Citation issued: March 3, 2021
Paul Otto De Lange
Failure to Inquire
1. Between approximately July 2015 and July 2018, in one or more of the seventy-seven (77) transactions directly or indirectly involving one or more of TG, RB, JS, PS, GS, HG and RS set out in Schedule A (the “Transactions”), you used or permitted the use of your firm’s trust account to either receive some or all of $44,604,020.92, disburse some or all of $2,656,049.99, or both, in circumstances where you failed to do one or more of the following:
(a) be on guard against becoming the tool or dupe of an unscrupulous client or other persons;
(b) make reasonable inquiries about the circumstances of the Transactions and related client matters, including, but not limited to, one or more inquiries in relation to:
(i) your clients or other persons, or both;
(ii) the legal or beneficial ownership of property and business entities;
(iii) the subject matter and objectives of your retainer;
(iv) the nature and purpose of the Transactions;
(v) the business relationships between parties and agents or intermediaries;
(vi) the source of funds received;
(vii) the purpose of the payment of the funds; and
(viii) the reason for the funds going to or through your firm’s trust account;
(c) make a record of the results of inquiries made; and
(d) decline to act or continue to act in the Transactions until there was a reasonable basis for believing that the Transactions were legitimate.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
2. Between approximately August 2015 and July 2018, in one or more of the fifty-eight (58) instances set out in Table 2 of Schedule A, you received some of all of $44,604,020.92 into your firm’s pooled trust account but you did not maintain a book of entry or data source showing the source of the funds received, contrary to one or more of Rules 3-68(a) and 3-73(2) of the Law Society Rules and rule 3.5-5 of the Code of Professional Conduct for British Columbia.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
3. Between approximately July 2015 and May 2017, in one or more of nineteen (19) instances set out in Table 1 of Schedule A, you disbursed some or all of $2,656,049.99 from your firm’s pooled trust account but you did not retain supporting documentation for the trust withdrawals, contrary to one or both of Rule 3-64 and Rule 3-67 of the Law Society Rules.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
Improper Commissioning of Documents
4. On approximately March 24, 2016, you improperly commissioned one or more of the following documents when you allowed PS to sign the document(s) using JS’s name without first satisfying yourself that PS had the authority to do so:
(a) Authorization and Consent dated March 24, 2016;
(b) Share Purchase Agreement between RB, JS or Nominee and A Ltd. dated March 24, 2016; and
(c) Assignment of Shares in A Ltd. effective March 24, 2016.
This conduct constitutes professional misconduct, pursuant to section 38(4) of the Legal Profession Act.
Misrepresentations to the Court and Law Society
5. On approximately April 17, 2018 and April 18, 2018, in the course of providing oral testimony in proceedings in BC Supreme Court [Docket Number 1], [Docket Number 2] (Vancouver Registry), you failed to act honourably and with integrity, or acted contrary to your obligations to the court, or both, contrary to one or more of rules 2.1-2(a), 2.1-2(c), 2.2-1 and 1-2(e) of the Code of Professional Conduct for British Columbia, by making one or more of the following representations to the Court which you knew or ought to have known were false or misleading, or both:
(a) that JS had attended your law office on March 24, 2016;
(b) that on March 24, 2016, you reviewed a share purchase agreement with JS;
(c) that on March 24, 2016, you witnessed JS affix her signature to one or more of the following documents at your law office:
(i) Authorization and Consent dated March 24, 2016;
(ii) Share Purchase Agreement between RB, JS or Nominee and A Ltd. dated March 24, 2016;
(iii) Assignment of Shares in A Ltd. effective March 24, 2016,
(d) that your assistant took a scan of JS’s driver’s licence on March 24, 2016; and
(e) that PS did not sign documents on behalf of JS in your presence on March 24, 2016.
This conduct constitutes professional misconduct, pursuant to section 38(4) of the Legal Profession Act.
6. Between approximately June 2019 and approximately August 2020, over the course of the investigation into your conduct, you made one or more of the following representations to the Law Society that you knew or ought to have known were false or misleading, or both, contrary to one or more of Law Society Rule 3-5(7) and rules 2.2-1 and 7.1-1 of the Code of Professional Conduct for British Columbia:
(a) during interviews conducted on or about June 7, 11, and 19, 2019, you represented that JS had attended your law office on March 24, 2016;
(b) during interviews conducted on or about June 7, 11, and 19, 2019, you represented that, on March 24, 2016, you witnessed JS affix her signature to an Authorization and Consent dated March 24, 2016;
(c) during interviews conducted on or about June 7, 11, and 19, 2019, you represented that, on March 24, 2016, you witnessed JS affix her signature to a Share Purchase Agreement between RB, JS or Nominee and A Ltd. dated March 24, 2016;
(d) during an interview conducted on or about June 11, 2019, you represented that, on March 24, 2016, you witnessed JS affix her signature to an Assignment of Shares in A Ltd.;
(e) during an interview conducted on or about June 7, 2019, you represented that, on March 24, 2016, you or your assistant photocopied or scanned JS’s identification;
(f) in a letter to a Law Society investigator, dated August 7, 2020, you represented that you obtained a copy of JS’s identification when she attended your office on March 24, 2016; and
(g) in a letter to a Law Society investigator, dated August 7, 2020, you represented that JS’s identification had been photocopied or scanned at your office on March 24, 2016.
This conduct constitutes professional misconduct, or a breach of the Act or rules, pursuant to section 38(4) of the Legal Profession Act.
Conflicts of Interest
7. Between approximately January 2018 and at least July 13, 2018, you acted in a conflict of interest with your client B Ltd. and JS (the “Client”) by registering a Form B Mortgage ([number]) against the Client’s property in the amount of $200,000, contrary to one or more of rules 3.4-28, 3.4-29 and 3.4-34 of the Code of Professional Conduct for British Columbia, and failing to do one or more of the following:
(a) disclose and explain the nature of the conflict of interest to your Client;
(b) require that your Client receive independent legal representation; and
(c) obtain your Client’s consent.
This conduct constitutes professional misconduct, pursuant to s. 38(4) of the Legal Profession Act.
8. On approximately March 24, 2016, you acted in a conflict of interest by acting for one or more of A Ltd., RB, PS, GS, RP and TG, in relation to the purchase of property located in Burnaby, BC, contrary to rule 3.4-1 and section 2 of Appendix C of the Code of Professional Conduct for British Columbia.
This conduct constitutes professional misconduct, pursuant to section 38(4) of the Legal Profession Act.
9. In the alternative to allegation 8, on approximately March 24, 2016, in the course of representing your clients A Ltd. and RB (the “Clients”) in relation to the purchase of property located in Burnaby, BC, you acted contrary to rule 7.2-9 of the Code of Professional Conduct for British Columbia when you met and communicated with one or more of PS, GS, RP and TG, each an unrepresented party (together, the “Unrepresented Parties”), and failed to do one or more of the following:
(a) urge one or more of the Unrepresented Parties to obtain independent legal representation;
(b) take care to see that one or more of the Unrepresented Parties was not proceeding under the impression that you were protecting their interests; and
(c) make it clear to one or more of the Unrepresented Parties that you were acting exclusively in the interests of your Clients.
This conduct constitutes professional misconduct, pursuant to section 38(4) of the Legal Profession Act.
10. Between approximately September 2016 and March 2017, by continuing to act for one or more of A Ltd., RB, PS, GS and JS, who were opposing parties in a dispute related to property located in Burnaby, BC, you acted in a conflict of interest contrary to rule 3.4-3 of the Code of Professional Conduct for British Columbia.
This conduct constitutes professional misconduct, pursuant to s. 38(4) of the Legal Profession Act.
Breaches of Trust Conditions and Misrepresentations
11. In the course of representing one or more of your clients A Ltd., RB, PS, GS, RP and TG, in relation to the purchase of property located in Burnaby, BC, you failed to honour the trust condition set out in your letter to EY dated March 24, 2016, by registering transfer documents when you did not hold in your trust account sufficient funds which, when added to the proceeds of a new mortgage, would allow you to complete the transaction, contrary to rule 7.2-11 of the Code of Professional Conduct for British Columbia.
This conduct constitutes professional misconduct, pursuant to s. 38(4) of the Legal Profession Act.
12. Between approximately May 2018 and June 2020, in the course of representing your clients C Ltd. and RP in connection with the purchase of property located in Vancouver, BC, you did, or you failed to do, one or more of the following:
(a) you represented to JR, another lawyer, that you had received and held $43,156.59, being the excess deposit in the purchase transaction (the “Excess Deposit”) in trust, or you failed to correct JR’s impression that you held the Excess Deposit in trust, or both, when you knew or ought to have known this was false or inaccurate, contrary to rule 2.2-1 of the Code of Professional Conduct for British Columbia (the “BC Code”);
(b) you failed to honour the trust condition to hold the Excess Deposit in trust, as set out in a letter from JR, another lawyer, dated June 25, 2018, contrary to one or both of rules 2.2-1 and 7.2-11 of the BC Code;
(c) you represented to JR, another lawyer, that you had received and held $20,000 in deposit funds in trust (the “Deposit Funds”), when you knew or ought to have known this was false or inaccurate, or both, contrary rule 2.2-1 of the BC Code; and
(d) you failed to honour the trust commitment you gave in your June 30, 2018 email to JR, another lawyer, to hold the Deposit Funds in trust as set out in JR’s letter dated July 2, 2018, contrary to one or both of rules 2.2-1 and 7.2-11 of the BC Code.
This conduct constitutes professional misconduct, pursuant to s. 38(4) of the Legal Profession Act.
13. Between approximately May 2018 and June 2020, in the course of representing your clients C Ltd. and RP in connection with the purchase of property located in Vancouver, BC, you failed to honour the trust condition to hold $43,156.59, being the excess deposit, in trust, as set out in a letter from EL dated May 30, 2018, contrary to one or both of rules 2.2-1 and 7.2-11 of the Code of Professional Conduct for British Columbia.
This conduct constitutes professional misconduct, pursuant to s. 38(4) of the Legal Profession Act.
Failure to Deposit Funds/Trust Shortages
14. Between approximately May 2018 and December 2019, in the course of representing your clients C Ltd. and RP (the “Clients”) in connection with the purchase of property located in Vancouver, BC, you failed to do one or more of the following:
(a) deposit $43,156.59, being the deposit in excess of sales commission into trust to the credit of your Clients as soon as practicable, and in doing so, you failed to maintain sufficient funds in your trust account to the credit of your Clients to meet your obligations with respect to funds held in trust for your Clients, contrary to one or both of Rules 3-58 and 3-63 of the Law Society Rules;
(b) deposit or transfer $20,000 in deposit funds into trust to the credit of your Clients as soon as practicable, and in doing so, you failed to maintain sufficient funds in your trust account to the credit of your Clients to meet your obligations with respect to funds held in trust for your Clients, contrary to one or both of Rules 3-58 and 3-63 of the Law Society Rules; and
(c) immediately eliminate one or both of the trust shortages referenced in subparagraphs (a) and (b) above, or you failed to make a written report to the Executive Director of the Law Society of the relevant facts and circumstances surrounding the trust shortages, or both, contrary to Rule 3-74 of the Law Society Rules.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
Improper Trust Withdrawals/Trust Shortages
15. Between approximately June 17, 2015 and January 16, 2018, you misappropriated client trust funds, or improperly withdrew or authorized the withdrawal of client trust funds contrary to Law Society Rule 3-64, being some of all of the $108.45 in charges to clients paid from trust and particularized in Schedule “B”, when you knew or ought to have known that those fees or disbursements were not properly charged to the clients.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
16. Between approximately July 2015 and November 2018, in relation to one or more of the sixteen (16) instances set out in Schedule “C”, you improperly withdrew or authorized the improper withdrawal of some or all of $10,912,032.02 in client trust funds, contrary to one or more of Rules 3-63 and 3-64(3) of the Law Society Rules and rule 7.2-12 of the Code of Professional Conduct for British Columbia, in one or more of the following circumstances:
(a) your trust accounting records were not current;
(b) there were insufficient funds on deposit to the credit of the client(s); and
(c) there were insufficient funds in your pooled trust account.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
17. Between approximately July 2015 and November 2018, you failed to immediately eliminate one or more of the sixteen (16) trust shortages caused by the instances referred to in Schedule “C”, or you failed to make written reports to the Executive Director of the Law Society of the relevant facts and circumstances surrounding one or more of the trust shortages, or both, contrary to Rule 3-74 of the Law Society Rules.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
18. Between approximately November 17, 2017 and December 13, 2017, you improperly withdrew or authorized the improper withdrawal of some or all of $630,000 from your pooled trust account in connection with client [matter 1] in one or more of the three (3) instances particularized below, contrary to one or more of Rules 3-63 and 3-64(3) of the Law Society Rules, rule 7.2-12 of the Code of Professional Conduct for British Columbia, and your fiduciary duties:
(a) on approximately November 17, 2017, you withdrew $315,000 from your pooled trust account when you knew or ought to have known that you held insufficient funds in your pooled trust account to make the withdrawal;
(b) on approximately November 22, 2017, you withdrew $200,000 from your pooled trust account when you knew or ought to have known that you held insufficient funds on behalf of your client to make the withdrawal, resulting in a trust shortage of $173,715; and
(c) on approximately December 13, 2017, you withdrew $115,000 from your pooled trust account when you knew or ought to have known that you held insufficient funds on behalf of your client to make the withdrawal, increasing the trust shortage to $288,715.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
19. Between approximately November 2017 and February 2018, you failed to immediately eliminate one or more of the trust shortages referred to in allegation 18 of this citation, or you failed to make written reports to the Executive Director of the Law Society of the relevant facts and circumstances surrounding one or more of the trust shortages, or both, contrary to Rule 3-74 of the Law Society Rules.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.
Breaches of Miscellaneous Trust Accounting Rules
20. Between approximately February 2015 and December 2018, you failed to comply with your accounting obligations under Part 3, Division 7 of the Law Society Rules (the “Rules”) and the Code of Professional Conduct for British Columbia (the “BC Code”), by doing, or failing to do, one or more of the following:
(a) between approximately July 2015 and January 2018, in relation to one or more of the twenty (20) instances set out in Schedule “D”, you failed to do one or more of the following, contrary to Rule 3-73 of the Rules:
(i) prepare monthly trust reconciliations of your pooled trust accounts within 30 days of the effective date of the reconciliation, or at all; and
(ii) maintain a detailed monthly listing to support your monthly trust reconciliation that showed the unexpended balance of trust funds held for each client, and that identified each client for whom trust funds were held,
(b) between approximately September 2015 and September 2018, in one more of the twenty-seven (27) instances set out in Schedule “E”, you completed matter to matter trust transfers without your written approval or without an explanation of the purpose for which each transfer was made, or both, contrary to Rule 3-68(c) of the Rules;
(c) between approximately May 2016 and May 2018, in one or more of the eighty-eight (88) instances set out in Schedule “F”, you recorded trust transactions more than seven (7) days after the trust transaction, contrary to Rule 3-72 (1) of the Rules;
(d) you maintained your own funds in your pooled trust account, contrary to one or both of Rule 3-58(4) and Rule 3-60(5) of the Rules [Rule 3-52(4) prior to July 1, 2015], in one or more of the following instances:
(i) between approximately February 2015 and August 2015, you deposited and maintained $113,405.50 of your own personal investment funds in your pooled trust account;
(ii) between approximately July 30, 2015 and June 24, 2016, in relation to client [matter 2], you maintained $1,795.42 of your own funds in your pooled trust account by failing to withdraw funds from trust in payment of your fees as soon as practicable; and
(iii) between approximately October 1, 2016 and December 20, 2016, in relation to client [matter 3], you maintained $900 of your own funds in your pooled trust account by failing to withdraw funds from trust in payment of your fees as soon as practicable,
(e) you withdrew funds from trust in payment of your fees and disbursements without first preparing a bill for those fees and immediately delivering the bill to the client(s), contrary to one or both of section 69 of the Legal Profession Act and Rule 3-65(2) of the Law Society Rules, in one or both of the following instances:
(i) on approximately April 6, 2016, you withdrew $12,569.65 in trust funds by way of trust cheque [#1] in payment of your fees and disbursements in relation to client [matter 4];
(ii) on approximately October 19, 2017, you withdrew $976.70 in trust funds by way of trust cheque [#2] in payment of your fees and disbursements in relation to client [matter 5]; and
(f) in the alternative to allegation (e), you failed to retain copies of the bills issued in relation to one or both of the payments identified in allegation (e), contrary to one or both of Rules 3-67 and 3-71 of the Law Society Rules.
This conduct constitutes professional misconduct or a breach of the Act or rules, pursuant to s. 38(4) of the Legal Profession Act.