Friday, November 20, 2020

Return From Vacation

A Hearing Panel of the British Columbia Law Society has found misconduct on these facts

After returning from vacation in late March 2016, the Respondent learned she was missing millions of dollars from her trust accounts.  The Respondent’s bookkeeper and a former employee stole about $7.5 million from the Respondent’s trust accounts.

After the theft, the Respondent focused on ensuring that various upcoming real estate and financial transactions would complete on time, despite the missing trust funds.  The Respondent immediately deposited some replacement funds.  However, the primary way the Respondent addressed her trust account shortfall was by moving various trust funds around between different clients and different trust accounts to complete the affected transactions.  In other words, since she did not have sufficient trust funds in her trust accounts to meet upcoming financial transactions, the Respondent moved various trust funds around, taking trust funds from some clients to fulfill another client’s financial commitments.  Because the Respondent did not advise her clients about the theft, the use and movement of the trust funds in this manner put those clients’ trust funds at risk without their knowledge or consent.

The Respondent says that she did not commit professional misconduct.  Her mistake was placing trust in her employee who took advantage of her trust to commit a sophisticated scam.  She says that, although she breached trust accounting rules by using trust funds from some clients to pay other clients, her actions minimized the overall impact of the missing trust funds on the upcoming client transactions.  In other words, if she had not moved the trust funds around, more clients would have been adversely affected by the employee theft.  The Respondent argues that, since she moved trust funds around to minimize the impact on her clients, her actions mitigate against a finding of professional misconduct.

The panel dismissed one of the several citations of misconduct. (Mike Frisch)
 

https://lawprofessors.typepad.com/legal_profession/2020/11/return-from-vacation-.html

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