White-Collar Crime

Guilty plea ends record $38M fraud case that doubled assessments for British Columbia lawyers

After nearly five years of legal battle, a former real estate developer pleaded guilty to two counts of fraud in a Vancouver, B.C., court Friday, putting an end to a record $38.4 million Canadian lawyer-fraud case that doubled the client-compensation assessment payments for attorneys in the Law Society of British Columbia.

Tarsem Singh Gill’s now-disbarred former attorney, Martin Keith Wirick, was expected to be the star witness at Gill’s B.C. supreme court trial that was to have begun Monday. Wirick pleaded guilty in June 2009, was sentenced to seven years, and has already been released on parole, the Province reports.

As detailed in an earlier CBC News article and the Benchers’ Bulletin of the Law Society of British Columbia, the two were accused of misappropriating homeowners’ money for their own use instead of paying off mortgages at real estate closings.

Wirick also admitted at his June 2009 sentencing that he had forged mortgage documents and made filings on behalf of buyers who claimed to expect to live in the properties but, as he knew, actually did not intend to do so, the CBC News story recounts.

Gill was accused of operating the scheme for over a decade; Wirick reportedly was involved only between 1999 and 2002.

Compensating homeowners for their losses in more than 100 transactions in which Wirick was involved had cost his colleagues in the the Law Society of British Columbia $38.4 million as of 2008, the Benchers’ Bulletin reported, by far the largest amount ever racked up by a single attorney. (Previously, over its entire history of over 30 years, the society’s Special Compensation Fund had paid out a total of around $52 million.)

Insurance covered $15 million of the $38.4 million misappropriated on Wirick’s watch (the amounts are in Canadian dollars), and, at the time the losses came to light, the society’s Special Compensation Fund had a balance of about $7 million.

Although annual contributions for the law society’s members were capped at $17.5 million, they stepped up and approved an elimination of that limit so that all losses would be covered. The result was to more than double members’ assessments in 2003, the year after the fraud came to light. Although the amount of their contributions to the fund was subsequently reduced, it remained higher than it otherwise would have been until at least 2009.

Gill will be sentenced at a later date.

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