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Unlicensed paralegal uses Small Claims Court to commit fraud

|Written By Siobhan McClelland

An unlicensed paralegal’s use of the Small Claims Court to defraud a man of more than $50,000 is proof of the value of the current regulatory system, a lawyer for the victim says.

On Aug. 2, deputy judge Christopher Ashby ordered Steven Bresnark to repay $50,353.42 to John Lane after finding Bresnark had obtained the money through false pretenses and fraudulent misrepresentations. The court also ordered him to pay costs of $25,000 to Lane “in light of the fraud of Mr. Bresnark.”

To obtain the funds, Bresnark brought a Small Claims Court action in another man’s name. He passed himself off as the paralegal representing the man and obtained default judgment on a promissory note for $10,000 with a whopping 48-per-cent interest rate for 10 years. All the while, Lane was out of the country and unaware of the fraud against him.

“This is one of those cases that shows us how important the licensing process is,” says Lane’s lawyer, Jonathan O’Hara of McMillan LLP. O’Hara notes Bresnark tries to provide legal services to people and appears to have some past legal experience.

“One of the changes that I think is helpful is that in 2007, the rules with respect to paralegals came into effect.” O’Hara says that if Bresnark had brought the same action today, the rules requiring licensing would make it harder for him to pass himself off as a paralegal before the court.

According to O’Hara, there’s some risk that people may use the Small Claims Court to engage in fraud as its rules are a little looser and people don’t have to have representation. He says there’s the risk that people will take advantage of the flexibility and more lenient rules, particularly as the monetary limit has increased to $25,000.

As a result, he says judges play an important role as the gatekeepers of decisions. “When they see 48-per-cent interest, I would hope the judges would ask some pretty hard questions.”

This case arises from a forged promissory note allegedly between Lane and Natan Bilenkis. Twenty years ago, Lane lived at 140 Baycrest Ave. in Toronto and was Bilenkis’ tenant. Lane lived in Canada until 1997, when he went to Ireland. During his time in Canada, he opened an RRSP account.

Subsequently, Bresnark bought Bilenkis’ house. O’Hara believes that while Bresnark lived there, he received Lane’s mail, including bank documents showing more than $50,000 in his RRSP account.

In 2007, Bresnark issued a plaintiff’s claim in the Small Claims Court bringing an action on behalf of Bilenkis. O’Hara says Bresnark forged a promissory note from Lane to Bilenkis for $10,000 with interest of 48 per cent. The relief was for judgment on the note plus interest.

According to O’Hara, Bilenkis died in 2006, a year and a half before Bresnark issued the claim, with the incorrect spelling for Bilenkis’ name in the style of cause.

O’Hara says Bresnark filed affidavits of service indicating the claim was served at 140 Baycrest Ave. That’s where Bresnark lived and where he knew Lane wouldn’t be.

O’Hara notes Bresnark delayed moving forward with the action as he had received a two-year jail sentence and thus didn’t follow up on the matter until his release in 2009.

O’Hara confirms Bresnark was the defendant in R. v. Bresnark, a case in which the court convicted him of seven counts of attempting to obtain income tax refunds by making false statements in returns of income for himself and four other taxpayers for several years.

The amount of false refunds totalled more than $1.2 million. At that time, Bresnark was offering services as an accountant and a paralegal.

Upon his release from jail, Bresnark continued to present himself as Bilenkis’ representative and obtained default judgment against Lane. Although the judgment was only for $10,000, the award ballooned to more than $50,000 with the 48-per-cent interest.

Bresnark enforced the judgment and had the sheriff seize the funds in Lane’s RRSP account. The cheque for the funds was payable to Bilenkis but went to Bresnark’s address. Bresnark then forged Bilenkis’ signature, endorsed the cheque over to himself, and deposited the funds into his own account.

In May 2012, Lane returned to Canada at age 63 and learned for the first time that the funds in his RRSP account that he was hoping to use for his retirement were gone. Further investigations revealed the funds’ seizure as part of a court action. Lane went to the court and obtained the file.

O’Hara says Lane realized he didn’t sign any promissory note and retained counsel to investigate the matter further.
At the initial motion to set aside default judgment, Bresnark attended at the court. However, O’Hara says the judge made it clear he didn’t want to hear from Bresnark as he had no standing.

The court set aside the default judgment and ordered the plaintiff, Bilenkis, to repay the funds back into court since there wasn’t absolute confirmation at that point that Bresnark had the money in his bank account.

O’Hara says that after further investigation, they confirmed that Bilenkis had passed away in January 2006 and obtained his death certificate. O’Hara’s office also obtained information from court orders that confirmed Bresnark had received the money from the default judgment.

On Aug. 2, Ashby ordered Bresnark to personally repay the funds taken from Lane’s RRSP account. Ashby also ordered $25,000 in costs given the fraud after choosing to exercise his discretion under s. 29 of the Courts of Justice Act.

“I think the judge was live to the fact that the court had been used to perpetrate a fraud and wasn’t particularly keen on that,” says O’Hara.

O’Hara is happy with the decision, although he notes that “enforcement is often the bigger part of the battle.” He believes Lane may not be able to collect. He adds that had Bresnark been a licensed paralegal, there would have been a compensation fund for Lane to collect from.

Denise McCourtie, a communications adviser at the Law Society of Upper Canada, said in an e-mail that the law society’s compensation fund is available to people who have lost money due to a licensed paralegal’s dishonesty. However, it’s available only to people who have hired a licensed paralegal.

“There is little recourse for someone who is defrauded by an unlicensed person except to pursue the person through the courts,” she wrote.

“Unlike licensed legal professionals, an unlicensed person does not have to carry insurance for negligence. This means that if the person makes a mistake, there may be no money to compensate the victim for any damages suffered. An unlicensed person is not backed by a compensation fund.

If the unlicensed person takes a client’s money but provides no services, there may be no way of getting the money back. People who hire a person who is not licensed have no protection.”

Besides the court action, a report has been filed with the fraud unit the Toronto police 32 Division.

  • George Brown
    There is no such thing as an unlicensed paralegal just as there is no unlicensed lawyer. Effective May 2008, all legal service providers MUST be licensed with the Law Society of Upper Canada ("LSUC"). It is only after completing the LSUC's requirements and being issued a license can a legal service provider be called, considered or regarded a paralegal. Therefore, any legal service provider who does not have a license is not a paralegal. For this reason, the subject article is incorrect and misleading in its reference to the individual who committed the fraudulent act as a paralegal, in fact, he is not a paralegal but an individual who defrauded another pretending to be a paralegal.
  • Licensed Paralegal
    This case demonstrates not the value of the regularatory system, obviously it didn't work here; the underlying issue is really of the abundance of licensing; it demonstrates that instead of licensing every Tom, Dick and Harry, the public should be educated and informed about the value of the current licensed legal services providers, such as lawyers and paralegals - thereby keeping the public out of the clutches of these fraudsters. Licensing is a good regulator of safeguarding the future of the regulators; it does little to protect the public, and even less for its own current licensed members (paralegals and lawyers) obtain business and grow. There are many licensed (new) paralegals and lawyers out there dying for jobs/work - they graduate from a 2 year programme (or 3 year law degree) being promised the moon and sky, only to find there is no work and the market is saturated with legal lemonaid stands offering legal services against us honest veteren legal services providers.
  • Christine Davenport
    Surely Lane can seiza and sell Bresnark's house in order to collect. A house in Toronto is pretty good security as long as it is not mortgaged to the hilt.

  • Peter Ross
    One has to have the facts to back-up any claim of fraud, if this was a fraud? Q: Have fraud charges been laid, has the person been convicted of this fraud? Or has the innocent party perpetrated a fraud to make himself the victim in all of this? One should do their research before making misguided accusations, my motto is, "give everybody the benefit of the doubt"

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