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Law society disbars Vancouver lawyer who used 20 burner phones, helped clients launder $31M

Scales of justice. (Shutterstock) Scales of justice. (Shutterstock)
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A Vancouver lawyer who deliberately used his professional status to help clients hide the illegal proceeds of securities fraud has been disbarred.

In a decision issued last week and published online Wednesday, the Law Society of British Columbia's hearing panel describes Ronald Norman Pelletier's case as "novel." 

"It appears to be the first time a lawyer has been disciplined for money laundering," the decision notes in its introduction.

"The respondent utterly abandoned any pretense of acting ethically," it continues. "He actively enabled his clients to benefit from their crimes. The respondent knowingly assisted in or encouraged dishonesty, crime or fraud. The respondent’s conduct is a gross dereliction of his duties as a lawyer and arguably made him a party after the fact to his clients’ frauds."

The conduct in question is detailed in a previous law society decision issued in June, which made conclusions about the facts of the case. The decision released Wednesday was a decision on penalties.

According to the June decision, Pelletier was found to have used his firm's trust account to facilitate more than $31 million in transfers involving clients he knew to be under investigation by the U.S. Securities and Exchange Commission. 

The SEC accused the clients, identified in the law society decisions only as WW and KM, of a "pump and dump" scheme. They artificially inflated the price of a stock by creating the appearance of a legitimate financing arrangement with a large investor, then sold all of their shares while the price was high, generating "large trading profits," according to the law society.

Pelletier told the hearing panel that he was aware of the SEC investigation and that he knew or suspected the funds he received from the clients were proceeds from their scheme.

The lawyer said he held the funds for the purposes of "settlement" with American authorities, and kept the total amount secret from investigators in hopes of getting a more favourable settlement for his clients.

The hearing panel was unimpressed with this explanation, noting there was no evidence Pelletier ever attempted to reach such a settlement, and that holding the funds for such a purpose was illegal, anyway.

"The respondent was aiding and abetting his clients in their securities fraud," the June decision reads.

"The only logical inference from his evidence is that the respondent hoped to obtain a settlement for less than the remaining funds, thereby enabling his clients to profit from the securities fraud. Even if the respondent did not intend to assist his clients in receiving illicit profits, he was knowingly possessing the proceeds of securities fraud. It is not acceptable for a lawyer to knowingly accept or possess stolen, fraudulent or otherwise illicit funds from a client."

The law society also took issue with Pelletier's efforts to hide the funds from investigators, noting that he "purchased 20 burner phones over an 18-month period out of fear the American authorities might tap his regular phone lines."

The panel found that Pelletier committed further misconduct by failing to comply with rules about client identification and verification, and by failing to follow rules governing trust account withdrawals and transfers.

Some of the funds deposited by the clients were used to purchase real estate in Vancouver, a car in Toronto and a ring from Tiffany and Co., according to the June decision.

Pelletier charged his clients a total of $900,000 in legal fees, despite "not providing any substantive legal services," the law society panel notes in both decisions.

"A lawyer who knowingly assists in or encourages a crime or fraud cannot be allowed to practice law," the Wednesday decision concludes.

"This illegal and unethical behaviour must be denounced in the strongest possible way. Just like lawyers who are ungovernable, lawyers who take part in illicit schemes to assist their clients to commit crimes or purposely assist in hiding proceeds of crime must be disbarred. The public must know that illegal activities by lawyers will be severely sanctioned." 

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