Prolonged fraud investigation by the Law Society of Upper Canada has prompted a hearing panel to dismiss a disciplinary case against an Ontario lawyer who says he suffered severe emotional and psychological distress during the five-year probe.
“The law society can’t leave lawyers’ licensing hanging in the wind for five years or for three years or for four years before they even let the lawyer know that they’re going to be prosecuted,” says Bradley Teplitsky, who represented the lawyer in question, Eugenio Totera.
“It’s not fair and it’s not in accordance to the principles of natural justice.”
The law society first contacted Totera on March 27, 2006, over professional misconduct allegations in relation to 12 real estate transactions.
But it wasn’t until March 22, 2011, that the law society issued a notice of application for professional misconduct. The application alleged Totera had failed to be on guard against “becoming the tool or dupe of unscrupulous clients” and “participated in or knowingly assisted his clients” in fraudulent or dishonest conduct.
It also alleged Totera had breached Rule 2.02(1) by failing to be honest and candid when advising lender clients.
“This was a situation where the law society, on its own initiative, decided to bring charges forward and it was not even a situation where there was a complaint made. But the principle remains the same regardless of how the petition for discipline was commenced,” says Teplitsky.
For his part, Totera argued the hearing panel should dismiss the case against him because he wasn’t aware at the time that the mortgage lenders were committing frauds and was “certainly not knowingly involved in them.”
He also said he had almost no experience in real estate transactions and noted his mentor, an experienced real estate lawyer, had introduced him to the fraudster.
In his affidavit, Totera said the case took a “physical and emotional toll” on him. “The applicant’s investigation and subsequent issuance of this proceeding has been the focus of my life since 2006,” wrote Totera in his affidavit.
In particular, he noted he had been suffering from chronic depression, insomnia, an increase in teeth grinding, and anxiety.
“I particularly recall that the initial fear and uncertainty were like nothing I had experienced before. These feelings have persisted and seldom waned.”
The hearing panel concluded that one of the reasons behind the LSUC delay related to a staffing change after Totera’s case moved to another investigator, Joan DiGregorio, in February 2008. That was two years after he received notice of an investigation.
Currently, the law society has 57 members on its investigative staff. According to LSUC spokeswoman Susan Tonkin, the length of time it takes to complete an investigation depends on a “number of factors,” including “the complexity of the matter and the availability of witnesses.”
“Mortgage fraud cases take longer to investigate due to the number of transactions involved, the volume of factual information underpinning them, the seriousness of the allegations, and the complexity of the issues,” said Tonkin.
She noted reports showing that an investigation similar to the one against Totera involving allegations of mortgage fraud is “roughly the equivalent of doing 20 non-mortgage fraud investigations.”
In its ruling, the hearing panel found DiGregorio was working on 52 cases. Although she had two assistants, the panel concluded DiGregorio was “not given the resources required” to act upon her assigned cases.
During the hearing, counsel for the law society noted the regulator has “limited funding and resources” and said it was “not feasible” to increase fees to licensees in order to boost its investigative capacity in “so short a period of time.”
But with the hearing set for Feb. 27, 2012 — six years after the LSUC initially contacted Totera — the panel found the “the society was guilty of both unnecessary general and unnecessary individual delay” that was mostly the result of “systemic” issues.
“One of the most fundamental duties of the society as a self-governing body is to govern in the public interest,” wrote panel chairman James Wardlaw. “If it wishes to remain a self-governing body, it has to be prepared to spend the money to carry out the most fundamental of its obligations.”
Teplitsky believes the case sets a precedent and hopes it will prompt the law society to prevent future delays. He believes investigations shouldn’t take more than “six months to one year at the latest.”
But Totera’s case isn’t unusual. According to William Trudell, chairman of the Canadian Council of Criminal Defence Lawyers, prolonged investigations are common.
“Unfortunately, this is not unusual, especially in cases that are sort of branded mortgage-type fraud cases,” says Trudell, who notes he has seen similar cases that lasted longer than five years.
Trudell, whose practice largely involves defending lawyers in law society matters, says that although he believes the LSUC’s investigation team “works hard,” the regulator needs to resolve systemic issues.
“When the bottom line is revocation, then these things end up being long and protracted,” says Trudell.
“I think that the issues can be identified earlier by proper front-end management and I don’t think it happens as often as it should.”
In Trudell’s view, the law society should follow the approach of the criminal and civil courts in mortgage fraud cases by putting more energy into them at “the front end” and thereby preventing cases that “don’t deserve it” from proceeding to a full hearing.
“That’s one of the really strong messages here: do we have to apply the same cookie-cutter approach to every case or can we do better? We’re lawyers, we’re problem solvers, so when you have cases that take five years to get into the system, what that means is there’s a problem.”
In addition, both Teplitsky and Trudell believe the law society should take into consideration the emotional toll investigations can have on lawyers.
“I think that there has to be a greater attempt to look at lawyers as human beings who make mistakes and I don’t think that our law society does a really good job of that in the front end,” says Trudell.
