Canadian Lawyer

E ric Cunningham didn't see it coming. On a brisk morning in November 2006, the 57-year-old marketing executive was sitting on a hard bench in the hallway of the Milton, Ont., courthouse waiting for his lawyer to arrive before heading into a divorce hearing. That's when one of his wife's lawyers, James Edney of Toronto's Blaney McMurtry LLP, walked over and dropped a large document in Cunningham's lap, saying, "Consider yourself served." Cunningham put on his glasses and began reading what he quickly discovered was a contempt motion: It was demanding he be thrown in prison until Cunningham handed over the $2.4 million they said he'd socked away in offshore bank accounts. By the time his lawyer David Sherman arrived moments later, Cunningham was trembling and white as a sheet. When Sherman heard the news, he was outraged and stormed over to the Blaneys lawyers to warn them. "I fundamentally told them that there will be hell to pay, and that these allegations were absolutely false," recalls Sherman, a sole practitioner based in Hamilton, Ont. Sherman's admonishment to the Blaneys lawyers would prove prescient: The claim Cunningham had stashed millions in offshore accounts was rejected later by the courts. Two different judges in Cunningham's divorce found there was no basis to the claim he had hidden any assets in offshore accounts. In a 2007 summary judgment, Justice Laurence A. Pattillo noted Cunningham's "evidence establishes in my view, through independent third parties, that what was alleged by [his wife] (based on her private investigator's reports) is not only not true, but in my view, fraudulent." Today, Cunningham is suing Blaneys, his ex-wife, and other related parties for $12 million for defamation and leveling false allegations against him. None of Cunningham's claims in the defamation suit have been proven in court. So what went wrong? As it turned out, Blaneys had hired a Newmarket, Ont.-based private investigation firm called Internal Affairs, run by a husband and wife duo of Cullen Johnson and Elaine White, to conduct an asset sweep of Cunningham's holdings on behalf of Joan Montgomery, Cunningham's estranged spouse. Johnson and White billed themselves as experts in finding hidden money offshore. What Blaneys didn't know, however, was White and Johnson were largely running a scam: Instead of producing genuine information, the private investigators simply manufactured much of it and charged clients tens of thousands of dollars for forged and bogus documents. In the case of Cunningham, they presented Blaneys with an impressive-looking 59-page, single-spaced dossier, replete with bank account numbers, dollar amounts, and wire transaction records — for the most part fiction. This month, White and Johnson go on trial in Virginia on charges of fraud and money laundering, having been extradited from the Caribbean last spring. They'd fled to the islands in 2010 after being charged for fraud in Canada. They face the U.S. justice system before eventually being returned to Ontario to contend with similar charges there. Meanwhile, Cunningham's lawsuit against Blaneys is in discovery and steaming towards trial. Yet the White and Johnson affair raises serious questions about the relationship between lawyers and private investigators. After all, White and Johnson were employed by many lawyers over many years and are charged with having forged and fabricated numerous dossiers that caused a lot of damage. In the end, it was primarily Cunningham, a former Ontario MPP, who brought their alleged crimes to light in the face of indifference from the lawyers who had employed White and Johnson, Ontario's regulatory watchdog for private investigators, and the Law Society of Upper Canada. "These people weren't going to take me down," he declares. "They were not going to malign my reputation and get away with it." Moreover, the scandal presents a vibrant example of the problems that can arise if lawyers don't check the credentials or track records of private eyes they employ. "You've got to exercise some due diligence — you can't just pick a name out of the Yellow Pages," remarks Philip Epstein, a partner at Toronto-based Epstein Cole LLP and one of Canada's leading lawyers and lecturers on family law. "You've got to make some reasonable investigation as to whom you are hiring and then you have to follow up." POOR REGULATION OF PIs P rivate investigators have been in the news a lot lately — and rarely for good reason. At the centre of the Rupert Murdoch News of the World phone-hacking scandal in the U.K. was the use of private eyes to illegally tap into the phones of celebrities and politicians. In Canada, Ontario private security contractor Gary Peters assisted one of Libyan dictator Muammar Gaddafi's sons, Saadi, to flee to Niger in 2011 after his father's regime collapsed. www.CANADIAN L a w ye r m a g . c o m October 2013 27

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