Poonai disbarred over frauds worth millions

A Brampton, Ont., lawyer convicted of defrauding four financial institutions of almost $3 million has been disbarred by the Law Society of Upper Canada and sentenced to  3.5 years in jail.

Vishnu Rajendra (Joey) Poonai was sentenced April 26 in Superior Court in Milton. The court also orded him to pay more than $59,000 in restitution to three different banks.
He was ordered “immediately disbarred” by a hearing panel earlier this month.

In a 99-page agreed statement of facts, former real estate lawyer Poonai admitted he engaged in professional misconduct and that the appropriate penalty was immediate disbarment. The law society says since February, Poonai has co-operated fully to bring the matter to a timely conclusion. As of April 11, Poonai can no longer practise law in the province.

The law society alleged that Poonai was involved in 13 counts of professional misconduct, including acting as the solicitor in 49 mortgage transactions between 1997 and 2003 where he knowingly assisted in a scheme to obtain mortgage funds from mortgagees under false pretences, in what the court called a “flip fraud.”
The total aggregate loss to the financial institutions (the rest was covered by insurance) was $2,853,403, according to the ruling from Poonai’s criminal trial.

Poonai, who was arrested in October 2003, had pleaded not guilty to the initial set of charges during his trial, and in fact, at one point, claimed the Law Society of Upper Canada had given him permission to do the flips, a claim Justice John Murray found “ridiculous.”

The frauds occured when a property wass purchased around its market value, conveyed immediately afterwards for a falsely inflated, significantly higher price to a second buyer who was not a bona fide buyer, and mortgage funds are advanced based on the higher second selling price. The difference between the funds needed to close the first deal and the mortgage for the second deal is the profit for the fraudsters, with the mortgage then falling into default.

In these lucrative flips, Poonai or another lawyer “acting in concert with him” would act for all the parties including the lending institution without fully apprising the lender of the circumstances of the transaction.
In one of the transactions, the property saw a 2,123-per-cent increase in price over the two-week period between the first agreement and second agreement, resulting in a $275,999 profit. Another property increased by 1,508 per cent over four days.

The agreed statement notes Poonai “admits that the transactions were dishonest and fraudulent and that he was aware of their dishonest and fraudulent nature.”
In October 2003, Poonai was also charged with five counts of fraud over $5,000 relating to 12 real estate transactions between April 2002 and May 2003. The court lists the Royal Bank of Canada, the Bank of Montreal, CIBC Mortgages Inc., and Scotia Mortgage Corp., as being defrauded in the schemes.

While the misconduct proceeding against him were initiated in 2003, in 2004 Poonai agreed to an interim suspension in exchange for an adjournment sine die of the law society proceeding, pending the outcome of the criminal trial.

He was found guilty on Dec. 22, 2006 of four counts of fraud over $5,000 and pleaded guilty to an additional count of fraud over $5,000 on March 30.

In December, the LSUC hearing panel found Poonai guilty of professional misconduct for providing legal services while suspended and destroying client property. At that point, he was ordered suspended for two years. Ten days later, he was convicted of four counts of criminal fraud in the Ontario Superior Court, with Justice John Murray concluding: “Mr. Poonai acted in a manner that reasonable, decent persons would consider dishonest and unscrupulous.”

In the April 11 discipline decision, hearing panel chairman Gerald Swaye said Poonai “decided in his career practising as a lawyer to enter into various fraudulent schemes to take money that did not belong to him.
“In our view, the conduct of this member is horrendous. In our view, he has taken advantage and used his position of being a lawyer to get extra advantages that ordinary members of the public are not entitled to.

The society and lawyers in general should be absolutely ashamed this type of conduct was allowed to continue, and it should also be noted that other members of the society were suckered in by him and helped him with his fraudulent schemes,” said Swaye.

Two other lawyers - Pretam Kaur Purewal and Patience Boatemaa Whyte - were also involved in the frauds. They “knowingly assisted in or encouraged dishonesty, fraud, crime, and/or illegal conduct or to have become the dupe of clients who were engaged in dishonesty, fraud, crime, and/or illegal conduct, with respect to several properties.”

Whyte was given permission to resign in January and Purewal was disbarred March 19.
Swaye said in 12 years as a bencher, he doesn’t recall ever seeing such a large agreed statement of facts as the one in this case.

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