Wednesday, May 15, 2013

Attorney Ripoff Reimbursement Fund Coughs Up $38.4M In Connection With R/E Settlement Proceeds Pilfering, Despite Scheme Being Masterminded By Non-Lawyer; 10,000 BC Bar Members Get Clipped With Special Assessments To Fund Payout Necessitated By Rogue Closing Counsel's Handiwork In Scam

In Vancouver, British Columbia, The Vancouver Sun reports:

  • Vancouver property developer Tarsem Singh Gill, whose fraudulent activity cost B.C. lawyers nearly $40 million and placed immeasurable stress on dozens of homebuyers and lenders, has entered an 11th-hour guilty plea.

    During a 45-minute appearance in B.C. Supreme Court on Friday, Gill pleaded guilty to defrauding 77 homebuyers and 30 lenders of $31,165,111 from 2000 to 2002. [...] With a guilty plea in hand, Judge Terry Schultes adjourned the matter until May 17, at which time he will set a date for a sentencing hearing.
  • Gill perpetrated his crimes through Vancouver lawyer Martin Wirick. Homebuyers entered into agreements to buy properties from Gill-controlled companies or Gill nominees. They sent their money to Wirick, who was acting on Gill's behalf, on his undertaking to pay off the existing mortgages and deliver clear title.

    However, instead of using the money as promised, he remitted the funds to Gill, who used them for his own purposes.

    In a similar vein, lenders - nearly all well-known financial institutions, most notably Vancouver City Savings Credit Union - forwarded money (on behalf of their borrowing clients) to Wirick on his undertaking to clear off existing mortgages and register their charge in first position on the property.

    Once again, Wirick failed to discharge his duties and instead diverted the funds to Gill, who used them for his own purposes.

    The charges do not appear to capture the entire amount of the fraud. The B.C. Law Society, which ensures the public against lawyer fraud, paid out $38.4 million in claims on account of Wirick's participation.(1)

    Sorting out the claims, many of which were overlapping, took hundreds of man hours. And to finance the payouts, the society had to impose a special assessment on its 10,000 lawyer-members.

    If there was one consolation to Wirick's conduct, it was that he almost immediately went into mitigation mode.

    When the scheme was uncovered in May 2002, Wirick resigned from the law society, admitted his part in the scheme and agreed to permanent disbarment. And when the case came to court in June 2009, he pleaded guilty and was sentenced to seven years in jail.

    Many of the victims were new Canadians who suffered the initial shock of learning that prior mortgages on their homes had not been discharged, then the anxiety of living in homes that were laden with debt not of their own making.

    Although the law society eventually compensated them, the experience took a heavy emotional toll:

    "It was only with tremendous effort that we were able to purchase a new condominium in 2002," one person stated in a victim impact statement at Wirick's sentencing

    "Since it had been nearly 10 years (since our last holiday), we joined a tour to Disneyland. ... But we received the letter from the court a few days prior to our departure. That night, my wife and I cried in each other's arms. And the days thereafter were full of sorrow and sadness."

    Another victim described the wrenching psychological impact: "Under constant threat of foreclosure and lawsuit, sleep was impossible and escalating episodes of panic, despair and hours of uncontrollable sobbing alternated with periods of complete numbness."

    While Wirick mercifully expedited the proceeding, Gill not only maintained his innocence, he played a game of musical chairs with his lawyers.
For more, see Vancouver property developer pleads guilty to massive fraud (Tarsem Singh Gill defrauded 77 homebuyers and 30 mortgage lenders of $31.2 million from 2000 to 2002).

(1) The Lawyers' Insurance Fund of the Law Society of British Columbia was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by an attorney licensed in British Columbia.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other Canadian provinces and states throughout the U.S., see:

Maps available courtesy of The National Client Protection Organization, Inc.

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