipline hearing, the panel concluded the evidence he offered was “so completely lacking in credibility, and was, in fact, so outrageous that it did nothing but support the contention that the entire transaction was in fact an advance-fee fraud.”

Moos, who declared bankruptcy in 2002 — owing creditors $1.8 million — told the Star he was putting together “a task force to sue the law society” for “fraudulently misrepresenting” him in the way he is portrayed in the disciplinary decision.

Moos told the Star in a later telephone conversation that he lives in a trailer, but would not say where. The Star found a stately home on Lakeshore Road in Burlington owned by Moos’ wife, Judith, that has a mortgage of $1.85 million held by the couple’s son, Jason.

Across the street, Jason owns another home valued at $1.9 million that is registered to him and his mother. That home is currently the subject of an arson investigation by the Halton Regional Police and the Ontario Fire Marshal after it sustained $750,000 of damage in a mysterious fire last year.
Bernd Moos, was identified by the Law Society of Upper Canada as a principal of Equity Investments International, the company that advertised the availability of collateral for entrepreneurs. He signed collateral loan agreements and approved many of the applications, according to law society documents. (Dale Brazao/Toronto Star)

Where did the money go?

That is a question the law society never fully answered. But the banking records make one thing clear: The lawyers moved the processing fees out of their trust account almost as soon as the money landed.

A law society accounting reveals the following recipients of money from the trust account managed by the two lawyers: $362,000 moved into a bank account attached to a numbered company registered in the maiden names of the wives of Sacks and Leich; Renaud’s wife, who got $330,858; Moos’ wife, who received $127,500; and a financial services company registered in Moos’ name, which got $76,000.

Moos told the Star he couldn’t remember why any processing fees went to his wife. He said his company “probably” took the money as a loan.

Numerous other payments were made, including one to an auto repair shop ($2,500), one to an electrical company ($2,000) and another to a bank account in the Bahamas ($90,000). Another $65,000 went to pay off a personal judgment against Leich. The law society was only able to obtain partial banking records, so its accounting is incomplete.

Leich and Sacks insisted they did not personally benefit from that money, and that Moos directed them where to move the funds, a claim Moos denies.

In 2003, Sacks told a law society investigator Moos “basically told them what to write and what to say and who to pay and they just followed instructions and didn’t ask any questions.”

Sacks said he believed the numbered company had been set up so Moos could avoid Revenue Canada, a charge Moos also denies.

Despite repeated requests from law society investigators to produce the banking records for that account, neither Leich nor Sacks ever did.

Law society spokesman Roy Thomas told the Star that pursuing a court order for the banking records of the numbered company registered to the lawyers’ wives would have been “an unnecessary step which would have delayed the investigation and prosecution.”

“For the purposes of the regulatory prosecution, it was sufficient to establish that they (Leich and Sacks) had benefitted,” Thomas said.

The Star was unable to reach Leich’s wife, Claudia Choquette.

In a brief phone conversation with the Star, Sacks’s wife, Kate Pocock, said she did not know a numbered company had been set up in her name, and she was not involved in the law practice.

She said she has “no idea” what happened to the $362,000 her husband moved from trust into the bank account attached to a company in her name.

“I had nothing to do with any of it,” she said. “One of the questions is: Where is the money? I’d like to know as well.”

When the entrepreneurs tried — and failed — to use the collateral loan agreement to get financing, many reached out to Sacks and Leich.

As his business venture disintegrated, Freedman continued to press Leich for answers. In a fax to Leich in late February 2001, Freedman said he had brought his “concerns” about Equity to a number of law enforcement agencies.

“All those people suggested that (Equity) is either perpetrating a fraud, scam or swindle; or alternatively, they are simply inept businessman with no regard for their clients or the law,” he wrote.

Leich responded with a letter to Freedman’s Calgary lawyer. He said Equity was suspending Freedman’s business transaction, and preparing to sue him for “libel, slander and damages.”

“Your client wanted to play with big dollars but must also be prepared to pay the cost of his actions,” Leich wrote.

Equity then filed a statement of claim against Freedman seeking $1 billion. (The suit never materialized.)

Equity’s list of victims, meanwhile, continued to grow.
Vancouver resident Eklas Miller says she was "devastated" when she lost more than $12,000 in the Equity Investments International advance-fee fraud. (Jeff Vinnick/for Toronto Star)

Provincial legislation gives the law society broad powers to investigate lawyer misconduct. While a probe is underway, investigators can impose suspensions, freeze accounts and take over entire law practices.

None of that happened in this case.

Documents obtained by the Star show a law society investigator was assigned to the case as early as July 2001, but Leich and Sacks were allowed to continue practicing for five more years, until they lost their licences in 2006.

Entrepreneurs were being approved by Equity, and sending processing fees to the lawyers’ trust account until early 2002, the law society found.

Vancouver resident Eklas Miller, who complained to the law society in 2000 after she lost $12,000 in processing fees, believes the law society should have acted faster, and is “partly to blame” for the magnitude of the fraud.

Unlike many other victims, Miller, who had planned to build a film studio, sent her fees to Renaud, the broker in Calgary. When she realized she’d been scammed, she fell into a deep depression, and was evicted from her apartment.

“I was extremely devastated, and very embarrassed,” said Miller, now 68, said. “I couldn’t work. (I was) depressed beyond reason. Suicide was on the list.”

The law society’s public relations chief, Roy Thomas, said his organization “acted upon receipt of information.”
The process took so long because “the investigation and prosecution involved a complex advance-fee fraud scheme requiring expert analysis and evidence,” he said.

Thomas said the test to issue an order to suspend a lawyer prior to a disciplinary hearing used to be more stringent. He said the law society “cannot speculate” as to whether the lawyers would have been suspended under the current rules.

Law enforcement agencies would not confirm whether an investigation took place, but the Star could not find criminal charges related to this fraud against the lawyers, Moos or Renaud.

Thomas said police and the law society “were in contact,” but refused to say whether the law society reported Leich, Sacks or Moos at any point during the investigation or after the hearing.

Several victims, including Freedman, told the Star that police referred them to the law society.

“I wish the police had become involved,” Freedman said. “I don’t know how they didn’t.”
Neville Gibson (left), of Parsippany, New Jersey and David Jack of Kinneton, New Jersey are longtime friends who were both out thousands of dollars in a massive fraud involving Toronto lawyers Peter Leich and Glenn Sacks. Both Jack and Gibson were trying to secure financing for business ventures. (Russ Desantes/for Toronto Star)

The law society flew in victims from all over North America to testify against Sacks and Leich in 2006.

While the victims waited to be questioned, they swapped stories, remarking on the striking similarities. When Freedman finally laid eyes on the lawyers, he said he was surprised to find them wearing cheap-looking, crumpled suits, “like a couple of old time hotel detectives.”

“They were very unimpressive,” said David Jack, a financial adviser from New Jersey who lost $40,000 in the scam. “If I saw them walking down the street, I would never think they were attorneys.”

Leich and Sacks were ordered to cover whatever grants the law society dispensed through its compensation fund, which provides victims of lawyer dishonesty up to $150,000.

Less than a year after he was disbarred, Leich applied to become a licensed paralegal.

At the 2009 hearing, he acknowledged he had yet to repay the compensation fund, but said he had made arrangements in his will to do so. The law society panel, however, found no such plans existed.

Leich said he had “obtained solace through prayer and meditation,” but the law society didn’t buy it, and rejected his application.

Only eight victims in this case got money from the compensation fund. The grants totaled $176,554 — just over 11 per cent of the $1.5 million Equity collected in processing fees.

Freedman got back the full $12,500 in 2007. But Jack and another New Jersey-based victim, Neville Gibson, said the grants they received only covered about three-quarters of their losses.

Although the law society relied on testimony from Miller, who wanted to set up a film studio, she was turned down by the compensation fund because she didn’t send her money directly to the lawyers.

Miller has spent years in civil court, trying to get her money back. In 2010, she won a $30,000 judgment in a British Columbia. court against Leich, and recently hired a Toronto lawyer to help her collect.

Freedman, 64, said the scam “took a huge personal toll.”

But, a few months later, he got US$1.5 million in financing from an investment group based in Calgary, and started his smart card business.

He still thinks Leich and Sacks “got off easy.”

“It’s the law society I keep wondering about,” he said. “They sort of seem to take care of their own.”

Carrie-Lynn Barkley
Lawyer Carrie-Lynn Barkley “misappropriated” more than $83,000 of trust monies held on behalf of several clients, including a couple in their mid 80s.

Like many lawyers disciplined by the Law Society, Barkley treated her trust account like her personal piggy bank, dipping in to funds held for client estates or real estate deals for unnamed “fees” or to pay rent.

The law society says she even used client money to reimburse her boyfriend for gas money for a trip to Niagara Falls.

When complaints about her erratic and unethical conduct piled up, Barkley, who practiced criminal, family and real estate law, abruptly closed her office in Bath, near Kingston, and left town without telling many of her clients.

In an agreed statement of facts tendered at her law society discipline hearing, Barkley acknowledged she failed to deposit retainers, used monies from one client to pay expenses for another, failed to keep records, bounced cheques, and “failed to perform legal services to the standards of a competent lawyer.”

Barkley, a Queen’s University law school grad who was called to the bar in 2000, also wrote numerous cheques to herself under the guise of “fees” and “disbursements.”

Evidence presented at her hearing showed her to be a cocaine addict.

Character references provided by family members to the law society chronicle her “rapid descent into the world of cocaine addiction. She fell hard and fast and totally lost control of her whole life and yes, she did screw up,” her parents wrote in a letter of support submitted to the law society.

In the end, the law society suspended Barkley’s licence to practice law for one year. Barkley’s profile on the law society’s website says she has a restriction on her ability to practice law, but does not state what areas she is restricted from practicing. The profile simply says Barkley is “required to receive medical assistance.”

Barkley now coordinates the paralegal program at a career academy in Ottawa. The program offers courses such as “Ethics and Professional Responsibility” and “Legal Accounting.”

Seven years after her suspension, Barkley says she is still trying to make restitution to the lawyers’ compensation fund. She said compensation had been paid to her victims, some of whom testified at the hearing but “were not really gunning for me or anything.”

Barkley faced charges of theft under $5,000 and possession of stolen property under $5,000, but those charges were withdrawn in 2009. Barkley told the Star the charges were unrelated to her law practice.

In a brief telephone conversation, Barkley said her employer, Algonquin Careers Academy, is aware of her past history. She said she believed her file was sealed and would need to consult with her lawyer before talking about her case. She refused to answer any further questions.

She said she was surprised the Star would look at her case. “I feel like I just won a really bad lottery.”

The Star never heard back from Barkley or her lawyer.

Edmund Anthony Clarke

Edmund Anthony Clarke, by all outward appearances, was a successful lawyer whose real estate practice allowed him to maintain a nice office on Bay St. and send his autistic son to $80,000-a-year speech therapy.
But Clarke was harbouring a dark secret.

“It wasn’t real,” he said in a recent interview with the Star. “Rather than admit that this practice isn’t working out, or that I set myself up in a very expensive chambers and I ought to maybe step down into more realistic situations, I didn’t.”

To maintain this illusion of a high-flying attorney and to support his family, Clarke says he resorted to mortgage fraud beginning in 2008. It was a choice that ultimately brought his world crashing down.

According to law society documents, Clarke orchestrated a scam in which he falsified documents to induce banking institutions, which were his clients, to provide inflated mortgages to his wife, who was also a lawyer. The falsifications included boosting her earnings by doctoring income statements to make her more palatable to lenders.

Clarke said he used the excess money from the mortgages to pay down practice debts and “maintain the illusion of the practice and of a wildly successful lawyer.”

His wife he claims was innocent in his mortgage fraud scheme, and that he forged her signature on the documents.

While a student at Osgoode Hall law school, Clarke said he was told by peers that the only way to be a success was to become a high-flying lawyer on Bay Street.

“And so I bought into that. But it’s false, it’s not real. I did not admit that to myself. I certainly didn’t admit that to my wife. I didn’t admit that to my parents or my sisters or anybody,” he said.

Clarke had escaped the law society’s wrath once before. In 2003, when he worked primarily as a civil litigator, Clarke was caught “misappropriating” money from his clients’ trust accounts to keep appearances up. The law society characterized this as the “unauthorized use of funds,” suspended him for a month and sent him on his way.

Of his first situation, Clarke said he didn’t learn anything from a one-month suspension. “You go ‘phew,’ and you try and be better for the years that follow, but eventually the habits come back.”

Clarke was disbarred in 2010 after his inflated-mortgage scheme was uncovered.

While Clarke did not face criminal charges for actions that resulted in his disbarment, he was charged with theft over $5,000 and breach of trust when one of his former clients went to police.

Clarke received a 16-month conditional sentence, which he served in the community, and was required to perform 50 hours of community service. Clarke says he was able to pay his client back with money his wife inherited.

“There are different forms of jail, I can assure you. I’m in mine,” said Clarke, who does not have a job and calls himself “unemployable.”

“I’m a stained individual. I see myself as a stained, ruined person.”

How The Star did it

The Star analyzed every discipline case of lawyers sanctioned by the Law Society of Upper Canada between 2003 and 2013. They characterized offences using appropriate criminal terms, including theft (described by the law society as "misappropriation" or "misapplication"), fraud, forgery and breach of trust as worthy of a criminal investigation. There were 236 cases that fit this description.

Collectively, it found these lawyers were responsible for misusing client funds by stealing, defrauding, failing to account, overdrawing and improperly dispersing, among other law society classifications, to the tune of $61,457, 642,

To find out if these lawyers ever faced criminal charges or served jail time, they scoured court decisions, law society disciplinary and media reports. They also consulted with the Ministry of the Attorney General and several police forces. The law society would not say if it keeps track of the number of lawyers who have faced criminal charges in relation to their practices.

We could find criminal charges for 41 lawyers disciplined by the law society, fewer than one in five. Of these we could find reports of jail sentences for 12. 

You can reach the reporters at:

Kenyon Wallace
Phone: 416-869-4734
E-mail: kwallace@thestar.ca
Twitter: @KenyonWallace

Dale Brazao
Phone: 416-869-4433
Email: brazao@thestar.ca

Rachel Mendleson
Phone: 416-869-4059
Email: mendleson@thestar.ca
Twitter@Rachelmendleson


Brodsky admits breaking rule

Top lawyer must pay $33,000 for professional misconduct

Mike McIntyre
September 29, 2019
Defence lawyer Greg Brodsky seen in a file photo breached professional stands. (Colin Corneau/Brandon Sun)

He's made a name for himself nationally as one of Canada's top criminal defence lawyers.

But when Greg Brodsky ran into charges that he'd breached professional standards as a lawyer, all he could do was enter a guilty plea.

Brodsky must pay $39,000 in fines and costs after admitting he mishandled a former client's account. It marks the first time Brodsky has been called on the carpet by the Law Society of Manitoba during a 46-year career that has seen him defend more than 600 alleged killers, which is believed to be a North American record.

Brodsky, a former Chairman of the law society's Ethics and Judicial Committees, appeared before a panel of three lawyers last month on two charges: breaching the code of professional conduct by failing to act with integrity and receiving payment for legal services without accounting for such payment to his law firm; and breaching the law society's accounting rules by failing to deposit a retainer to a pooled trust account.

The law society and a lawyer acting on behalf of Brodsky made a joint recommendation for the $20,000 fine and the $19,000 cost of the investigation, prosecution and hearing of the case.

"The panel considered the lengthy practice history of the member and his contribution to the profession and the community and accepted the joint recommendation," the decision reads.

The law society has several available sanctions for lawyers found guilty of misconduct, ranging from a reprimand and a fine to a suspension or disbarment. An online search of other disciplinary notices over the past several years reveals Brodsky's fine is one of the largest handed down.

"It is a substantial fine," Darcia Senft, counsel with the law society, told the Free Press on Monday. She said the sanction will be on Brodsky's permanent record.

Brodsky declined to comment when reached by the Free Press Monday.

According to a summary of agreed facts, Brodsky was hired in December 2005 to defend a man facing unspecified criminal charges. The accused wrote a cheque in the amount of $5,000, which was made payable to Brodsky's law firm of Brodsky & Company. Another $5,000 cheque was written to the firm in March 2006.

The $10,000 retainer was based on expected services that had not yet been rendered. Both cheques were deposited in the pooled trust account of his firm, as required.

In August 2006, Brodsky phoned his client requesting an additional $10,000. This time, Brodsky told the man to write the cheque to him personally, rather than to his firm. Brodsky then deposited the cheque into his own personal bank account.

On December. 4, 2006, Brodsky's firm rendered a statement of account to the client that showed a credit for a trust transfer in the amount of $10,000 made up of the two separate $5,000 cheques paid to him previously. However, the statement did not make any reference to the $10,000 paid to him personally.

The client immediately filed a complaint with the law society and Brodsky agreed to refund the $10,000 at the centre of the dispute.

No explanation for the incident has been provided in the disciplinary summary.

"The panel found Mr. Brodsky guilty of professional misconduct based on his admission to the charges," the decision reads.

Brodsky graduated in 1963 from the University of Manitoba's law program. He received his master's of law in 1965.

He was called to the Ontario bar in 1971 and to the Saskatchewan bar in 1977. Brodsky was appointed to Queen's Counsel in 1976 as a senior partner at Walsh Micay.

Brodsky has made headlines across Canada for his role in several precedent-setting cases that created the so-called battered wife defence and modernized the not-criminally-responsible defence.

www.mikeoncrime.com
Lawyer gets disbarred for misusing client's $70K

By Mike McIntyre
Saturday, April 23, 2011

 A veteran Winnipeg lawyer has been disbarred after getting caught misappropriating more than $70,000 in trust funds from a corporate client.

Donald MacKinnon was found guilty of six counts of professional misconduct following a lengthy investigation by the Law Society of Manitoba.

The Manitoba Court of Appeal upheld the verdict in a decision released this week.

The case has been forwarded to Winnipeg police for further investigation, which is ongoing.

"We report all matters where there is possible criminal activity," law society CEO Alan Fineblit told the Free Press. MacKinnon has not repaid any of the missing money, and the law society is in the process of arranging repayment through its reimbursement fund. The law society, the governing body for all Manitoba lawyers, is then expected to pursue civil action against MacKinnon.

He has already been forced to pay more than $34,000 in costs after the law society placed a lien against his home, which was sold last year. Those costs cover the lengthy investigation by the law society, which included a forensic audit of MacKinnon's business.

MacKinnon got his licence to practise law in 1987 and specialized in civil litigation. A complaint was filed against him by a client who had retained his services for an ongoing lawsuit.

Fineblit said the client paid more than $70,000 into a trust fund, which MacKinnon secretly transferred to himself for fees and disbursements without the knowledge or approval of the client.

MacKinnon then denied any wrongdoing when confronted by the client and the law society and was found to have fabricated 14 statements of account.

"There were a number of questionable acts. While each one of them might be explained, the panel was entitled to make findings of credibility adverse to the appellant," the Appeal Court wrote in its decision this week. "They were entitled to consider the cumulative impact of these incidents together as leading to a conclusion of intentional misleading of the client and professional misconduct."

MacKinnon had no prior history of wrongdoing, but Fineblit said the multiple findings of his "dishonesty" by the law society spelled the end of his professional career.

www.mikeoncrime.com


Republished from the Winnipeg Free Press print edition April 23, 2011 A16.

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