Vancouver lawyer reportedly failed to take precautions to avoid becoming 'a tool or dupe'
A Vancouver lawyer has been dealt a 15-year suspension from the practice of law starting January 1 after he acknowledged a failure in oversight of roughly $22 million received by his trust account.
Paul Otto De Lange confessed to professional misconduct relating to representing clients and trust accounting practices during a Law Society of British Columbia disciplinary process. The breaches occurred between July 2015 and July 2018, over the course of 65 transactions.
De Lange used or allowed a client group identified only as the TG Group to use his trust account to receive $21.8 million and disburse $1.64 million during that time, reported the Vancouver Sun.
A lawyer is required to keep a trust account when receiving and holding money on behalf of clients or other parties.
He reportedly failed to take necessary precautions to avoid becoming "a tool or dupe" of an opportunistic client and failed to ask pertinent questions on the details of the transactions, such as the legal or beneficial ownership of property and businesses.
He also did not ask about the nature and purpose of the transactions; how the parties, agents, and intermediaries involved are interrelated; where the funds came from; the purpose of the funds; and why the money had to go through his trust account.
One red flag De Lange should have caught, according to an agreement he entered into with the law society, was the involvement of an individual identified only as T.G., who faces fraud charges and was declared background, but still has debts outstanding.
Other suspicious transactions involving numerous financing and refinancing rounds, often on short terms, and transactions that went through numbered companies incorporated by T.G. or another member of the TG Group.
De Lange also "accidentally" paid out money held in trust to a customer twice, causing a trust deficiency that he neglected to address right away. This was only one of several other instances of misconduct that was acknowledged in the agreement.
According to a legal theory that’s been affirmed in a Supreme Court of Canada decision, lawyer-client confidentiality shields lawyer's trust accounts from the reach of law enforcement. Lawyers are not required to report suspicious transactions to Canada's financial intelligence agency, unlike banks, securities dealers, and other financial institutions.
The law society noted that since he started practising law in 2009, De Lange did not misappropriate any client money or act in a "dishonest" manner.
Following De Lange's proposal, in which he acknowledged his professional misconduct, the panel conducting the disciplinary case approved the 15-year suspension.
“After 15 years, a mandatory credentials hearing will be required if De Lange applies for reinstatement,” the law society said in a written statement.
