Sunday, June 24, 2018

Selling Bridges In Canada

An attorney has had a license revoked by the Tribunal Hearing Division of the Upper Canada Law Society

The Lawyer, Paul Thomas McEnery, was called to the bar in 1974. He practised for approximately 38 years in Ottawa. The central allegations in this application are that he misapplied or misappropriated over $2.5 million held on behalf of clients, failed to be honest and candid with clients, and failed to respond to the Law Society.

Mr. McEnery did not attend the hearing, although his counsel was present. Counsel agreed that Mr. McEnery had not responded and advised that he would not be responding to a Request to Admit. Accordingly, counsel agreed that Mr. McEnery was deemed to admit the facts set out in the Request to Admit under the Tribunal Rules of Practice and Procedure (“Tribunal Rules”).

Based on the deemed admissions, we found at the hearing that professional misconduct was established as alleged. After considering the parties’ submissions as to penalty, we ordered at the hearing that his licence be revoked, effective immediately, that he repay amounts to the Compensation Fund, and that there be no costs.

The story

Mr. McEnery asked at least 10 of his clients if they were interested in investing excess funds in “bridge loans” to other parties. These “bridge loans” provided a substantial return on short-term investments. Most of the particulars before us relate to those funds received in trust by the Lawyer that the Lawyer either misappropriated or directed to other people. Some of the monies received in trust funds were held for estate matters while other monies were the proceeds of sale of houses or condominiums. It appears there never were any bridge loans.

Despite a thorough investigation by a forensic auditor of the Law Society, it has not been possible to determine what happened to approximately $2.5 million that the Lawyer received from the clients, supposedly for investing in the bridge loans.

The Lawyer failed to co-operate with the Law Society, in 23 investigations, by failing to respond to correspondence from the Law Society and failing to produce information and documents, including books and records of his law practice, contrary to s. 49.3 of the Law Society Act, RSO 1990, c. L.8.

 It has been determined that all of the funds provided by one client were not used for bridge financing and were used without authorization for the benefit of either Mr. McEnery or other clients. In other instances, it was determined that the Lawyer withdrew funds from his trust account, made a cheque payable to a bank and then purchased a bank draft. By so doing Mr. McEnery was able to conceal the flow of funds from his trust account so that it was impossible to trace and determine the ultimate recipient of those trust funds.

 Mr. McEnery also represented to clients that he held funds in trust from the proceeds of sale of a house sold by an estate when in fact the statement was not true.

Mr. McEnery also repaid various clients with monies that had been drawn from monies in his trust account held for other clients for other fictitious “bridge financing” loans without the consent or knowledge of those other clients.

 Mr. McEnery also received payment for fees from clients that he claimed were owing to him, without rendering an account for services rendered, contrary to By-Law 9, s. 9.

Ottawa Citizen reported on the sanction. (Mike Frisch)

Bar Discipline & Process | Permalink


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