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Lawyer acquitted of drug and fraud charges

|Written By Neil Etienne

The Ontario Court of Justice has acquitted 75-year-old real estate lawyer Kenneth James of all the charges he faced following an international drug and fraud investigation the RCMP launched in 2010.

Still in the process of dealing with an unrelated Law Society of Upper Canada disciplinary matter originating in 2010, James was also back in the Ontario Court of Justice Jan. 20 to attempt to have a restraining order on several of his personal and business accounts removed.

Through his counsel Scott Bergman, of Cooper Sandler Shime & Bergman LLP, James said he feels “greatly comforted” to have dealt with the criminal accusations against him, but he will also still have to wait out the Crown’s 30-day appeal period before he can feel completely vindicated.

“Despite an extraordinarily difficult four years where all aspects of Mr. James’ life were torn to pieces, he never lost faith in the criminal justice system,” says Bergman.

“Having now been acquitted of all charges, Mr. James is greatly comforted by justice having been done. He is eager to move on with his life.”

James faced charges of property obtained by crime, specifically about $3 million; defrauding the Government of Canada over $5,000; unlawful export of a controlled substance [ephedrine]; and conspiracy to export a controlled substance in allegations spanning from early 2009 to June 2012. According to Crown prosecutor Kevin Wilson, charges stemming from the same investigation against James’ employee Rosemary Cremer, 64, were stayed early in the proceedings. He added that he could not comment on the possibility of an appeal of James’ acquittal by the Crown.

According to an agreed statement of facts, the charges arose from his alleged dealings with Afshin Dastani, who owned and operated an online nutrition supplement business that the RCMP alleged also sold and unlawfully exported ephedrine to the United States.

The RCMP alleged Dastani provided James with a number of bank drafts that were deposited into various bank accounts held by or associated to the longtime real estate lawyer. Police alleged James then distributed funds, in cash, to Dastani or to third parties by cheque at Dastani’s direction.

Dastani was arrested and charged with a number of related offences in May 2011 and ultimately pleaded guilty. He received a two-years-less-a-day sentence and two years of supervised probation.

According to the agreed statement of facts, following his 2011 arrest, Dastani provided statements to the police that implicated James in the activities, leading to the investigation and ultimate arrest of James in 2012. RCMP raided his offices in Concord, Ont. and a suburban Toronto home he shared with Cremer where about $750,000 in cash was found.

In his reasons for judgment in R. v. James,  Ontario Court Justice David Rose found Dastani, a key Crown witness, to be inconsistent in his testimony and that James would not have been knowledgeable of the illicit business activities. In his decision, Rose wrote:

“There is ample evidence that Mr. James was paying suppliers on behalf of Mr. Dastani, namely Nutrition Club or Canada Post. Mr. Dastani’s evidence was that Mr. James paid the Canada Post bills but was not knowledgeable about where Canada Post was shipping to.

“I have rejected Mr. Dastani’s testimony as not credible, and since he is the principal source of evidence that Mr. James knew that the ephedrine received was for exportation I have a reasonable doubt on this charge [conspiracy to export ephedrine].”

Rose wrote that he accepted Dastani’s testimony “to the extent that he himself designed and operated a scheme which started with unlawful exportation of ephedrine and developed to include money laundering and tax evasion.

“There is a plethora of evidence which confirms just that. Beyond that, I completely reject Mr. Dastani as a credible witness.

“His evidence has too many internal inconsistencies, and his history of significant lies to so many people renders him unworthy of belief,” he wrote.

During the investigation against him, several of James’ personal and business accounts became subject to restraint orders on the basis the monies there were offence-related or proceeds of crime.

He was in court Jan. 20 to attempt to have those lifted, but Bergman says the matter was adjourned until Jan. 27.

When the criminal charges were brought against James, he was in the process of addressing an LSUC disciplinary investigation against him in a separate matter.

Those matters include allegations of professional misconduct for failing to be on guard against unscrupulous clients in connection with 12 mortgage transactions pre-dating 2010 and for failing to be honest with lender clients.

It is further alleged that James acted in those transactions for multiple parties with conflicting interests in the transactions without disclosure to, or consent from, his lender clients.

On Jan. 6, he was in front of the disciplinary panel in relation to those allegations and panel has reserved its decision.

In July 2012, during an LSUC hearing, James agreed to a suspension of his licence to practise law while the criminal proceedings were being resolved.

“With the possibility of an appeal and the outstanding application for the return of his property still before the court, it would be improper to comment any further on the extraordinary hurdles these allegations have posed for Mr. James,” Bergman says.

“He will have more to say after the Crown’s 30-day appeal period has come and gone.”

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