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B.C. lawyer who misappropriated $8M to fuel gambling addiction agrees to 7-year ban

Scales of justice. (Shutterstock) Scales of justice. (Shutterstock)

A B.C. lawyer who withdrew more than $8 million in client funds from his firm's account over two years to feed his gambling addiction has admitted his misconduct and agreed to a seven-year ban from practising law.

Russell Sean McDonough entered a consent agreement with the Law Society of B.C. late last month, and the document was published online Friday

In it, McDonough admitted to misappropriating a total of $8,075,152.80 across 34 occasions relating to 30 clients between Jan. 6, 2021 and Oct. 3, 2022.

Much of the money came from clients involved in real estate transactions, and in 29 instances, McDonough's conduct resulted in him breaching undertakings he had made in relation to those transactions, according to the consent agreement.

He also admitted to making false and misleading representations to a client, telling them that a "statutory holdback" of $50,000 was required, when it wasn't, so that he could misappropriate those funds.

In every instance, McDonough said in a letter to the law society that was partially reproduced in the consent agreement, the misappropriation was done to facilitate his gambling. He either directly gambled the diverted funds or he used them to pay down outstanding debts that had accumulated due to his gambling.

"The conduct I engaged in is inexcusable and contrary to the fundamental values that our legal system is based upon and those that I firmly believe in," the letter reads, as excerpted in the consent agreement.

"I take full responsibility for my actions and intend to remain accountable to those affected directly or indirectly."

McDonough's pattern, according to the consent agreement, was to pay expenses for which misappropriated funds had been held in trust by misappropriating funds from other clients to cover them. He also applied a total of $308,000 in gambling winnings toward the shortfall.

A little more than $6 million of the roughly $8 million shortage in his trust account was made up for in this way, the consent agreement indicates, while the rest was paid out by the law society's Lawyers Indemnity Fund.

All of the clients and entities that were owed money from McDonough's trust account ultimately received their payments.

According to the consent agreement, McDonough was diagnosed with a gambling addiction in October 2022 and attended a residential treatment program in November and December of that year.

A discharge report from that program indicates that, with continued care, McDonough's "prognosis is good" for long-term abstinence from gambling in the future, according to the consent agreement.

"The lawyer is remorseful and is committed to his recovery," the document concludes. "He does not intend to ever gamble again. The lawyer accepted responsibility for his actions at an early stage of the investigation, and candidly admitted all of his misconduct. He has continued to engage in various treatment programs and monitoring, and has successfully abstained from gambling since October 2022."

In addition to agreeing not to practise law for seven years, McDonough also agreed not to apply for reinstatement to the law society of B.C. or membership in any other law society in Canada until Aug. 1, 2030, and not to apply for membership in any other law society without first notifying the B.C. society.

If you or someone you love is suffering from a gambling addiction, help is available. The B.C. government maintains a toll-free gambling support line that is always in operation at 1-888-795-6111. You can also request help online at Top Stories

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