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B.C. lawyer suspended after moving $9.5M through trust accounts

Law Society of BC hands out two suspensions; one to a lawyer who improperly moved nearly $10 million through his trust account and another to a lawyer who practiced law while already suspended.
Lawyer trust accounts are exempt from federal money laundering and terrorist financing reporting obligations set out by FINTRAC.

The Law Society of BC has suspended Vancouver lawyer Justin G. Kates after finding he moved millions of dollars through his trust account for a client.

Lawyer trust accounts are exempt from federal money laundering and terrorist financing reporting obligations set out by FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), which helps monitor financial transactions at a macro level. This is so to preserve attorney-client confidentiality, a right affirmed by the Supreme Court of Canada but one that's produced longstanding and ongoing questions as to how lawyers should be regulated.

“The Law Society’s citation alleged that Kates permitted nearly $9.5 million to be paid into and withdrawn from his firm’s trust accounts without providing legal services directly related to the trust transactions, and without making reasonable inquiries about the circumstances of the trust transactions or making a record of the results of any inquiries made,” stated the society on its website July 27.

The hearing panel’s reasons are pending and will be available “in due course,” the society stated.

“The Law Society citation further alleged that Kates circumvented, or helped his client to circumvent, a bank’s refusal to permit approximately USD$6.4 million to be transferred from the client’s bank account to the United States, when Kates ought to have known there were questions or concerns about the transfer of the funds,” the society stated.

Kates also “failed to take reasonable steps to verify client identities or obtain and record the requisite client identification information.

“Finally, the citation alleged that Kates provided responses to a Law Society auditor that he ought to have known could be misleading or incomplete,” stated the society.

Kates is said to have made “substantial admissions” following the investigation.

Kates “admitted to discipline violations concerning all allegations in the citation, and consented to a two-month suspension.”

Law society also suspends lawyer for working while suspended

The society handed a three-month suspension to Kamloops lawyer Nickolaus Harold MacDonald Weiser after Weiser “engaged in the practice of law while suspended” and “failed to provide full and substantive responses to questions and/or statements contained in correspondence from the Law Society.”

“Practising law while under a suspension is misconduct of a serious nature,” as it degardes the public’s trust in the legal industry’s regulatory and disciplinary process, a hearing panel wrote in its July 25 decision to further suspend Weiser.

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