A lawyer who worked with former paralegal Shellee Spinks, who stole $2.6 million from clients, denies he could have done anything to stop her.
Spinks used an old trust account belonging to Hamilton, Ont., lawyer Michael Puskas’ law firm to deposit funds for mortgage transactions and then transferred the money to a personal account at the same bank to feed her gambling habit.
Sentencing the former paralegal to four years in jail on Aug 5, Ontario Superior Court Justice Barry Matheson was left to wonder how she got away with it for so long.
“How it went undetected is a mystery to me. Did the lawyers not check on their paralegal?” asked Matheson. “Did the law society not check on the trust accounts of the firm? Many questions remain unanswered.”
The court heard Spinks worked for Puskas between 2002 and 2008, when she was arrested. But Puskas tells Law Times his relationship with Spinks, who operated an office in the same building as him, was always at arm’s-length.
He says he contracted her to assist him on real estate files, but she was never his employee.
“These were all files of which I wasn’t aware. If someone is suggesting I should have been breaking into her office and reviewing her filing cabinet, that’s putting a heavy onus on me,” says Puskas.
He says he asked Spinks to close down the trust account in September 2006 because he was transitioning from sole practice to a partnership and no longer needed the old trust account.
“She told me she had closed it. She had me sign a cheque to transfer the remaining funds out of it into the new account. Unfortunately I relied upon her advice that she had indeed shut it down,” says Puskas.
For its part, the Law Society of Upper Canada said it conducts about 1,200 spot audits on trust accounts every year to help identify financial irregularities.
“In addition, 400 practice management reviews are conducted annually to ensure that lawyers meet competency standards and to identify areas for improvement. The law society recently approved an increase in the number of spot audits so that all firms in Ontario will be audited once every five years,” says LSUC spokesman Roy Thomas.
Spinks pleaded guilty to 16 criminal charges in April that included theft by conversion, theft by power of attorney, perjury, obstruction of justice, and uttering a forged document.
She allowed 12 clients to believe she was a lawyer, arranging mortgages and refinancing before stealing the funds. Between them, they lost almost $1 million.
From October 2002, she also held power of attorney for an elderly woman who lived in a nursing home. Over the next six years, she stole $200,000 from the woman, “systematically bankrupting” her, according to Crown counsel Tracy Stapleton.
In 2006, Spinks forged the will of an Ancaster, Ont., man that named her executrix of his estate. She kept the proceeds from the sale of his house and later swore a false affidavit confirming she was the executrix in order to cash out his securities. The total loss to his real beneficiaries was $1.4 million.
At the sentencing, Stapleton said records at the Ontario Lottery and Gaming Corp. showed most of the money was gambled away at casinos by Spinks over the same period as the frauds.
Defence counsel Stephen White wanted a lighter two-and-a-half-year sentence, asking the judge to consider her difficult childhood and unorthodox legal training.
“There is no question that Ms. Spinks has dug her own grave, but I want to document how the shovels were handed to her,” he said in court.
White said his client’s parents were both gamblers who abused Spinks physically and emotionally. He said she was “thoroughly imbued” with gambling as a part of normal life from an extremely young age.
White said her legal education began under a Hamilton lawyer who gave her too much responsibility for his practice and encouraged her to cut corners.
“It led to Ms. Spinks having a higher sense of her capacity that she ought to have had. Her training ground was the slippery slope of practising quick and fast law,” said White.
But Matheson opted for a harsher sentence, explaining the court needs to send a message about this kind of crime.
“There is no doubt that many innocent people have had their lives ruined by Ms. Spinks,” said the judge. “She has made very little effort to rehabilitate herself, attending only a few Gamblers Anonymous meetings and she attempts to shift the blame to others.”
In a sometimes-tearful statement to the court, Spinks apologized for her actions.
“I want to say that I’m sorry, knowing that words are not enough,” she said. “I’m mortified hearing all the details of what I’ve done.”
She also suggested that Puskas had a hunch about her fraudulent activities, but was happy to take money from her for “employee’s wages, law society dues, and trips to Mexico” among other things.
At Spinks’ preliminary hearing, Puskas admitted borrowing as much as $240,000 from her, which he has not paid back.
“We had an arrangement where on the basis of billings for large files that were coming in, she was loaning me money,” he tells Law Times.
“It was a loan to be repaid, so there was no reason for me to suspect that the money was anything other than legitimate. Anything else she is suggesting is just trying to deflect the criticism from her culpability.”
Puskas is currently unable to practise real estate law or operate a trust account, restrictions related to bankruptcy proceedings against him.
He says the law society is investigating him for improperly supervising Spinks and will decide shortly whether or not to begin formal proceedings against him.
Thomas refused to confirm or deny that, citing the law society’s policy on investigations that have not resulted in formal proceedings.
The court also heard that Spinks told a psychiatrist she had been investigated by the law society for the unauthorized practice of law. The law society again refused to confirm, but Puskas says it looked into her at least twice while he knew her.
He says the first investigation concluded when she signed an undertaking not to practise family law after a complaint by an opposing counsel in a case.
He says the second investigation, related to an estate matter, ended in 2006 when all Spinks’ files were destroyed in a fire at the building where she worked.
Puskas says he hopes to put the whole affair behind him.
“I want to ensure that the way I organize my practice will ensure that it doesn’t ever have the opportunity to happen again. So far as what happens to Shellee, that’s between her and the courts and the parole system and I could care less at this point.”
Spinks used an old trust account belonging to Hamilton, Ont., lawyer Michael Puskas’ law firm to deposit funds for mortgage transactions and then transferred the money to a personal account at the same bank to feed her gambling habit.
Sentencing the former paralegal to four years in jail on Aug 5, Ontario Superior Court Justice Barry Matheson was left to wonder how she got away with it for so long.
“How it went undetected is a mystery to me. Did the lawyers not check on their paralegal?” asked Matheson. “Did the law society not check on the trust accounts of the firm? Many questions remain unanswered.”
The court heard Spinks worked for Puskas between 2002 and 2008, when she was arrested. But Puskas tells Law Times his relationship with Spinks, who operated an office in the same building as him, was always at arm’s-length.
He says he contracted her to assist him on real estate files, but she was never his employee.
“These were all files of which I wasn’t aware. If someone is suggesting I should have been breaking into her office and reviewing her filing cabinet, that’s putting a heavy onus on me,” says Puskas.
He says he asked Spinks to close down the trust account in September 2006 because he was transitioning from sole practice to a partnership and no longer needed the old trust account.
“She told me she had closed it. She had me sign a cheque to transfer the remaining funds out of it into the new account. Unfortunately I relied upon her advice that she had indeed shut it down,” says Puskas.
For its part, the Law Society of Upper Canada said it conducts about 1,200 spot audits on trust accounts every year to help identify financial irregularities.
“In addition, 400 practice management reviews are conducted annually to ensure that lawyers meet competency standards and to identify areas for improvement. The law society recently approved an increase in the number of spot audits so that all firms in Ontario will be audited once every five years,” says LSUC spokesman Roy Thomas.
Spinks pleaded guilty to 16 criminal charges in April that included theft by conversion, theft by power of attorney, perjury, obstruction of justice, and uttering a forged document.
She allowed 12 clients to believe she was a lawyer, arranging mortgages and refinancing before stealing the funds. Between them, they lost almost $1 million.
From October 2002, she also held power of attorney for an elderly woman who lived in a nursing home. Over the next six years, she stole $200,000 from the woman, “systematically bankrupting” her, according to Crown counsel Tracy Stapleton.
In 2006, Spinks forged the will of an Ancaster, Ont., man that named her executrix of his estate. She kept the proceeds from the sale of his house and later swore a false affidavit confirming she was the executrix in order to cash out his securities. The total loss to his real beneficiaries was $1.4 million.
At the sentencing, Stapleton said records at the Ontario Lottery and Gaming Corp. showed most of the money was gambled away at casinos by Spinks over the same period as the frauds.
Defence counsel Stephen White wanted a lighter two-and-a-half-year sentence, asking the judge to consider her difficult childhood and unorthodox legal training.
“There is no question that Ms. Spinks has dug her own grave, but I want to document how the shovels were handed to her,” he said in court.
White said his client’s parents were both gamblers who abused Spinks physically and emotionally. He said she was “thoroughly imbued” with gambling as a part of normal life from an extremely young age.
White said her legal education began under a Hamilton lawyer who gave her too much responsibility for his practice and encouraged her to cut corners.
“It led to Ms. Spinks having a higher sense of her capacity that she ought to have had. Her training ground was the slippery slope of practising quick and fast law,” said White.
But Matheson opted for a harsher sentence, explaining the court needs to send a message about this kind of crime.
“There is no doubt that many innocent people have had their lives ruined by Ms. Spinks,” said the judge. “She has made very little effort to rehabilitate herself, attending only a few Gamblers Anonymous meetings and she attempts to shift the blame to others.”
In a sometimes-tearful statement to the court, Spinks apologized for her actions.
“I want to say that I’m sorry, knowing that words are not enough,” she said. “I’m mortified hearing all the details of what I’ve done.”
She also suggested that Puskas had a hunch about her fraudulent activities, but was happy to take money from her for “employee’s wages, law society dues, and trips to Mexico” among other things.
At Spinks’ preliminary hearing, Puskas admitted borrowing as much as $240,000 from her, which he has not paid back.
“We had an arrangement where on the basis of billings for large files that were coming in, she was loaning me money,” he tells Law Times.
“It was a loan to be repaid, so there was no reason for me to suspect that the money was anything other than legitimate. Anything else she is suggesting is just trying to deflect the criticism from her culpability.”
Puskas is currently unable to practise real estate law or operate a trust account, restrictions related to bankruptcy proceedings against him.
He says the law society is investigating him for improperly supervising Spinks and will decide shortly whether or not to begin formal proceedings against him.
Thomas refused to confirm or deny that, citing the law society’s policy on investigations that have not resulted in formal proceedings.
The court also heard that Spinks told a psychiatrist she had been investigated by the law society for the unauthorized practice of law. The law society again refused to confirm, but Puskas says it looked into her at least twice while he knew her.
He says the first investigation concluded when she signed an undertaking not to practise family law after a complaint by an opposing counsel in a case.
He says the second investigation, related to an estate matter, ended in 2006 when all Spinks’ files were destroyed in a fire at the building where she worked.
Puskas says he hopes to put the whole affair behind him.
“I want to ensure that the way I organize my practice will ensure that it doesn’t ever have the opportunity to happen again. So far as what happens to Shellee, that’s between her and the courts and the parole system and I could care less at this point.”
