A 61-year-old former lawyer in Peel region accused of defrauding six victims of $4.8 million between 2003 and 2010 was before the Ontario Court of Justice last week following a major investigation by the Peel Regional Police fraud bureau.
“I think the whole thing is surprising, to be honest,” says a Peel-area lawyer who knew the accused but asked to remain anonymous.
“In fairness to him, I’ve known him for a long time, and he never seemed like someone who would have these sorts of problems.”
Investigators arrested Richard Chojnacki on Oct. 7 and charged him with defrauding the public. According to a statement issued by Peel police, investigators allege Chojnacki accepted personal funds entrusted to him by his clients either to be held in trust or as short-term personal loans known as promissory notes.
Later, the victims allegedly discovered their promissory notes were worthless and the money had disappeared.
“It looks as though it was a case of the victims trusting that he would hold onto their money, and the suspect ended up defrauding his customers into the millions of dollars,” says Peel police Const. George Tudos.
“It looks like this was just another instance where someone used their role within the community to take advantage of the victims just to try and better himself and he ending up getting caught.”
The criminal allegations against Chojnacki haven’t been proven in court, however, and it isn’t clear whether the six victims in the case launched by Peel police are the same ones involved in the matter that led to Chojnacki’s disbarment last year.
“Within the limits permitted by the Law Society Act, the law society co-operates thoroughly with law enforcement. We cannot discuss our handling of specific investigations,” says Law Society of Upper Canada communications adviser Susan Tonkin.
The law society revoked Chojnacki’s licence in October 2010 after a panel found he had misappropriated roughly $3 million from funds he held in trust for toy companies RP Toys Ltd. and Patch Products Inc.
This was in addition to almost $500,000 taken from funds held in trust for two other clients. The panel found Chojnacki had deposited the funds into his general and personal accounts, as well as those of unrelated third parties.
Besides disbarring him, the LSUC panel ordered Chojnacki to pay $277,205 in costs. It’s not clear whether Chojnacki has since made the payments.
At the same time, the Superior Court appointed the law society trustee of Chojnacki’s practice early in 2010 after he abandoned it.
Chojnacki’s case isn’t unique, however, as several other Ontario lawyers have faced accusations of misappropriating money held in trust.
According to a 2010 LSUC report, roughly 29 per cent of discipline matters that year related to mishandling of trust accounts, misappropriation, and real estate or mortgage schemes.
In Chojnacki’s case, it isn’t clear what will happen to the six victims’ money should the court find him guilty. “In some cases, people’s money is insured, but I don’t know if it is in this circumstance,” says Tudos.
“I would hope so. That’s really a large sum of money to be missing, especially since money isn’t easy to come by these days. I mean, $20 is a lot these days, let alone millions.”
At the same time, the LSUC runs a compensation fund for members of the public who are victims of lawyer dishonesty and have suffered a financial loss.
If Chojnacki is found guilty of defrauding the public, the six victims in this case could apply to the fund and potentially receive a maximum of $150,000 per person, according to the LSUC’s guidelines.
Chojnacki was called to the bar in 1985.
At the time of his hearing, he practised at a law firm variously named Chojnacki O’Neil & Associates and Chojnacki Ford O’Neil. Despite the firm names, Chojnacki held clients and his trust and general accounts independently.
According to the Criminal Code, if Chojnacki is convicted of defrauding the public, he could face up to 10 years in prison.