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Windsor lawyer in hot water for alleged misuse of client funds

|Written By Ron Stang

WINDSOR, Ont. — The Law Society of Upper Canada is seeking an interlocutory suspension of Windsor lawyer Claudio Martini’s licence following an investigation into allegations that large amounts of money he had received had gone to “questionable purposes.”

The move follows a separate seven-month suspension that Martini appealed last fall. But the regulator is now seeking an interlocutory suspension following new findings by an investigator.

The law society had scheduled a hearing on the interlocutory suspension for Friday but has since adjourned the matter until April. In the meantime, the Law Society Tribunal issued an interim interlocutory suspension on Jan. 5.

Meanwhile, Martini, a 51-year-old lawyer called to the bar in 1989, had his trust account frozen in December by an interim order of the Superior Court of Justice. Also that month, his name was removed as a partner from his long-time firm, Shulgan Martini Marusic LLP. Martini didn’t return a request for comment from Law Times last week.

While an affidavit filed by LSUC forensic auditor Michael Spagnuolo as part of the motion for an interlocutory suspension says the investigation is still “at the early stages,” it argues the lawyer’s conduct “places the interest and property of his clients at risk.”

In his affidavit, Spagnuolo says the law society received three complaints against Martini, who for many years has been a well-regarded member of Windsor’s legal community with a busy litigation practice.

The complaints cover areas related to misappropriating trust funds; permitting the use of his trust account for a fraudulent or improper purpose; borrowing money from clients and misleading them in relation to

settlements; acting in a conflict of interest; preferring the interest of one client over another; failing to keep his clients apprised of the status of their affairs; failing to serve his clients; and failing to respond to communications of a third party.

Windsor police have also opened an investigation.

In one complaint, according to Spagnuolo’s affidavit, $1 million was wired to the lawyer to broker the purchase and sale of diesel fuel but was “not paid out for the purpose for which (monies) were provided” but instead went to “questionable purposes” such as apparently personal expenses.

According to Spagnuolo, the “most problematic” matter had to do with the payout of $50,000 to a couple that, Martini allegedly told him, “comprised payment of a ‘fake settlement.’”

The money paid to the couple, identified as the Ds, came from $2.7 million in trust money earmarked for another client. Moreover, the lawyer “admitted to me that he misled the Ds in relation to the status of several litigations,” according to the affidavit.

These new issues identified by Spagnuolo follow earlier complaints dealt with last year dating back almost a

decade.

At a Law Society Tribunal hearing last year, a panel found Martini had engaged in professional misconduct “in failing to serve two clients and thus failing to conduct himself in a way that maintains the integrity of the profession.”

It suspended his licence and ordered him to pay costs of $30,000. In December, the tribunal’s appeal division stayed the suspension pending Martini’s appeal.

In one matter, the hearing panel found Martini had failed to follow clients’ instructions to commence an action and misled them that a claim had been issued. In a separate matter, he advised that litigation had settled and the client would receive a cheque when there in fact was no settlement.

He thus failed “to conduct himself in a way that maintains the integrity of the profession,” the panel found.

Evidence from one of the clients, according to the panel’s decision, stated that when no settlement funds were forthcoming to pay for an industrial property in Michigan, the lawyer “felt responsible and ashamed that he had allowed this to occur.” He described the experience “as ‘beyond belief’ and so disheartening that it has ‘affected my belief in what a lawyer can do.’”

The client said the situation had an impact on his reputation.

“He felt embarrassed in front of his family and employees as it looked like ‘they did not know what they were doing,’” the panel said.

For his part, Martini testified he felt “extreme remorse” and said he was “haunted by these two files every day.”

Martini said that during these events between 2006 and 2008, he had an extremely busy practice that included three overlapping trials and was admittedly “way over my head.”

He also said he had assumed primary care for his three children following his wife’s diagnosis with multiple sclerosis and his father’s diagnosis with heart disease.

Martini told the hearing panel that when it came to his clients, he couldn’t be straightforward and “one lie led to another.”

During the tribunal proceedings, Martini received widespread support from Windsor’s legal community.

There were 25 letters of support from judges, a partner, associates, other lawyers, and clients. “While many expressed surprise and often profound disappointment, they all continued to hold the lawyer in high esteem and to support him,” according to the panel.

The letters included one from Superior Court Justice Joseph Quinn.

“I would rank Mr. Martini among the best civil litigation counsel that have appeared before me over the past 18 years,” he said.

Note: Story updated Jan. 26 to note the interim interlocutory suspension ordered on Jan. 5.

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