Carrying a sign that reads “law society shame,” purchasers of Toronto condominium units who lost their deposit funds held a protest last week to demand more protections for client funds in lawyers’ trust accounts.
The condo buyers collectively lost up to $14.9 million in deposit fees a lawyer, Meerai Cho, was holding in trust.
Cho, who’s now facing fraud charges, claims she transferred the money to developer Joseph Lee in error.
But standing outside Queen’s Park on Sept. 29, a representative for the purchasers said they reject that idea.
Thomas Ma said the group doesn’t accept that Cho made a mistake due to her inexperience when she transferred the funds to Lee.
“This naive explanation, coupled with Canada’s almost non-existent punishment for white-collar crime, would suggest sophisticated fraud,” said Ma. “It’s very dangerous that as lawyers, they know how to cheat their way through the system and protect themselves using their professional knowledge. It’s a significant risk to the public.”
He added: “The case isn’t the first one where trust money has gone missing. Last year, the Heydary group of law firms collapsed after lawyer Javad Heydary, now deceased, disappeared amid allegations of missing client funds. It is evident that once an event like this is allowed to happen uncurbed, the perpetrators unpunished, fraud will occur again and again.”
The protesters handed over a petition to the Ontario government, police, and the Law Society of Upper Canada demanding stricter rules for trust funds. Ma said a system that requires more than one lawyer to sign off on a trust fund transfer would be helpful.
“If more lawyers are involved, they will prevent that,” he said.
“But I think it’s very important that we set up a rule for the bank to monitor the trust account. If not, how [do you] say it’s a trust account? There’s no meaning.”
The current rules are insufficient, he argued. “Now, we are too reliant on the particular lawyer’s reputation. If she can move the money wherever she wants, then there’s no control,” he said, suggesting lawyers should get some sort of authority before releasing trust funds.
Alka Sharma, one of the protesters, raised concerns about a “loophole in the system.”
“It just goes to show that in this case, the law has simply failed,” she said as she stood behind a podium at Queen’s Park.
“The law society regulates lawyers, and [it] has been shown in the past that lawyers have gotten away with mishandling trust funds. This goes to show that there is a flaw in the system and we need to get this fixed,” said Sharma, who noted she lost $50,000 in “hard-earned” deposit fees.
Meanwhile, some lawyers are worrying about a potential overreaction from the Ontario government and the law society to the calls for action.
A Law Times online poll found 65 per cent of respondents felt a requirement for dual signatures on trust accounts would be
impractical for sole practitioners and the legal profession shouldn’t implement such a rule.
As for the law society, it says it’s aware of the protests. “We regularly review the ethical rules and requirements for lawyers and paralegals and amend where appropriate,” said spokesman Roy Thomas.
“A recent example is the adoption of the new Rules of Professional Conduct based on the Federation of Law Societies’ model code of professional conduct.”
For more, see "Lawyer under fire after $15M in condo deposits goes missing" and "Actions against Cho proliferate."
The condo buyers collectively lost up to $14.9 million in deposit fees a lawyer, Meerai Cho, was holding in trust. Cho, who’s now facing fraud charges, claims she transferred the money to developer Joseph Lee in error.
But standing outside Queen’s Park on Sept. 29, a representative for the purchasers said they reject that idea.
Thomas Ma said the group doesn’t accept that Cho made a mistake due to her inexperience when she transferred the funds to Lee.
“This naive explanation, coupled with Canada’s almost non-existent punishment for white-collar crime, would suggest sophisticated fraud,” said Ma. “It’s very dangerous that as lawyers, they know how to cheat their way through the system and protect themselves using their professional knowledge. It’s a significant risk to the public.”
He added: “The case isn’t the first one where trust money has gone missing. Last year, the Heydary group of law firms collapsed after lawyer Javad Heydary, now deceased, disappeared amid allegations of missing client funds. It is evident that once an event like this is allowed to happen uncurbed, the perpetrators unpunished, fraud will occur again and again.”
The protesters handed over a petition to the Ontario government, police, and the Law Society of Upper Canada demanding stricter rules for trust funds. Ma said a system that requires more than one lawyer to sign off on a trust fund transfer would be helpful.
“If more lawyers are involved, they will prevent that,” he said.
“But I think it’s very important that we set up a rule for the bank to monitor the trust account. If not, how [do you] say it’s a trust account? There’s no meaning.”
The current rules are insufficient, he argued. “Now, we are too reliant on the particular lawyer’s reputation. If she can move the money wherever she wants, then there’s no control,” he said, suggesting lawyers should get some sort of authority before releasing trust funds.
Alka Sharma, one of the protesters, raised concerns about a “loophole in the system.”
“It just goes to show that in this case, the law has simply failed,” she said as she stood behind a podium at Queen’s Park.
“The law society regulates lawyers, and [it] has been shown in the past that lawyers have gotten away with mishandling trust funds. This goes to show that there is a flaw in the system and we need to get this fixed,” said Sharma, who noted she lost $50,000 in “hard-earned” deposit fees.
Meanwhile, some lawyers are worrying about a potential overreaction from the Ontario government and the law society to the calls for action.
A Law Times online poll found 65 per cent of respondents felt a requirement for dual signatures on trust accounts would be
impractical for sole practitioners and the legal profession shouldn’t implement such a rule.
As for the law society, it says it’s aware of the protests. “We regularly review the ethical rules and requirements for lawyers and paralegals and amend where appropriate,” said spokesman Roy Thomas.
“A recent example is the adoption of the new Rules of Professional Conduct based on the Federation of Law Societies’ model code of professional conduct.”
For more, see "Lawyer under fire after $15M in condo deposits goes missing" and "Actions against Cho proliferate."
