B.C. lawyer suspended for misconduct after employees stole $7.5M in client funds
A Richmond, B.C., lawyer has been suspended from practicing for one year as a result of actions she took in 2016 after two employees stole $7.5 million she had been holding in trust for clients.
A hearing panel of the Law Society of B.C. suspended Hong Guo in a disciplinary decision issued this week. The panel had previously concluded that Guo had committed professional misconduct and misappropriated funds.
The misconduct stemmed from failing to supervise her employees, failing to comply with trust accounting rules and leaving a series of blank, signed cheques with her bookkeeper while she was on vacation in March 2016, according to the panel.
The panel concluded that the misconduct allowed her bookkeeper - identified in the decision as JL - and another employee identified as QP to work together to steal the $7.5 million in client funds.
The two artificially inflated the balances of the trust accounts while using the blank, signed cheques to funnel money into a separate account, according to the panel's decision. They then took bank drafts from that account, cashed them at a B.C. casino, and flew to China with the cash, the panel said.
The bank caught the final cheque when it was cashed, according to the decision, meaning the thieves got away with roughly $6.6 million.
Guo was not aware of or involved in the theft, according to the panel, and after it happened she contributed $2.6 million of her own family's money to the trust accounts to help make up for the shortfall caused by the theft.
She told the panel she flew to China after the theft and hired investigators there to catch the thieves. She also testified that the pair had been tried and imprisoned in China for their alleged fraud and theft.
"We note that no evidence of any Canadian criminal charges against JL and QP was presented to the panel," the panel wrote in its decision.
"Further, no independent evidence was provided to the panel to show that JL and QP were convicted in China for the alleged offences. We take notice that China and Canada have different legal systems and that no evidence was presented to the panel to explain how the Chinese criminal system would have prosecuted individuals in China for alleged theft or fraud committed in Canada."
In addition to depositing her own money after the theft, Guo also reappropriated funds from other clients' trust accounts to replace missing funds that were needed to complete pending real estate transactions, the panel found.
Though it was done with the intention of minimizing harm from the theft and ensuring the transactions could continue, the use of other clients' funds in this way constituted further misconduct, according to the decision.
"There are no circumstances where any encroachment upon those funds can be permitted," the panel wrote. "In our view, the misappropriation of client trust funds can never be found to be anything but professional misconduct."
The law society sought to have Guo disbarred for her misconduct, but the panel declined to administer that punishment.
Guo argued in her defence that the theft led to "exceptional circumstances" that explain and mitigate her misconduct. The panel agreed, noting three specific mitigating factors:
- First, she provided her own money to help make up for the stolen funds.
- Second, she misappropriated the funds out of a sincere belief that it was the right thing to do given the massive theft that had occurred.
- And third, most - if not all - of the clients affected by the theft were eventually "made whole" through a combination of Guo's personal funds and insurance payments.
"To be clear, we do not condone the respondent’s actions in this case," the panel wrote. "However, for the purposes of deciding whether the presumptive sanction of disbarment should apply in this case, we find that the three circumstances viewed collectively amount to exceptional circumstances that explain and mitigate against an order of disbarment."
The panel also noted that Guo is currently practicing under the supervision of another lawyer and does not have access to trust accounts.
Guo's suspension will begin on Dec. 1, according to a news release from the law society.
CTVNews.ca Top Stories
BREAKING King Charles' cancer treatment progressing well, says Buckingham Palace
King Charles III’s doctors are 'sufficiently pleased' with his cancer treatment and he is expected to return to public-facing duties, Buckingham Palace announced on Friday.
BREAKING Orca calf that was trapped in B.C. lagoon for weeks swims free
An orca whale calf that has been stranded in a B.C. lagoon for weeks after her pregnant mother died swam out on her own early Friday morning.
'Unacceptable': Trudeau reacts after AFN chief says headdress taken from plane cabin
After the Assembly of First Nations' national chief said her headdress was taken from an airplane cabin this week, Prime Minister Justin Trudeau called the incident 'unacceptable' and a 'mistake' on the part of Air Canada.
Sophie Gregoire Trudeau on navigating post-political life, co-parenting and freedom
Sophie Gregoire Trudeau says there is 'still so much love' between her and Prime Minister Justin Trudeau, as they navigate their post-separation relationship co-parenting their three children.
From faulty kids' cribs to flammable kids' bathrobes, here are the recalls of the week
Health Canada issued recalls for various items this week, including kids’ bathrobes, cribs and henna cones.
Taylor Swift dons Montreal designer's dress in 'Fortnight' video
A pair of Montreal designers' work has now been viewed over 41 million times. Taylor Swift dons a Victorian throwback black gown in her latest music video, 'Fortnight', designed by UNTTLD due Simon Belanger and Jose Manuel Saint-Jacques.
'Too young to have breast cancer': Rates among young Canadian women rising
Breast cancer rates are rising in Canada among women in their 20s, 30s and 40s, according to research by the University of Ottawa (uOttawa).
'Violation': CSIS had officer investigated after she reported a superior raped her
A CSIS officer's allegations that she was raped repeatedly by a superior in agency vehicles set off a harassment inquiry, but also triggered an investigation into her that concluded the alleged attacks were a “misuse” of agency vehicles by the woman.
'I was scared': Ontario man's car repossessed after missing two repair loan payments
An Ontario man who took out a loan to pay for auto repairs said his car was repossessed after he missed two payments.