A Vancouver lawyer has been disbarred from practicing law in B.C. after he received $900,000 in “legal fees” for his role in helping clients hide millions of dollars from U.S. authorities.
By helping his clients engage in an elaborate securities fraud, Ronald Norman Pelletier “abused his trust account and allowed his clients to profit from their illicit funds,” said the Law Society of BC in a hearing panel this week.
“A lawyer who knowingly assists in or encourages a crime or fraud cannot be allowed to practice law,” wrote the panel.
“The public must know that illegal activities by lawyers will be severely sanctioned.”
The case dates back to 2011, when Pelletier knowingly assisted multiple clients to carry out a $78-million fraudulent stock scheme. A previous panel ruling found Pelletier had deposited about $31 million in both Canadian and U.S. dollars into his trust accounts on behalf of his clients.
Among his clients were three companies Pelletier knew were being investigated for fraud by the U.S. Securities and Exchange Commission.
One British client, Kevin Miller, later filed a lawsuit in the B.C. Supreme Court to recover $3 million and $583,000 from Pelletier’s trust account. In a 2017 settlement agreement with the SEC, Miller neither admitted nor denied his role in the pump-and-dump fraud, but was ordered to repay roughly $900,000 to the SEC for his role in the scheme.
The scheme, according to the SEC, saw U.K. and Canadian citizen Wayne Weaver and other conspirators conceal shares in offshore shell corporations to avoid reporting requirements. The conspirators are alleged to have sent false newsletters about Jammin’ Java Corp., a company that used trademarks of the late reggae artist Bob Marley to sell coffee products.
To the outside world, a sham financing arrangement was designed to give the appearance of outside interest and investment in the company. That allowed the group to “pump” the stock value before dumping shares via fraudulent and misleading filings with the SEC.
The biggest penalty in the SEC agreement went to Weaver, who was ordered to repay US$26.4 million, plus a $26.4-million civil penalty.
Back in Vancouver, some of the money was used to renovate one property and buy another. The money was also used to buy a car in Toronto and a ring from Tiffany & Co.
Pelletier went to significant lengths to hide his involvement in the scheme. He was found to have purchased 20 burner phones over 18 months because he feared U.S. authorities were tapping his phone lines. The Vancouver lawyer also used anonymous email addresses and nicknames to evade being found out by authorities. In 2016, he directed his office manager to alter invoices to erase a client's name, and in the end, treated his trust account as a bank for his clients, according to a panel decision released in June.
Pelletier’s disbarment represents the first time a B.C. lawyer has been disciplined for money laundering, the panel said. In handing down its ruling, the panel stated Pelletier “utterly abandoned any pretense of acting ethically” and “actively enabled his clients to benefit from their crimes.”
Pelletier, found the law society, “knowingly assisted in or encouraged dishonesty, crime or fraud.”