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Re: Law Society failing society?

PostPosted: Sat Sep 14, 2019 7:46 am
by admin ... LUaD2-d27M

Screen Shot 2019-09-14 at 8.43.10 AM.png

Teresa Mikolajczyk, 67, lost $100,000 of her retirement savings in a syndicated mortgage. (Nick Boisvert/CBC)


Investors who lost millions in syndicated mortgages call for changes at law society

Lawyers failed to explain fine print, commission rates, investors allege
Nick Boisvert - CBC News
Posted: September 13, 2019

Dozens of investors who lost millions of dollars in syndicated mortgages say provincial regulators and the Law Society of Ontario failed to protect them from the predatory scheme.

The investors, who collectively go by the name Victims of Syndicated Mortgage Investments (VOSMI), rallied on Friday morning outside the law society's offices at Osgoode Hall in downtown Toronto.

"We feel they are partly responsible for this fiasco and for the loss, and we want them to take accountability," said Corrine Sutej, who helped organize the protest.

"Overall, we just feel very let down by the regulators and the law society."

VOSMI alleges that lawyers who worked on the mortgages deliberately withheld information about the riskiness of the projects, and failed to disclose commission rates as high as 35 per cent in the investments.

Former mortgage agent who solicited $9M in syndicated mortgages, fined $300K by regulator
Ontario mortgage watchdog orders $1.1M in fines to brokers involved in financing Fortress projects
They are calling for thorough investigations into the lawyers and for those involved to be disbarred.

The majority of the protesters at Friday's event invested in syndicated mortgages at properties managed by Fortress Real Developments, a firm based in Richmond Hill, Ont.

RCMP outside Fortress hq
Fortress Real Developments is under investigation by the RCMP over its role in the syndicated mortgages. (CBC)
The company is under investigation by the RCMP, and brokers associated with Fortress have been fined $1.1 million by the Financial Services Commission of Ontario (FSCO).

Syndicated mortgages are investments in which a developer finds more than one private lender to invest money in a property instead of going through a bank.

'You believe lawyers'

Some VOSMI members say they were promised returns of eight per cent annually, but have instead seen their money disappear.

"Our money is gone, our health is gone, we are totally, totally disappointed," said Teresa Mikolajczyk, who invested $100,000 in a syndicated mortgage.

She said the loss represents a major portion of her retirement savings, and that she's now struggling to pay for housing and basic necessities.

CBC INVESTIGATES Allegations of inflated property values at centre of RCMP syndicated mortgage fraud investigation
Canadian regulator failed to make checks on risky mortgage brokers
"I am worried about what I can do to live on my very little CPP. I cannot even pay my own apartment," she told CBC Toronto while fighting back tears.

Mikolajczyk, 67, is now blaming the experts who promised the mortgages would be safe and strictly regulated.

"You believe lawyers, you believe brokers, because I am not a lawyer," she added.

"Who we can trust here in Canada, who? We don't have anybody right now. Everybody left us alone."

VOSMI members say the developers, brokers and lawyers targeted seniors who are poorly equipped to endure such major financial hardship.

VOSMI protesters
Protesters at the rally believe that lawyers knowingly participated in fraud while facilitating the mortgages. (Nick Boisvert/CBC)
"For people of my age, there is still some room, some time for recovery," said Nikolai Chekhmatov, who lost around $120,000.

"For these people pretty much it's the end of the story."

Did regulators do enough?

VOSMI alleges that the Law Society of Ontario and FSCO failed to investigate the syndicated mortgages scheme when complaints first began to surface.

In the case of the Fortress mortgages, Sutej said the law society was notified in 2016, but failed to take action for more than a year.

"People invested during that time, they may not have if there was more of a warning out there," she said.

In a statement to CBC Toronto, the law society said it could not provide details about ongoing investigations into its members, but a spokesperson said the organization is aware of the problem.

"The Law Society published a Notice to Lawyers Concerning Syndicated Mortgages in an effort to alert lawyers to potential pitfalls when acting for clients on [syndicated mortgages] and to highlight lawyers' obligations in such cases," wrote Gelek Badheytsang.

The province has replaced FSCO with the Financial Services Regulatory Authority of Ontario (FSRA) since the Fortress investments scandal, though it is not clear if the new body will have more resources than its predecessor.

Re: Law Society failing society?

PostPosted: Tue Apr 12, 2011 1:21 pm
by admin
Legal system doesn't work for ordinary people, top judge says


Canada's top judge is warning that the legal system doesn't work for ordinary people and courts are fast becoming the domain of the rich -or the indigent.

In a startlingly frank speech at a University of Toronto legal conference, Supreme Court of Canada Chief Justice Beverley McLachlin last week was especially critical of high legal fees -now averaging nearly $340 an hour.

"Do we have adequate access to justice?" Justice McLachlin asked.

"It seems to me that the answer is, no. We have wonderful justice for corporations and for the wealthy. But the middle-class and the poor may not be able to access our justice system."

Her speech was a near-perfect echo of one delivered in November by B.C.'s top jurist, Provincial Court of Appeal Chief Justice Lance Finch, her former benchmate. He, too, said the situation is unfair and that the profession must address "the elephant in the room."

"Everyone knows it's there, but no one wants to talk about it -I think it is time to open the conversation. ... No matter how much we may all wish to avoid the subject, high legal fees are an issue that must be addressed."

The chief justice agreed and gave the discussion even more urgency.

Like Justice Finch, Justice McLachlin in her critique focused on the monopoly lawyers enjoy with the implicit warning that if the profession doesn't fix this problem, governments will -and the bar might not like their solution.

"If you're the only one who can provide a fundamental social need from which you benefit, I think it follows that you have to provide it," Justice McLachlin said.

"And I don't think it's enough to say we are providing it for the rich and the corporations. You have to find a way to provide it for everybody."

Various Band-Aid measures are being tried, such as selfhelp Internet sites; judges and court administrators are becoming more accommodating to self-represented litigants; simplified rules and procedures are being adopted.

In an interview last year, Justice McLachlin drew the analogy between legal help and medical care -sometimes you can go to the drugstore and get a pill; but a lot of times, you need an expert who can diagnose the ailment, determine the proper treatment and present you with options.

No matter how many how-to websites are created or freeadvice lines are staffed, people still need lawyers.

And, at the moment, any protracted court battle can generate legal costs that will crush middle-class wage earners.

Denied reasonable access to the courts, Joe and Joan Six-Pack are increasingly being invited to solve their own problems through self-help or vigilantism.

"We can draft the best rules in the world and we can render the best decisions, but if people can't have access to our body of law to resolve their own legal difficulties, it is for naught," Justice McLachlin said.

And this is not only our problem -it's a concern in Britain, America and other jurisdictions that have seen a more and more complicated body of modern law develop and legal fees rise accordingly while governments reduced legal aid programs to funding only those facing serious criminal charges or the indigent.

Here's the rub, however: most of the legal troubles faced by the middle-class are family or financial in origin.

Most can usually be resolved quickly and easily if addressed promptly, but can quickly spiral out of control if allowed to fester.

No matter what your metaphor -the elephant in the room or the writing on the wall -the situation is alarming.

As Justice McLachlin said: "How can there be public confidence in a system of justice that shuts people out; that does not give them access? That's a very dangerous road to follow."

(advocate says a Thank You to Justice McLachlin for her candid comments. The mark of a true professional is whether or not they are willing and able to speak candidly about the faults within their own profession. Where are the rest of the voices? Where are the rest of the professionals?)

Read more: ... z1JLGZq9Uz

Re: Law Society failing society?

PostPosted: Sun Mar 20, 2011 11:05 am
by admin
Gary Logan was responsible for designing a new mortgage fraud enforcement system covering the complaints intake and protocol for mortgage fraud investigations being assigned to different police services agencies in Ontario. Two weeks ago, one of the Ontario lawyers who committed mortgage fraud was arrested by Peel Regional Police. He had been disbarred by the LSUC in November 2010. Here is the story about this arrest in the Law Times on March 14, 2011.

This story illustrates that the LSUC did not find it to be in its mandate to turn their LSUC investigation evidence over to the police for criminal investigation and prosecution. We have exactly the same problem with the Mutual Fund Dealers Association, the Investment Industry Association of Canada and quite frankly, the Ontario Securities Commission also. This arrest also illustrates the effectiveness of a centralized assessment unit for fraud that still draws upon the resources of the investment fraud division of Municipal Police Services, as was done in this case.

The Securities Crime Unit proposal developed by Gary Logan reverses the method of investment fraud complaints intake so that victim complaints come in at the top for criminal assessment rather than in at the bottom for the self-regulatory organizations to assess criminal conduct that is shifted up to the police for criminal investigation. Self-regulatory organizations are neither trained, nor naturally inclined to find criminal conduct that may harm the reputation of their industry or profession.

(advocate comment.......I agree with the comments above and repeat that "self regulation leads to de-criminalization".)

Re: Law Society failing society?

PostPosted: Sun Mar 20, 2011 11:02 am
by admin
This initial post reminds me of the Calgary lawyer (still practicing) who misinformed a Calgary judge on an Anton Piller application. The lawyer's client wanted a whistleblower silenced, and this whistleblower had been working with Police and financial regulators on matters of fraud.

The Calgary lawyer in question, "forgot" to inform the judge of some of the pertinent details and ended up getting the judge to sign an order prohibiting the whistleblower from speaking to police or "any authority". This was quite a trick for this lawyer to slide in front of the judge. And the judge trusted this "officer of the court" not to deceive in this manner. This trust was misplaced with this particular lawyer.

Some days after signing this lawyers order, the judge may have had further time to reflect upon it, or read it more carefully, and he wrote an order to the lawyer instructing him to remove the prohibition on speaking to certain authorities. This order was not filed in time.

The whistleblower went to the court prior to leaving for the holidays to visit his parents, and found that his "prohibition" had not been lifted, he was still barred from speaking to authorities, despite judges order removing this. The whistleblower went home, feeling abandoned and hopeless, according to email correspondence from him.

The lawyer in question finally did file the necessary paperwork to lift the prohibition against speaking to authorities. He lifted it some nine months later, in september of that year. Unfortunately, the whistleblower took, his own life, in an apparent hanging in his parents basement, Dec 24, 2004. He took his life within days of learning that the order prohibiting his speaking to police or authorities was NOT lifted, and he was effectively silenced and gagged.

A billion dollar financial abuse of the public, lay at the base of this story. I won't go into it, but I am saddened at the actions of the law society of Alberta to cover and protect this particular lawyer. He is a bully and a predator in the service of his self, but not worthy of admission to the profession.

When a complaint was written to the society, with expectations that some disciplinary action might be taken against this lawyer, a response was negative. The lawyer in question failed to answer to any of the allegations, but he did produce a voluminous document that was supposedly a reply. The law society failed in protecting the public from this legal predator. Myself and others feel that he bullied a person to his death with tricks.

He also misrepresented himself on his website, claiming to be a member of many forensic and other related organizations in the United States, despite several of these organizations having been contacted and replying that he was not a member. No law society action.

Again, I repeat how sad it is to see a so called professional organization such as the law society, having become complicit in protecting itself or its members over protecting the public.

It adds to the evidence that says that self regulation leads to "de-criminalization".

Law Society failing society?

PostPosted: Sun Mar 20, 2011 10:42 am
by admin
image003-7.jpg (12.3 KiB) Viewed 17344 times

LSUC paid $2M to lawyer’s victims

Mariano Mazzucco now facing charges of fraud, breach of trust
By Michael McKiernan | Publication Date: Monday, 14 March 2011
<>Despite concerns over the Law Society of Upper Canada’s actions as police charged a disbarred Toronto lawyer with fraud this month, solicitor-client privilege prevents the regulator from sharing information from its investigations, candidates in the upcoming bencher elections say.

Mariano Mazzucco, left, is facing charges over $12 million in alleged fraudulent deals.
In the meantime, the law society has paid out more than $2 million to the clients of the lawyer, Mariano Mazzucco, who was disbarred late last year for his role in a mortgage scheme.

Victims have received $2.2 million since the law society’s compensation fund began accepting claims in June 2008. The final tally could be even higher with further claims awaiting completion and the potential for even more people to come forward, according to law society spokesman Roy Thomas.

Mazzucco, 61, was arrested on March 2 following a two-year investigation by Peel Regional Police. They allege he defrauded 40 individual victims and 10 financial institutions out of more than $12 million.

He appeared in court in Brampton, Ont., on March 9 on charges of fraud over $5,000, laundering the proceeds of crime, and criminal breach of trust. Police say they expect more victims to come forward.

The LSUC disbarred Mazzucco in November after he admitted to his role in a mortgage fraud scheme between November 2007 and March 2008. During that time, he obtained funds in 20 fraudulent mortgage deals worth a total of $7 million.

His trust account was still under supervision by the law society at the time following an earlier 30-month suspension in July 2000 for misappropriating more than $300,000. He returned to practice in 2003 under a plan of supervision that ended in September 2005.

Trust account supervision and co-signing by the law society continued until March 2008, when the LSUC took over his practice in the wake of a wave of complaints. But Mazzucco got around the restriction by simply opening another trust account at the same bank that he used for the mortgage deals.

The LSUC maintains it couldn’t prevent Mazzucco’s action. “The law society cannot prevent unlawful behaviour by someone who is absolutely determined to engage in such behaviour, notwithstanding the stringent controls that have been placed on their activities,” Thomas said in an e-mailed statement.

According to an agreed statement of facts filed with Mazzucco’s hearing at the law society on Nov. 5, 2010, a former client approached him in early 2006 to participate in a mortgage fraud scheme.

Mazzucco said he didn’t immediately jump on board but he did open a new trust account in May 2006 that the LSUC labelled “the rogue trust account.”

It wasn’t until November 2007 that Mazzucco decided to take part in the scheme, according to the agreed statement of facts. None of the criminal allegations against him have been proven in court.

Mazzucco’s contact would supply him with the names of lenders and borrowers, often the victims of identity theft, and ask him to register the transfer and charge on the property. Mazzucco refused “because he did not want to put the owner’s title at risk,” the agreed statement of facts noted.

“He had been suffering from overwhelming debt for many years,” according to the document. “The respondent used funds given to him by clients to pay money owed to other clients, in a kind of Ponzi scheme that dated back to 1990. A couple of clients giving and receiving funds were family members.

The respondent was anxious not to disappoint or hurt them.”
Of the $7 million netted by the scheme, Mazzucco distributed $3.3 million to other participants in the fraud and kept $1.5 million for himself as part of an agreement reached with his former client.

A further $1.6 million was used to pay off lenders who wanted proof the transaction had closed in order to keep the scheme going undetected. Mazzucco would hold them off with an excuse about why the deal hadn’t closed and reimbursed them using money from his rogue trust account, other personal funds, and, on occasion, other clients, according to the agreed statement of facts.

In March 2008, the law society stepped in to take over as trustee of his law practice and freeze his bank accounts within two days of receiving complaints about serious losses by those dealing with Mazzucco.

The LSUC recovered $835,000 from the practice that included money from three bank accounts used by Mazzucco as well as $43,000 stuffed into a brown paper envelope in his desk.

According to a decision by Ontario Superior Court Justice David Brown in January 2009, even Mazzucco’s main trust account had problems.

Although it “appeared to balance,” there were “transfers in and out which had not been approved by clients,” Brown wrote. Brown ordered the $835,000 to be pooled and shared pro rata among Mazzucco’s legal clients and financial institutions left short.

According to Thomas, the police and law society received notification about the problems at the same time in March 2008 and remained in contact “as confidentiality and other requirements permitted.”

Police have complained the LSUC didn’t notify them about Mazzucco’s suspension in 2000, but bencher candidate Jerry Udell says the regulator is rightly constrained by solicitor-client confidentiality in its conduct of investigations.

“It’s up to the complainants to take those steps, not the law society,” he says. “They’re not the ones who had something stolen from them. You can lead a horse to water all you want, but we have to respect the fact that the victim may not want the publicity.

“I don’t think there’s an obligation on the law society when we suspend one of our members to let the world know about it other than to ensure the public is protected. The law society’s function is to govern itself and ensure that the public interest is paramount.”

Robert Wadden, another bencher candidate, says the LSUC could improve its public perception by driving home that message. “It does act in the public interest, but I don’t know if it’s always making that clear.

There may be a communication gap between the law society and the public. It’s got to be communication as seen from the perspective of the public as opposed to the perspective of lawyers.”