PARALEGAL SUSPENDED IN MASSIVE IMMIGRATION FRAUD ALLEGATION. FLED ABROAD

The Law Society of Upper Canada suspended the paralegal license of the person below, amid massive fraud allegations involving at least 180 applications for work permits and close to a million dollars in client funds. He apparently fled the country, according to the decision below.

The most bizarre thing in this case is that the person in question was a licensed paralegal by LSUC, who apparently had run afoul of the regulator, so one is left to wonder how things got out of hand so quickly before the brakes were put on this person, or even how he even got a license as a paralegal. That is not clear from the decision. This calls paralegal regulation into question, which is already a very controversial topic in the Bar.

Law Society of Upper Canada v. Castillo Garcia

Between
The Law Society of Upper Canada, Moving Party, and
Victor Manuel Castillo Garcia, Respondent

[2014] L.S.D.D. No. 308

2014 ONLSTH 226

Tribunal File No.: PINT93/14

 Law Society Tribunal
Hearing Division
Toronto, Ontario

Panel: Raj Anand, Chair; Michelle Tamlin; Eric Whist

Heard: October 23, 2014.
Decision: November 25, 2014.

(22 paras.)

Tribunal Summary:

Castillo Garcia -- Interlocutory suspension -- The Paralegal failed to appear on this motion, though properly served -- The Society was investigating 12 complaints against him, the majority of which were from vulnerable individuals who either were trying to gain entry into Canada or were Canadian residents attempting to secure a work permit or refugee status -- The Paralegal's practice included matters that fell outside permitted paralegal practice -- At least three complaints suggested fraud and dishonesty on the Paralegal's part -- One concerned 180 foreign applicants for work visas who provided retainer fees of $960,000 that he deposited in a bank account that was not a trust account -- He closed the account and, at about the same time, he appeared to have closed his practice and gone abroad -- The Paralegal's licence was suspended immediately, on an interim interlocutory basis -- He was to pay costs of $10,000.

Appearances:

Jennifer Forde, for the Moving Party.

Respondent, not present and not participating.

---

REASONS FOR DECISION

INTRODUCTION

1     RAJ ANAND (for the panel):-- This is a motion for an interlocutory suspension of the Respondent's paralegal licence.

2     The Respondent did not appear at the hearing and did not serve or file any responding materials. Through affidavit evidence the Law Society demonstrated that he had been properly served with its factum, motion record and book of authorities. Indeed, the Law Society went beyond proper service, and made considerable additional efforts to provide the materials to the Respondent in the two weeks preceding the hearing. The evidence showed that the Paralegal had failed to respond to the Law Society in any fashion since April 2014. Given his failure to attend the scheduled hearing, we proceeded in his absence.

3     After submissions by Ms. Forde on behalf of the Law Society, the panel granted the motion with costs, with terms as specified below. I gave brief oral reasons, stating that the uncontradicted evidence before us at this point suggests serious concern that the Respondent has committed professional misconduct under the 15 headings enumerated by the Law Society in its factum. We were accordingly satisfied that the Law Society had met the statutory test for an interlocutory suspension. I indicated that brief written reasons would follow. Since the investigations are at various stages of completion and a conduct hearing may follow, these reasons will rely on the Law Society's evidence that has been gathered thus far, but will not provide detailed accounts of the facts or analysis of the liability issues.

THE INVESTIGATIONS

4     The Paralegal was granted a P1 licence in 2010, and his practice focuses largely on immigration, including matters such as worker visas which fall outside permitted paralegal practice. The Respondent is not a registered immigration consultant, nor does it appear that he employs one.

5     In the 12 complaints that are being investigated by the Law Society, the majority of the complainants are individuals who are either trying to gain entry to Canada or are Canadian residents who are attempting to secure a work permit or refugee status. They are vulnerable individuals, with language and financial barriers, and likely without significant knowledge of our legal system.

6     At least three complaints suggest fraud and dishonesty on the part of the Respondent.

7     One concerns 180 foreign applicants for work visas, who provided retainer fees of $960,000 to the Respondent between September 2013 and April 2014 through a recruiting company, to which the Respondent promised pre-approved Labour Market Opinions (LMOs). Many of these applicants received rejections from the federal authorities on the basis that the LMOs were fraudulent and, indeed, it appears that the named employers knew nothing about LMOs that supposedly related to them. The Respondent deposited the $960,000 in a bank account, which was not a trust account, and then closed the account in June 2014. At about the same time, the Respondent appears to have closed his practice and gone abroad.

8     The Respondent's 2012 and 2013 Paralegal Annual Reports indicate that he did not operate a trust account and received no trust funds, but various complainants' documentation suggests that they provided funds that should have been placed in trust. Eleven of the 12 complaints allege that the Respondent accepted retainer fees and failed to do the work for which he was retained. Several of the complainants allege that the Respondent failed to account for their funds and indeed failed to return important documents such as passports, birth certificates and diplomas when they terminated his retainer or he abandoned his practice. The Respondent appears to have abandoned the files of eight of the complainants even before the Paralegal physically departed his office.

9     Information received from complainants and a corporate search also indicates that the Paralegal is the principal of VIPA Financial, which lends money to his clients to finance his legal services. Documentation suggests that clients were referred to VIPA, which advanced funds to the Paralegal. It appears that he failed to recommend that they seek independent legal advice despite the apparent conflict of interest. In one case, it is alleged that the Respondent's advice in a human rights settlement context involved preferring his finance company's interests in recouping its loan over the client's interest in a larger settlement.

10     Between December 2013 and September 2014, Law Society staff sent the Respondent 30 letters and 15 e-mails, and attempted to call him 11 times, to request his written representations and other information in response to the complaints. The Law Society used the contact information that the Respondent provided. Many of these letters were returned. There was one response to two complaints in April 2014, in which the Paralegal claimed that he had provided representations and documentation in response to both, but in fact he only attached documents relating to one complaint. The Law Society has not received any response to the other complaints.

11     The Respondent's April 2014 communication was his last contact with the Law Society. He indicated that he was out of the country, travelling between Mexico, Cuba and South America, with plans to return in May 2014. The Respondent also took steps in April 2014 to cure an administrative suspension, which indicates that he was planning to resume his paralegal practice in Ontario. Two complainants said they had met with him in June 2014 when they provided him with $5,000. One of them was able to communicate with the Paralegal through a website the next month. Several complainants and the Law Society investigator report that the Respondent's office was closed in the summer of 2014 for rent arrears.

ANALYSIS

12     This panel's jurisdiction to issue an interlocutory suspension is conferred by s. 49.27 of the Law Society Act, which states:

·       Interlocutory orders 

·       (1) 

The Hearing Division may make an interlocutory order authorized by the rules of practice and procedure, subject to subsection (2). 2006, c. 21, Sched. C, s. 53; 2013, c. 17, s. 26. 

·       Exception 

·       (2) 

The Hearing Division shall not make an interlocutory order suspending a licensee's licence or restricting the manner in which a licensee may practise law or provide legal services, unless there are reasonable grounds for believing that there is a significant risk of harm to members of the public, or to the public interest in the administration of justice, if the order is not made and that making the order is likely to reduce the risk. 2006, c. 21, Sched. C, s. 53; 2013, c. 17, s. 26. 

13     We are satisfied, based on the uncontradicted evidence before us, that there are reasonable grounds to believe that the public is at significant risk of harm. The allegations are serious, and concurrently fall into several important categories in terms of the professional obligations of the Law Society's licensees and its responsibility to protect the public interest: fraud and dishonesty, compliance with his regulatory obligations; mistreatment of clients and their funds and documents; conflict of interest; and abandonment of his practice.

14     In addition, the uncontradicted evidence of the Paralegal's actions in relation to immigration and other public law proceedings, including the possible misappropriation of almost a million dollars in retainer fees in return for no services, threatens significant harm to the administration of justice.

15     We also conclude that an interlocutory order is likely to reduce the risk of harm. We asked the Law Society's representative whether the Paralegal's failure to respond to the Law Society and even to the notice of motion before us, might suggest that he would not respect a suspension order either. She responded, in our view quite rightly, that if the defiance or non-co-operation that appears in the record continues, his ability to visit harm on existing or prospective clients will be reduced by public notice of his suspension.

16     Moreover, notice to public bodies including immigration and other administrative authorities makes it reasonable to conclude that the likelihood of harm to the administration of justice will be reduced.

17     Finally, we believe that our suspension order is likely to reduce the harm to the administration of justice and to members of the public in the following sense. Our order will convey the clear statement that in its obligation to regulate the legal profession in the public interest, the regulator cannot countenance the continuing practice of a licensee who appears to have been conducting himself in the manner that has been presented in the evidence on this motion. Our order will benefit both the administration of justice, of which paralegal regulation forms an important part, and the public which must have confidence in the effective regulation of the Law Society's licensees.

COSTS

18     As a general rule, the profession should not bear the entire costs where the Law Society is successful in a conduct proceeding. This proceeding, however, is an interlocutory motion in which no finding of misconduct has been made, and if an Application is issued the Respondent may indeed succeed in having the allegations dismissed after a contested hearing. For this reason, panels often reserve costs of an interlocutory suspension motion to the panel hearing the subsequent conduct application. See, for example, Law Society of Upper Canada v. Townley-Smith, 2010 ONLSHP 77; and Law Society of Upper Canada v. Nawab, 2008 ONLSHP 66, which the Law Society quite fairly submitted to us.

19     The Law Society's representative also put forward two cases in which costs were ordered and fixed on the motion: See Law Society of Upper Canada v. Janjua, 2009 ONLSHP 10; and Law Society of Upper Canada v. Grewal, 2014 ONLSTH 199. In these cases, the licensee did not appear at the hearing of the motion although properly served. Indeed, in the former case, like this one, the Lawyer had vacated his office, and his whereabouts were unknown. In these circumstances, the uncontradicted nature of the evidence put forward by the Law Society, which is the result of the licensee's failure or refusal to participate in the Tribunal process, militates against deferring a costs order in case misconduct is ultimately not found. Even if an application is ultimately dismissed, the Licensee will have no basis for complaint that the Law Society was awarded costs on this motion, because he did not appear on the motion to protect his interests. We therefore grant the Law Society's request for costs rather than deferring the issue.

20     We are satisfied that the requested costs order of $10,000, with six months to pay, is reasonable in the circumstances.

ORDER

21     We therefore signed the draft suspension Order tendered by the Law Society, with the costs amount and deadline filled in, with one exception. We asked the Law Society to add a provision to ensure that the Respondent can move to vacate our Order if the Law Society does not conduct its investigations with due diligence.

22     The operative parts of the Order read as follows:

·       1. 

Commencing immediately, the Paralegal's licence is suspended on an interim interlocutory basis. 

·       2. 

This Order shall be in effect until the earliest of the following: 

·       a. 

A panel varies or cancels the Order on the consent of the Law Society and the Paralegal prior to the hearing on the merits of the proceeding(s) to which the motion relates. 

·       b. 

A panel varies or cancels the Order on the basis of fresh evidence or a material change in circumstances that is brought by the Law Society or the Paralegal to the panel prior to the hearing on the merits of the proceeding(s) to which the motion relates. 

·       c. 

The panel presiding at the hearing on the merits of the proceeding(s) to which the motion relates, prior to the disposition of the proceeding(s), varies or cancels the Order. 

·       d. 

The panel presiding at the hearing on the merits of the proceeding(s) to which the motion relates disposes of the proceeding(s). 

·       3. 

The Paralegal shall comply fully with the terms of the Law Society's Guidelines for Paralegals who are Suspended or who have given an Undertaking not to Practise while suspended pursuant to this Order. 

·       4. 

The Paralegal may bring a motion to vacate this order if the Society does not conduct its investigations respecting the Paralegal with due diligence. 

·       5. 

The Paralegal shall pay costs to the Law Society in the amount of $10,000 within 6 months of the date of this Order, failing which, interest will accrue at a rate of 3% per annum thereafter.