Canadian Lawyer

8 F E B R U A R Y 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m C E N T R A L \ AT L A N T I C \ C E N T R A L \ W E S T REGIONAL WRAP-UP Ponzi case involving Montreal lawyer resurfaces T he Supreme Court of Canada's R. v. Jordan ruling has unexpectedly reopened wounds from a 2011 Ponzi scheme involving a missing Montreal lawyer who is believed to have helped bamboozle nearly 250 people out of some $10 mil- lion placed in trust accounts. It is also reviving questions about the limits on the Barreau du Québec's responsibility to indemnify victims for professional mal- practice and misconduct committed by its members. The case revolves around the arrests in 2013 of seven people, including former notary Sophie Jolicœur and members of Que- bec's Rock Machine biker gang, who had promised investors returns of up to 220 per cent on their money from the resale of goods seized by the federal government under a supposedly secret program that, in reality, never existed. An eighth suspect — Montreal lawyer Jean-Marc Lavallée — lent a legal legitimacy to the scheme by placing investors' money in trust accounts. Lavallée has not been seen since November 2012, when the stratagem unravelled. Police say the lawyer is either liv- ing abroad or was murdered to ensure his silence. One of the seven accused pled guilty to several charges earlier this year. In September, however, he formally requested to change his plea in order to join his co-accused in asking for a Jordan- inspired stay of proceedings due to unreasonable legal delays. That request has led to an outcry from victims of the Ponzi scheme, several of whom continue to seek restitution for their loss- es from the Barreau du Québec. One of the victims — Françoys Malo, a recruitment specialist who lost his life savings in the fraud — was indemnified $20,000 by Quebec's Chambre des Notaires in 2014. In its ruling, the regulator's executive committee ruled unanimously that Malo was a victim of professional misconduct. Malo and several other victims have lodged similar complaints and requests with the Barreau du Québec. However, those efforts have so far been rebuffed by the regulator and its professional lia- bility insurance fund. In a 2013 letter to Malo, the Barreau's syndic argued that "we cannot conclude that [Lavallée] failed in profes- sional obligations of any manner in your regards." For her part, Maria De Michele, general manager of the Fond d'assurance responsabilité professionnelle du Barreau du Québec, referred to a recent judgment involving Montreal lawyer Dany Perras that pertains to the parameters of the fund's liability limits. Perras was the subject of legal proceedings and both regulatory and criminal investigations for fraudulent and illegal transfers and use of trust accounts he set up for clients for fictional real estate investment schemes that he orchestrated from 2006 to 2011. He resigned from the Barreau just before he was officially declared bankrupt in 2012 after more than $6 million in discrepancies were found in his clients' trust accounts. Perras's activities also led to lawsuits against Kaufman Laramée, the Montreal law firm of which he was a partner, and earned the Quebec legal profession unflattering headlines amid the many multi-million-dollar, high-profile investor frauds that rocked Montreal during those years. "Kindly note that on April 17, 2014, the Court of Appeal (2014 QCCA 804) upheld the judgement rendered by the Superior Court in the case involving Perras," wrote De Michele. "When there are no professional services, there is no coverage from the Quebec Professional Liability Insurance Fund." She added that in the event professional services have been rendered, the Barreau's liability fund provides fidelity coverage of up to $1 million in financial losses caused to third parties from a misappropriation of funds deposited in trust, committed by a member or an employee of the partnership. A 2013 Canadian Lawyer article on the topic of misappropriat- ing funds reported that the Quebec liability insurer paid out nearly Check out in-house counsel's best networking tool! The 2016/17 Lexpert CCCA/ACCJE Directory & Yearbook online edition is a user-friendly, outstanding key resource for all in-house counsel. Along with immediate access to more than 4,100 listees at more than 1,500 organizations, you'll also find fresh editorial content, information on deals and links to important resources. Directory listees and CCCA members can also receive log-in credentials for access to detailed contact information to be able to connect with colleagues or research the in-house bar. ANYWHERE. ANYTIME. ANY DEVICE. CONNECT WITH IN-HOUSE COUNSEL COLLEAGUES AT LEXPERT.CA/CCCA ntitled-4 1 2017-01-11 12:22 PM

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