Winton breaks down at penalty hearing

Michael Winton was a respected lawyer with an unblemished reputation for more than 30 years at the now-defunct Goodman & Carr LLP before he made a series of fatal mistakes that ended his career and caused his life to come crashing down on him.

Winton’s legal career began and pretty much ended at Goodman & Carr. It was the firm where he articled and then joined after his 1973 call to the bar. He became a partner in 1979, and later the head of the firm’s real estate and leasing group. He was a productive and well-liked senior partner, and a trusted legal advisor to major corporate clients.

But at an Aug. 24 Law Society of Upper Canada penalty hearing for misappropriating trust funds and borrowing money from clients, the only question left for the panel to decide was whether Winton should be disbarred or permitted to resign from the profession.

As Winton, 61, sat with his head in his hands, breaking down into tears at one point, his lawyer Brian Greenspan described him as someone who made unwise and absurd choices because he wasn’t thinking clearly in the face of mounting financial pressure.

From 2002 to 2004, Revenue Canada reassessed Winton’s income tax returns and determined, based on rulings about tax shelters, that he owed the government hundreds of thousands of dollars.

As pressure to make substantial payments grew and interest accumulated, Winton began borrowing money from family, friends, and colleagues. He also borrowed a total of $175,000 from three of the firm’s longstanding clients - $125,000 came from Lou Maroun, chairman of Summit REIT.

Both Maroun and Summit REIT were Winton’s clients, and Winton had a close professional relationship with Maroun.

Then, between Aug. 20, 2004 and Sept. 8, 2004, Winton misappropriated roughly $227,000 from the Summit REIT trust account, and used the money to pay back loans.

At one point, he used $25,000 from the Summit REIT trust account to pay back Wolfe Goodman, the now-deceased co-founder of Goodman & Carr - something Greenspan called an “extraordinary act of desperation.”

This wasn’t a sophisticated operation, but was doomed to failure from the start, said Greenspan.

After his fifth transaction raised suspicions, Winton was suspended and resigned from the firm on Sept. 20, 2004, prior to a partners’ meeting where one of the partners planned to call for his expulsion.

The misappropriated funds were paid back after Winton’s wife arranged financing so that his capital account was no longer encumbered by a loan.

He practised law at another firm with friends from June 2005 to March 2006, but did not operate a trust account according to an undertaking. He is now under an undertaking not to practise law at all.

Now bankrupt, Winton is $1.4 million dollars in debt. He still owes Revenue Canada between $750,000 and $800,000, and has not paid back his loans to Maroun.

He has been forced to sell his Forest Hill home and lives with his wife in a rental apartment.

Winton works as an independent consultant and as a television program sponsorship broker for Mrs. Maroun, but has no income of any real significance, and can’t find employment because of his past misconduct and personal bankruptcy, said Greenspan.

Friends, former colleagues, and clients, including Maroun, provided character letters, describing Winton as someone with high ethical standards. His actions were completely out of character, said those who wrote on his behalf.

According to a letter from psychiatrist Wood Hill, Winton continues to feel embarrassment and shame, has been rebuffed and rejected by former colleagues, and is excessively self-critical.

He takes responsibility for his actions and has not minimized the severity of his actions, which were not part of an ongoing or long-standing pattern of deviant behaviour, but took place over a relatively brief period of time in response to financial debt and embarrassment, notes the letter.

“The effects of his wrongdoing will compromise Mr. Winton’s mental health for the indefinite future,” wrote Hill.

At the hearing, Winton apologized and said he finds it difficult to put his shame and remorse into words.

“I cannot and will not forget what I did and how I let down the people who trusted me,” he said. “There is not a moment of any day that I do not think of what I did and the consequences of my actions.

“I am trying to move forward with my life. Though it is extremely difficult, I owe it to my family and to the people I let down.”

The standard penalty for misappropriation is disbarment, unless extenuating or exceptional circumstances exist, in which case a member may be granted permission to resign, said law society lawyer Suzanne Jarvie.

But she stressed that Winton’s financial circumstances do not fall within the realm of exceptional or extenuating.

In previous cases, permission to resign has generally only been granted when a member has a very serious medical condition or substance-abuse problem, sometimes coupled with real financial pressure - the kind of financial pressure caused, for instance, by not being able to pay basic bills, not by factors that can be traced back to lifestyle, she said.

Instead of sitting down and consolidating his debt and working out a payment plan, Winton began borrowing money right, left, and centre. He could have exercised other options, but he made a choice to misappropriate funds when his debts began closing in on him, said Jarvie.

The panel should accept that Winton feels genuine shame and remorse, but no one would expect him to feel anything else, she said.

“It’s trite language, but it’s always worth it to repeat that we are here to govern the members of the profession in the public interest,” she said. “These kinds of egregious violations of trust cannot be excused.”

She pointed to another case involving a wealthy lawyer who misappropriated a similar amount because he had developed a pattern of living beyond his means. The cases are similar, but that member was not permitted to resign, she said.

But the circumstances in that case were not nearly as stressful, and the misappropriation took place over a four-year period, said Greenspan. He was also readmitted to the bar 12 years later, but Winton’s age rules out that possibility.

The panel decided to reserve its decision and promised to complete written reasons shortly.

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