Law Society of Ontario v. Kerem Ersoy, 2026 ONLSTH 41

LAW SOCIETY TRIBUNAL

HEARING DIVISION

Date: February 24, 2026 Tribunal File No.: 25H-017

BETWEEN:

Law Society of Ontario Applicant

• and -

Kerem Ersoy Respondent

Before: Paul Aterman (chair), Edward Choi, Geneviève Painchaud Heard: December 11, 2025, by videoconference

Appearances: Elaine Strosberg, for the applicant Alex Flesias, for the respondent

Summary: ERSOY – Professional Misconduct – Using Trust Account for Purposes Unrelated to the Practice of Law – The Law Society alleged that the Lawyer engaged in professional misconduct because he failed to be on guard against being the tool or dupe of an unscrupulous client and used his trust account for purposes unrelated to the provision of legal services ‒ The Respondent admitted the first allegation ‒ Although the panel found no dishonesty on the part of the Respondent, it determined that the second allegation was established, as he failed to look into numerous red flags in the fraudulent transaction ‒ A hearing on penalty and costs is to be scheduled.

REASONS FOR DECISION ON FINDINGS

1Paul Aterman (for the panel):– Kerem Ersoy (the respondent) is a lawyer who practises business and real estate law on his own. He set up his firm in May 2023. Three months later, he fell victim to a fraud.

2When the respondent opened his firm, he had no network of clients. He used Google ads to generate business. He believes this is how one of the fraudsters, Roland Karuk, contacted him.

3Karuk posed as a farmer in California who was selling a combine harvester to a farm in Ontario. He convinced the respondent to act for him in the sale of this equipment. The respondent was to draft an asset purchase agreement and related documents, and to negotiate the sale with the purchaser.

4The sale was rushed, and the respondent missed many signs that the transaction was suspicious. The supposed purchaser quickly sent the respondent a cashier’s cheque from a United States bank for $170,500 USD ($228,060 CAD). He deposited it into his trust account. Karuk then pressured him to distribute the funds right away. But not to him as the vendor. Rather, he directed the respondent to distribute the funds to third parties.

5The respondent checked with his bank to make sure that the cheque had cleared. The bank advised him that it had, because it was a cashier’s cheque. The respondent paid out the funds as directed by Karuk.

6However, the bank may have made an error, because a U.S. cashier’s cheque is not equivalent to a certified cheque in Canada. It requires a longer hold. Eventually the bank would not honour the cheque and returned it, creating a shortfall of $222,524.54 in the respondent’s trust account. The respondent and the bank are now suing each other.

7The Law Society alleges that the respondent engaged in professional misconduct by:

• failing to be on guard against being the tool or dupe of an unscrupulous client; and

• using his trust account for purposes unrelated to the provision of legal services.

8The respondent admits the first allegation, but denies the second. He maintains that he believed the transaction was genuine and provided legal services in relation to the money that was deposited into his trust account.

9The facts admitted by the respondent prove the first allegation. We also conclude that the Law Society has proved the second allegation.

10Our reasons below explain our conclusions. We first set out in more detail how the fraud took place. Then we analyze each allegation.

the respondent overlooked many red flags

11After Karuk contacted the respondent by email on August 3 and 8, 2023, the respondent sent Karuk a retainer. Karuk signed and returned it on August 10. For a fee of $3,999 plus HST, the respondent was to draft an asset purchase agreement and negotiate with Gayaan Bloom, the purchaser. Although Bloom supposedly lived nearby, in Milton, the respondent never met with him or Karuk.

12As we explain below, several examples show that the respondent overlooked red flags in this transaction.

The respondent did not verify Karuk’s identity

13Although Karuk provided the respondent with a California driver's licence and a US passport on August 14, the respondent did not properly verify these documents because:

• neither document had been notarized;

• the dates of birth and gender were not consistent between the documents; and

• there were other irregularities in two zones of the passport.

The transaction was odd, but the respondent did not question it

14The respondent received no documentation about the transaction. For example, nothing proved that Karuk owned the equipment.

15No negotiations took place. Bloom, the supposed purchaser, sent the respondent the purchase price on August 14, the same day that the respondent verified Karuk’s identity.

16Even though Bloom ostensibly lived in Milton, Ontario, the cashier’s cheque was issued in the United States by Citibank, and was mailed from Birmingham, Alabama. The cheque came from a broker, Castagna Construction, payable to the respondent in trust.

17The respondent thought it was strange that he received the money so early in the transaction, yet he took no action to inquire further. For example, he did not contact Citibank to see if the cheque was genuine. Nor did he ask why he was receiving the proceeds of sale before he had done the legal work on the transaction.

Karuk pressured the respondent to pay out the funds

18On the morning of August 14, Karuk directed the respondent to pay out the whole purchase price, less the respondent’s fee, to third parties. The asset purchase agreement had not yet been finalized or signed. Karuk told the respondent that the parties had already agreed on the terms of the transaction and the equipment was already in Milton or on its way there.

19Karuk’s email on August 14 told the respondent:

The inspection and service parts of the equipment has to be carried out [sic] tomorrow August 15th 2023 according to the LOI the inspection has to be carried out in 2days [sic] after receiving the initial deposit for this has been verbally discussed and mutually agreed upon both parties according to the LOI, that the sellers [sic] attorney will send the sum $150,000 to the inspection and service parts company for 6months [sic], please be informed about this.

20The respondent did not ask why Karuk expected him to disburse the funds to third parties, as opposed to Karuk doing it himself. He also did not ask why an inspection was taking place after the purchase price had been paid. And he did not ask why it was necessary to buy service parts for the equipment.

21The respondent deposited the cheque into his trust account on August 15.

22On the morning of August 16, Karuk directed the respondent to pay one Nilcea Nonato $20,000 for the inspection. He also directed him to pay $130,000 to OG Import and Export for the service parts.

23Later that day, the respondent wrote to Karuk and informed him that the buyer had not yet contacted him and that he needed time to draft the asset purchase agreement and have it signed. He asked Karuk to discuss the timing with him.

24Still later that day, the respondent paid out the requested funds to Nonato and OG Import and Export by wire transfer.

25And then in the early evening, Karuk directed the respondent to pay $73,207 to Umair Iqbal Ltd. for maintenance of the equipment.

The respondent began to have doubts

26Within the hour the respondent wrote back to Karuk as follows:

I have not been involved in any part of the negotiation process. I have not received a Letter of Intent. You are already instructing me to complete the funds transfer, minus my fees and all disbursements, prior to the signing of the Agreement. I will act on instructions but I need you to sign the attached release document first…

27The respondent prepared waivers and releases for both parties to sign. The waiver specified that the respondent’s scope of work was limited to drafting the asset purchase agreement and holding the sale funds in escrow until the transaction closed.

28The waiver also reflected the respondent’s unease. It referred to the solicitor-client relationship between the respondent and Karuk, and said:

Contrary to my lawyer’s advice and due to the urgency of this Transaction, I have instructed the Firm to transfer all funds necessary to close the deal and sign the Asset Purchase and Sale Agreement at a a [sic] later date. Furthermore, the Firm has fully explained me the risks I am assuming for proceeding to transfer funds for this Transaction on such short notice. I have acknowledged, fully understood the risks I am undertaking. I further acknowledge the Firm has not taken part in any stage of the negotiations for the Transaction. Contrary to the Firm’s understanding, the Firm also has not received any Letter of Intent.

29To be clear, we don’t think that the respondent’s unease with the order of operations at this point in the transaction meant that he was wilfully blind to the fraudsters’ wrongdoing. The Tribunal’s decisions show us that a licensee is wilfully blind if they “suspect dishonest activity and deliberately refrain from making further inquiries for fear of confirming those suspicions.”¹

30Rather, we think that he was naïve, trusting, and negligent. At this point, he still thought the transaction was genuine.

31The respondent sent the waivers to the parties on the morning of August 17. An hour later, Karuk returned the signed waiver to the respondent. The waiver was signed in California, yet it was supposedly witnessed by Bloom, the purchaser and resident of Milton, Ontario. Although Bloom’s first name is supposedly “Gayaan”, the first name of the witness was “Gaylan”. The respondent missed all of this.

32Minutes after sending the signed waiver, Karuk sent the respondent a Letter of Intent signed by both parties. There were three different spellings of Bloom’s first name in the Letter of Intent: “Gayan”, “Gayaan” and “Gaylan”. The respondent missed this as well.

33He also did not ask how or when the terms of the Letter of Intent had been negotiated.

34Later that morning, Bloom sent his signed version of the waiver to the respondent.

35The respondent then emailed Karuk, explaining that he could not wire money to Umar Iqbal Ltd., because its bank was too small to receive wire transfers. Karuk answered by directing the respondent to wire those funds to two people the respondent had never heard of: Louise Naud and Wade Archer.

36Without inquiring as to who they were, the respondent wired $14,955 to Naud and $58,207.45 to Archer.

37The respondent then started to work on the asset purchase agreement, and sent a draft to Karuk on the morning of August 18. Karuk quickly signed and returned it to the respondent with no changes. In retrospect, when interviewed by a Law Society investigator, the respondent said it made no sense that Karuk would sign and return it without changing anything.

The respondent realised that he had been defrauded

38On August 21, the respondent received an email from a potential client. It was strikingly similar to the one he had received from Karuk on August 3. Finally he became suspicious.

39He acted on his suspicion by contacting his bank and the Law Society. The Law Society advised him to alert LawPRO about a potential fraud. He did so, and was advised that the fraudulent sale of farm equipment is a known scam. LawPRO also told him that a U.S. cashier’s cheque should have been held for longer than the bank stated.

40Although the respondent tried to have the wire transfers recalled, he was too late. On August 28 the bank returned the cashier’s cheque, creating the $222,524.54 shortfall in his trust account.

THE LAW SOCIETY HAS PROVED BOTH ALLEGATIONS

Allegation 1: The respondent was the dupe of an unscrupulous client

41Rule 3.2-7 of the Rules of Professional Conduct deals with a lawyer’s professional obligations where the client or others may be dishonest. The rule first prohibits any knowing assistance in a client’s fraud or dishonesty.

42The rule then goes on to prohibit the lawyer from doing anything that they ought to know would facilitate fraud or dishonesty. This is meant to stop a lawyer from becoming the unwitting tool of a dishonest client. It does this by setting an objective measure of conduct – negligence – as opposed to the subjective measure of knowing assistance in the first part of the rule. In other words, what matters here is not what the respondent actually knew, but rather what he ought to have known.

43With the benefit of hindsight, the red flags in this transaction were numerous and obvious. Most of them could easily have been detected if the respondent had slowed down, read the documents carefully, and thought about the unusual features of this transaction, such as receiving and paying money before concluding any agreement.

44The waiver that the respondent drafted shows that he was aware that this transaction was odd. He specifically noted that Karuk wanted to act contrary to his advice. But the respondent went no further than that. He was negligent, because at the early stages of the transaction, a reasonably competent lawyer would have recognised that it was fraudulent. That is the standard the respondent is held to. Instead of stopping the transaction, he followed Karuk’s directions and carried on with it. The result was disastrous.

45The respondent does not contest this allegation. The Law Society has shown that he was the dupe of the fraudsters in this fictitious sale. The Law Society has proved this allegation.

46Before leaving the discussion of the first allegation, we need to clarify a point that arose in an exchange with us during the Law Society’s oral submissions.

47Both parties in this case agree that the respondent was negligent, because they agree that the respondent was duped. But in its oral submissions, the Law Society referred to the respondent as having been wilfully blind. We do not accept the respondent was wilfully blind to the fraud for two reasons.

48First, the evidence does not support a conclusion that the respondent was wilfully blind. This is how the panel in Purewal defines the term: “‘Willful blindness’” means that a licensee actually suspects the dishonest activity, but deliberately refrains from making further inquiries for fear of confirming those suspicions.²

49The evidence shows that the respondent had concerns about the transaction, but these did not rise to the level of a suspicion that the activity was dishonest. In fact, it was the respondent who was the victim of this fraud.

50Second, the Law Society framed the first allegation against the respondent as one of negligence, namely that he allowed himself to be duped. That is the basis on which the respondent conceded the first allegation. It would be procedurally unfair to the respondent at this point in the proceedings to now elevate that state of mind to one of wilful blindness. As wilful blindness is tantamount to actual knowledge, if the respondent were wilfully blind, he would be facing the presumption that his licence should be revoked.

51In our view, the Law Society misstated its own position when it referred to the respondent as having been wilfully blind. We make our finding on the first allegation based on the fact that he allowed himself to be duped, and was therefore negligent.

Allegation 2: The respondent used his trust account for an improper purpose

52The Law Society alleges that the respondent let his trust account be used for an improper purpose, because the proceeds of the sale of the farm equipment flowed in and out of his trust account without him providing any legal services. The respondent issued an interim account for his services on August 17, 2023. The bulk of his fee was for drafting the asset purchase agreement, yet because of the rushed transaction, he had not started to draft it by the time he submitted his interim account.

53The respondent denies this allegation. He says that he provided legal services, honestly believing that the transaction was genuine. For example, on August 14, he asked Karuk if either the vendor or the purchaser were corporations, because this would require a resolution authorizing the purchase or sale, and the transaction would be recorded in the corporate minute book. On August 17, the respondent prepared waivers for both Karuk and Bloom to sign. The waivers contain legal advice.

54Both of these are instances where the respondent applied legal knowledge and judgement in order to provide advice.

55The respondent claims that where he took actions that require the knowledge and skill of a lawyer, he was providing a legal service. He argues that it follows from this that the Law Society has not proved the second allegation. His belief that the transaction was genuine, while mistaken, was sincerely held. This, he says, is sufficient to defend against the Law Society’s allegation that he used his trust account for purposes unrelated to legal services.

56The logic of the respondent’s argument is that Rule 3.2-7-3 is only breached where a lawyer knowingly allows their trust account to be used for purposes other than the provision of legal services. In other words, the respondent claims that there is no breach of the rule in cases where the lawyer is negligent, and is duped into using their trust account improperly.

57Is the respondent’s honest belief a defence to this allegation?

58To answer this question, we need to interpret Rule 3.2-7.3. It states, “A lawyer shall not use their trust account for purposes not related to the provision of legal services.”

59Rule 3.2-7.3 covers both knowing and negligent use of trust accounts. We first discuss the text of the rule. Then we discuss the commentary to the rule.

The text first

60As the Supreme Court of Canada reminds us, the text is the anchor of any statutory interpretation exercise. This means that we start with the plain meaning of the rule. And it also means that when we turn from the text of the rule to an interpretation of its purpose, the interpretation of the purpose of the rule has to be grounded in and supported by the words of Rule 3.2.-7.3.³

61Rule 3.2-7.3 falls under Rule 3.2-7, which has the heading: “Dishonesty, Fraud, etc. by Client or Others”. However, the text of Rule 3.2-7.3 makes no mention of dishonest or fraudulent purposes. A plain reading of Rule 3.2-7.3 therefore tells us that it is possible for a lawyer to make an improper use of their trust account, even if they are not doing it for a purpose which is dishonest or fraudulent.

62The panel in Law Society of Ontario v Albaum⁴ explained that Rule 3.2-7.3 could be breached even if the lawyer was using their trust account for a benign or pro-social purpose. The panel notes at para 32:

While we accept that Rule 3.2-7.3 is intended to guard against use of a trust account for improper purposes, the rule is not limited to dishonest and other improper purposes. If the purpose for which a trust account is used is not related to the provision of legal services, the rule is breached whether the purpose of the use is dishonest, benign or entirely positive.

63This excerpt, which explains the plain meaning of the text, shows us that what matters is that the purpose for using a trust account must be related to providing legal services.

64Obviously, the rule will capture situations where the lawyer knows that the purpose of using a trust account is to commit fraud or a dishonest act. This is because a lawyer is not providing legal services if the lawyer knows that the purpose of those services is to advance a fraud.

65This principle is analogous to the loss of solicitor-client privilege in cases where purpose of the communication between lawyer and client is to facilitate committing a criminal offence. The Supreme Court of Canada explained this as follows:

Confidential communications, whether they relate to financial means or to the legal problem itself, lose that character if and to the extent that they were made for the purpose of obtaining legal advice to facilitate the commission of a crime.⁵

66But Rule 3.2-7.3 has a broader reach than prohibiting the use of a trust account to further fraud. As we note above, the rule does not expressly mention fraud or dishonesty. It just prohibits any use of a trust account for a purpose that is not related to providing legal services.

67The drafters of Rule 3.2-7.3 chose not to limit the prohibition to a dishonest or fraudulent purpose. Why did they make this choice?

68As the panels in both Albaum and Patterson⁶ note, the primary reason for strengthening the professional obligations around lawyers’ use of trust accounts was to prevent the facilitation of money-laundering and fraud, while still protecting solicitor-client privilege.

69After the passage of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act,⁷ stricter controls around the use of trust accounts came into force. Law societies imposed more exacting requirements on the use of trust accounts in order to protect the privilege of the solicitor-client relationship. This meant that lawyers would not be subject to the same public reporting obligations as others who process financial transactions in Canada. But they would have to manage their trust accounts with greater rigour.

70Accordingly, the text of the rule imposes a blanket prohibition on the use of a trust account for any purpose not related to providing legal services. In doing so, the rule includes, but is not limited to, purposes that advance a fraud or other dishonest act. The broad wording of the text is consistent with the drafters’ aim of enhancing controls on the use of trust accounts.

71In addition, the text of the rule is not limited to a knowing improper use of a trust account. The respondent would be vindicated if the text of Rule 3.2-7.3 read “A lawyer shall not knowingly use their trust account for purposes not related to the provision of legal services.” But it doesn’t. The absence of a knowledge requirement in the text of the rule means that an improper use can be brought about knowingly or through negligence.

72This interpretation is also consistent with the commentary on Rule 3.2-7. The commentary connects Rule 3.2-7.3 to the objectives in Rule 3.2-7. The objectives are the detection and prevention of fraud or dishonesty by clients or others. The relevant part of the commentary reads:

Rule 3.2-7 which states that a lawyer must not knowingly assist in or encourage dishonesty, fraud, crime or illegal conduct, applies whether the lawyer's knowledge is actual or in the form of wilful blindness or recklessness. A lawyer should also be on guard against becoming the tool or dupe of an unscrupulous client or persons associated with such a client or any other person. Rules 3.2-7.2 to 3.2-7.3 speak to these issues.

73Before parsing the commentary, we note that we struggled to interpret it because the drafting is vague.

74Commentary 1 consists of three sentences. If we parse it line-by-line, we see that the first sentence deals with knowing assistance. Knowing assistance includes three states of mind: actual knowledge, wilful blindness and recklessness.

75The second sentence deals with negligence. It says a lawyer “should also be on guard” against being a dupe.

76It could be clearer because, depending on the context, “should” can either be mandatory or recommendatory. Here we interpret “should also” to be mandatory, rather than suggestive of what a lawyer should do. Being “on guard against becoming the tool or dupe of an unscrupulous client” requires the lawyer to display a level of vigilance that a reasonably competent lawyer would. In other words, the lawyer must not be negligent. So the first two sentences cover knowing and negligent assistance.

77The third sentence of Commentary 1 says “Rules 3.2-7.2 to 3.2-7.3 speak to these issues”. This sentence is also vague. What does it mean to “speak to these issues”? In our view, the use of the plural in the phrase “these issues” refers back to both sentence 1 and sentence 2. In other words, Commentary 1 is saying that an improper use of the trust account can occur both through knowing and through negligent assistance.

78The plain meaning of Commentary 1 suggests that the primary (but not sole) purpose of Rule 3.2-7.3 is to support the detection and prevention of fraud and dishonest conduct by demanding rigour in the use of trust accounts. It does this by prohibiting both knowing and negligent use of trust accounts.

79Deliberately advancing a fraud is – by definition – not a purpose that is related to the provision of legal services. A lawyer can’t claim to be providing legal services if they know that those services are enabling a fraud.

80If a knowing use of a trust account to further a fraud is prohibited, then is there any reason to permit a negligent use of the trust account to achieve the same purpose? We can think of none. In fact, permitting the negligent use of a trust account to pass as the provision of legal services would lead to absurd results.

81It would do this by undercutting the drafters’ objective of tightening controls on trust accounts. That in turn would provide an incentive for licensees to take a relaxed attitude to the management of trust accounts.

82A liberal use of trust accounts is exactly what the panel in Albaum prohibited.

83The panel in Albaum explained that the phrase “the provision of legal services” must be related to an actual transaction or other legal service. Albaum wanted to treat his trust account as a vehicle for business development. He argued that he could use his trust account essentially as a banking service, in the hope that this would attract his client to eventually retain him to perform legal services.

84The panel rejected this argument, because the liberal use of trust accounts advocated by Albaum could open the door to fraudulent and dishonest use. Here is how the panel put it:

We do not accept that “business development” is a purpose permitted by the rule. Given the intent of the rule, it would be all too easy for unsavoury financial dealings to be shielded from scrutiny by the prospect of other legal work. It would be all too easy for trust accounts to be used to lend legitimacy to dubious or fraudulent investment schemes by the prospect of other legal work.⁸

85This interpretation of the phrase “the provision of legal services” is consistent with the plain meaning of the words. The text of the rule also accords with the drafters’ objective of ensuring rigorous controls on the use of trust accounts.

86Finally, the need for a conscious and rigorous approach to the use of trust accounts is echoed in s 18 of By-Law 9.

87As the administrator of their trust account, it is the lawyer who must know – and record - the purpose for which it is being used. This is reflected in s 18 of By‑Law 9, which obliges a lawyer to record the purpose for which trust monies are received. The By-Law requirement to record the purpose for which trust monies are received aligns with the Rule 3.2-7.3 requirement that a trust account is only used for purposes that are related to the provision of legal services.

88To summarise, together Rule 3.2-7.3 and By-Law 9:

• prohibit the use of a trust account for any purpose that is not related to the provision of legal services;

• capture both a knowing and a negligent knowing misuse of the trust account;

• require the lawyer to provide legal services in an actual transaction; and

• require the lawyer to record the purpose for which the trust money was deposited.

The principles in Rule 3.2-7.3 applied to this case

89We accept that the respondent believed he was engaged in a genuine commercial transaction. He only realised he had been defrauded after he had distributed money from his trust account, and after he received an email from a prospective client that suspiciously resembled Karuk’s initial email.

90But the respondent’s genuine belief is not a defence to the Law Society’s allegation that he used his trust account for a purpose unrelated to the provision of legal services.

91Should the respondent in this case have known that this was a fraud?

92We believe that he should have.

93Rule 3.2-7(a) and (c) prohibit the knowing facilitation of fraud or dishonesty by a lawyer. In relation to Rule 3.2-7(a), the Tribunal’s decision in Purewal establishes that knowing facilitation incorporates three possible states of mind:

• actual knowledge;

• wilful blindness; and

• recklessness.⁹

94As we note above in relation to the first allegation, the respondent did not knowingly facilitate a fraud. He did not have actual knowledge, and he was neither wilfully blind nor reckless as to the possibility of the fraud.

95However, the decision in Purewal discusses a fourth state of mind: negligence. Rule 3.2-7(b) prohibits the negligent facilitation of fraud or dishonesty. It does this by setting an objective standard for professional misconduct. A lawyer engages in professional misconduct if they ought to know that their actions are encouraging or facilitating dishonest conduct or fraud.

96The cumulative effect of the red flags in this transaction meant that the respondent ought to have known the transaction was a fraud. Set out below are some, not all, of the red flags. The respondent failed to:

• properly verify Karuk’s identity;

• engage in the negotiations he was supposedly retained for;

• inquire into the source of funds;

• inquire into the inconsistencies in Bloom’s identity;

• question why the transaction was so rushed;

• question why Bloom, a resident of Milton, was witnessing Karuk’s signature in California;

• question why inspection and servicing of the equipment took place after the apparent sale; and

• question why Karuk was requiring him to distribute the proceeds of sale to third parties, rather than doing it himself.

97What would be expected of a reasonably competent lawyer when faced with the circumstances the respondent was dealing with?

98The commentary to Rule 3.2-7 gives us some guidance. The third paragraph of the commentary states:

To obtain information about the client and about the subject matter and objectives of the retainer, the lawyer may, for example, need to verify who are the legal or beneficial owners of property and business entities, verify who has the control of business entities, and clarify the nature and purpose of a complex or unusual transaction where the purpose is not clear. The lawyer should make a record of the results of these inquiries.

99The respondent did not properly undertake any of these verifications.

100It is not necessary for us to pinpoint exactly when the respondent’s naïveté crossed over into negligence. It is sufficient to note that a reasonable lawyer would have made inquiries at the point of verifying Karuk’s identification, given the inconsistencies in the identity documents. They would certainly have questioned the transaction at the point that Karuk started to pressure the respondent to disburse the funds from his trust account, even though he had not started to draft the asset purchase agreement. At a minimum, a reasonable lawyer would not have allowed funds to flow in and out of their trust account before providing the legal services for which they had been retained.

101Finally, a reasonable lawyer would not only have questioned the mechanics of the transaction, they would also have questioned the purpose for which their trust account was being used. This is because the two are inextricably linked. In this case, the fraud depended on the use of the respondent’s trust account.

102So, if the respondent negligently facilitated a fraudulent transaction – which he admits – then he was equally negligent in employing his trust account for that purpose. He cannot claim that he used his trust account for a purpose related to the provision of legal services if he ought to have known that the services themselves were furthering a fraud. This is why his defence fails.

103The respondent must be held to the standard of a reasonable lawyer in the administration of his trust account. His subjective belief that he was engaged in a genuine transaction is not a defence to this allegation. The Law Society has proved the second allegation.

CONCLUSION

104The Law Society has proved that the respondent:

• failed to be on guard against being the tool or dupe of an unscrupulous client; and

• used his trust account for purposes unrelated to the provision of legal services.

105We request the Tribunal office to schedule a hearing on penalty and costs.

Footnotes

1. 1Purewal v The Law Society of Upper Canada, 2009 ONLSAP 10.
2. 2Purewal, above at para 32.
3. 3Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Directrice de la protection de la jeunesse du CISSS A, 2024 SCC 43 at para 24.
4. 42023 ONLSTH 116.
5. 5Descôteaux et al. v Mierzwinski, 1982 CanLII 22 (SCC).
6. 6Law Society of Ontario v Patterson, 2025 ONLSTH 15.
7. 7SC 2000, c 17.
8. 8Albaum at para 144.
9. 9Above at paras 28-35.