LAW SOCIETY TRIBUNAL

HEARING DIVISION

Date: April 8, 2026

Tribunal File No.: 25H-105

BETWEEN:

Law Society of Ontario

Applicant

• and -

Maria Mikhailitchenko

Respondent

Before: Nicole Treskler (chair), Murray Klippenstein, Geneviève Painchaud

Heard: January 15, 2026, by videoconference

Appearances:

Dawood Nasir, for the applicant

Respondent, not present or represented

Summary:

MIKHAILITCHENKO – Misappropriation of Trust Funds – Professional Misconduct – The Lawyer did not participate in the hearing – The Panel found that the Lawyer engaged in professional misconduct by using her trust account for purposes unrelated to legal services – she also knowingly assisted or facilitated dishonest or fraudulent conduct and breached an undertaking – A hearing on penalty is to be scheduled.

REASONS FOR DECISION ON FINDINGS

INTRODUCTION

1Nicole Treksler (for the panel):– The respondent, Maria Mikhailitchenko, was called to the bar in 2008. She operated the law practice Mikhailitchenko Law Office Professional Corporation Law, practising primarily in civil litigation, family/matrimonial law, real estate, wills and estates, trusts, and construction law.

2This proceeding concerns serious allegations of professional misconduct set out in the notice of application, including: misappropriation or misapplication of trust funds; breach of an undertaking; knowingly assisting or facilitating dishonest or fraudulent conduct in representing a corporate client in connection with the collection of purported loans; use of a trust account for purposes unrelated to the provision of legal services; and failure to co-operate with Law Society investigations.

3Around March 2024, the respondent ceased all communication with the Law Society (LSO). In so doing, she did not co-operate with the Law Society’s investigation, participate in the pre-hearing process or attend the hearing.

4The respondent has been suspended since April 2024 pursuant to a Tribunal order made on an interlocutory motion: Law Society of Ontario v Mikhailitchenko, 2024 ONLSTH 100.

5Since June 2024, the LSO has acted as a court-appointed trustee over the respondent’s practice.

6In July 2024, the Toronto Police Service issued a warrant for the respondent’s arrest on charges of criminal breach of trust; fraud exceeding $5,000; and theft exceeding $5,000.

7The Law Society is unaware of the respondent`s whereabouts.

8The respondent also failed to respond to a request to admit certain facts and the authenticity of documents. Pursuant to Rules 11.3(4) and 11.3(5) of the Law Society Tribunal Rules of Practice and Procedure (the Tribunal Rules), those facts and documents are deemed admitted.

9We are satisfied that the respondent was given proper notice of the allegations, the hearing and access to the Law Society’s materials. In these circumstances, the proceeding properly continued in her absence.

10After considering the Law Society’s submissions and supporting documentation, we found that the allegations of professional misconduct in the notice of application were proven.

11These reasons explain our decision to proceed in the respondent’s absence along with an analysis of the merits.

12Following the release of these reasons, we will reconvene to hear submissions on penalty and costs.

PROCEEDING IN THE RESPONDENT’S ABSENCE

13We proceeded in the respondent’s absence because she was properly notified of the hearing yet did not participate.

14The hearing was scheduled for 10:00 AM. The respondent did not attend and did not communicate with the Tribunal. Tribunal staff attempted to contact the respondent using the contact information on file but received no response.

15The Law Society delivers important communications through its online portal, which licensees are required to monitor. The Law Society is not required to verify a licensee’s current contact information or to send notices by electronic or physical mail. Notices sent to the most recent contact information on file, and communications delivered through the portal, are deemed received.

16In this matter, the respondent was properly notified of the hearing and ceased all communications with the Law Society in or about March 2024. Under Rule 6.7 of the Tribunal Rules, a panel may proceed in the absence of a party if the panel is satisfied that the party received notice of the proceeding and did not to participate. We are so satisfied and therefore proceeded in the respondent’s absence.

BACKGROUND

17Given the complexity of the financial transactions at issue, it is necessary to understand the background of how the respondent participated in what appears to have been a scheme involving one or more corporate clients, misusing her trust accounts to misappropriate or misapply funds and to enrich her corporate client(s).

18The respondent deposited hundreds of cheques from a corporate client into her trust account, totalling millions of dollars. She quickly withdrew funds before the cheques cleared and transferred the money back to the corporate client. There is no evidence that these transactions were connected to the provision of legal services.

19The respondent maintained multiple trust accounts at three financial institutions. At multiple times, she deposited many cheques into these trust accounts and then transferred funds between trust accounts before the cheques cleared, after which many or all the cheques were rejected for insufficient funds. The transfers included funds belonging to legitimate clients and were seemingly made to conceal deficits in some of the trust accounts.

20The respondent also provided documentation to a financial institution to legitimize the status and operations of one of her corporate clients. The documents were incomplete, fraudulent or misleading.

21The LSO received a complaint about the respondent from Bank of Montreal (BMO) around November 24, 2023, and the first investigation was authorized approximately one week later. Other complaints followed a few months later.

22The merits section addresses five allegations, in this order, with accompanying findings:

1. Between August and December 2022, the respondent used one or more of her trust accounts to receive and disburse more than $59 million for purposes not related to the provision of legal services, contrary to rule 3.2-7.3 of the Rules of Professional Conduct (the RPC).

2. Commencing in or about August 2022, the respondent participated in, knowingly assisted, or otherwise facilitated, dishonest or fraudulent conduct, contrary to Rules 2.1-1 and 3.2-7 of the RPC, in representing a corporate client with respect to the purported collection of loans.

3. Between approximately November 2022 and February 2023, the respondent misappropriated or, in the alternative, misapplied, $3.5 million, more or less, from the funds she held in trust on behalf of clients and third parties, including the following amounts:

a. $778,570, more or less, from Arti Sood;

b. $582,976, more or less, from AA;

c. $771,302, more or less, from BB and CC; and

d. $300,000, more or less, from DD.

4. On or about November 24, 2022, the respondent breached an undertaking, dated November 24, 2022, given to Arti Sood to not release any part of the mortgage funds advanced to the respondent until given authority to do so, contrary to Rule 7.2-11 of the RPC.

5. Since on or about April 4, 2024, and continuing, contrary to s 49.3 of the Law Society Act, RSO 1990, c L.8 (the Act), and Rule 7.1-1 of the RPC, the respondent has failed to cooperate with and respond to the following five LSO investigations: CAS139080-V3J5N0, CAS-143404-G4Z6L3, CAS-141906-T9B2D0, CAS-143096-M7L4S3, and CAS-141604-V8S3W4.

ALLEGATIONS 1 AND 2: USE OF TRUST ACCOUNT FOR PURPOSES UNRELATED TO LEGAL SERVICES AND PARTICIPATION IN A FRAUD

23The Law Society alleges that between August and December 2022, the respondent used one or more of her trust accounts to receive and disburse more than $59 million for purposes not related to the provision of legal services, contrary to Rule 3.2-7.3 of the RPC.

24It also alleges that commencing in August 2022, the respondent participated in, knowingly assisted, or otherwise facilitated dishonest or fraudulent conduct, contrary to Rules 2.1-1 and 3.2-7 of the RPC, in representing a corporate client with respect to the purported collection of loans.

25Rule 3.2-7.3 prohibits lawyers from using a trust account for non-legal purposes. The commentary to the rule cautions that lawyers must not knowingly assist in or facilitate dishonesty, fraud, criminal activity, or illegal conduct, including by allowing a trust account to be used as a financial conduit for a client.

26Rule 2.1-1 requires lawyers to act with integrity and to conduct themselves honourably in their dealings with clients, tribunals, the public and other members of the profession.

27Rule 3.2.1 prohibits lawyers from assisting in or facilitating dishonest, fraudulent, criminal, or illegal conduct while representing a client.

The Scheme

The retainer and supporting documents

28Sometime in 2022, the respondent was retained by Corp A, whose director was GG, purportedly to assist with debt collection and litigation where collection efforts were unsuccessful. The Law Society dealt with the following documents regarding this retainer:

• an unsigned and undated retainer agreement for Corp A;
• GG’s driver’s license and passport;
• a Certificate of Incorporation for Corp A;
• copies of various cheques, mostly illegible;
• 13 promissory notes which specify Corp A as lender and different entities as borrowers; and
• two loan agreements, each in the amount of $1.7 million, dated August 15, 2022, listing Corp A as lender and 9058 ONT and 9039 ONT as borrowers.

29The Law Society raises several concerns about the reliability of these documents, beginning with the retainer agreement, which was neither signed nor dated.

30Also, one promissory note for Alternate Funds bears the signature “Alternate Funds” rather than the signature of a director or signing officer. The same applies to a promissory note for Estate Realty which is signed “Estate Realty”.

31Between July 28 and October 21, 2022, the respondent billed Corp A around $54,000 for legal fees. Each invoice described the services as “Legal fees-transfer funds from Trust a/c.” The Law Society submits that there is no evidence that the respondent provided legal services related to debt collection or any other legal work during this period.

The trust accounts

32The respondent operated seven trust accounts at three financial institutions. The timing of when these accounts were opened and closed is central to understanding the alleged misconduct, including misappropriation and/or misapplication of funds.

33The respondent operated two trust accounts with BMO, two with Toronto Dominion Bank (TD) and three with Bank of Nova Scotia (BNS) as follows:

• BMO-1, opened around March 2019 and closed around February 2023 with a zero balance.
• BMO-2, opened around March 2019 and closed around March 2023 with a zero balance.
• TD-1, closed around June 28, 2023, with a zero balance.
• TD-2, closed around December 29, 2022, with a zero balance.
• BNS-1 and BNS-2, both opened around January 2023, and closed around August 6, 2024, with zero balances.
• BNS-3, opened around January 2023, remained open as of November 2024 with a negative account balance of (-$180,000).

34Between August and December 2022, the respondent deposited hundreds of cheques totalling over $64 million into BMO-1 on behalf of Corp A, including approximately:

• $24,919,650 from 9039 ONT;
• $31,575,050 from 9058 ONT; and
• $7,963,000 from Royal Realty Traders.

35During the same period, the respondent disbursed over $50 million from BMO-1 on behalf of Corp. A back to the same entities including approximately:

• $28,562,820 to 9039 ONT;
• $23,052,751 to Royal Realty Traders; and
• $3,701,500 to 9058 ONT.

36Royal Realty Traders was the business name for 9058 ONT.

37All these entities have the same single director.

38There is no persuasive evidence that these transactions were connected to legal services.

Massive trust account shortage and misuse of funds

39In November of 2022, as detailed below, the respondent deposited numerous cheques from 9058 ONT totalling approximately $7.4 million into her two BMO trust accounts. Before the cheques cleared, she transferred or withdrew equivalent amounts, including a certified cheque payable to herself.

BMO-1

40On November 1, 2022, the respondent deposited 41 cheques totalling about $3,701,500 from 9058 ONT to BMO-1.

41That same day, before the cheques had cleared, she transferred the same amount from BMO-1 to TD-1, then immediately disbursed the amount from TD-1 to 9058 ONT.

42On November 2, she deposited 40 cheques totalling about $3,763,500 from 9058 ONT to BMO-1.

43That same day, she withdrew about $3,763,500 from BMO-1 payable to herself.

44In the following two days or so, the initial 81 cheques were returned as frozen funds.

45She redeposited $3,763,500 to BMO-1, which still left a shortfall of $3,701,500.

46On November 3, the respondent deposited 37 cheques totalling approximately $3,524,500 from 9058 ONT to BMO-1 but did not disburse these funds. They were all returned as frozen funds.

47As of November 3, 2022, BMO-1 was short approximately $3.7 million.

BMO-2

48Similar transactions occurred in the following days in BMO-2. Cheques from 9058 ONT were deposited, then funds were transferred before the cheques cleared, then the cheques were returned for insufficient funds.

49On November 7, 2022, the respondent deposited 22 cheques totalling about $3,685,000 from 9058 ONT to BMO-2. The same day, she transferred the full amount to BMO-1. This appears to have been done to cover the shortfall in BMO-1. The cheques eventually were all returned for insufficient funds.

50Approximately 2 days later, the respondent deposited 22 other cheques totalling about $3,700,000 from 9058 ONT to BMO-2. The cheques eventually were all returned for insufficient funds.

51On November 10, 2022, BMO suspended outgoing funds from the trust accounts.

52As of November 14, 2022, BMO-2 had a negative balance of approximately $3.48 million.

53The respondent did not replenish the shortfall with funds from 9058 ONT or Corp A and did not report the shortage to the Law Society or LawPRO.

Bank inquiries and inconsistencies in documents

54Due to the high volume of transactions in the respondent’s BMO accounts, BMO requested additional information. In response, the respondent provided loan agreements and advised BMO that Corp A had entered into short-term lending arrangements with two borrowers. She also stated that the borrower’s corporate documents had been reviewed at the time the agreements were prepared.

55However, one purported borrower, 9058 ONT, was incorporated on October 4, 2022, nearly two months after the August 15, 2022 loan agreements.

56Some transactions involved promissory notes dated June 1, 2018, and September 1, 2021, ranging from $500,000 to $2,500,000. Some promissory notes issued by borrowers identified as Alternate Fund and Estate Realty were signed only with the entity names, rather than by a director or authorized signing officer.

57These inconsistencies and deficiencies seriously undermined the reliability of the documentation provided to the bank, contrary to legal and commercial practices.

Findings in relation to Allegations 1 and 2

58The evidence establishes that the respondent knowingly permitted her trust accounts to be used for large financial transactions unrelated to legal services, contrary to Rule 3.2-7.3. Tribunal jurisprudence has consistently affirmed that a lawyer’s trust account may be used only where the receipt and disbursement of funds is reasonably a part of legal services being provided: Law Society v Albaum, 2023 ONLSTH at para 143.

59Lawyers are often described as gatekeepers in money-laundering schemes, because they can move funds with less scrutiny than members of the public: Albaum at para 139. For this reason, strict limits on the use of their trust accounts are essential to protecting the public and maintaining confidence in the profession.

60In this matter, the respondent disbursed funds from a trust account before ensuring deposits had been cleared, failed to maintain sufficient trust balances, and used other clients’ funds to make up for trust fund shortages.

61The timing of the transactions between November 1 and 24 supports an inference that the respondent proceeded knowing that incoming funds from other clients would be available to temporarily cover trust deficits created by earlier disbursements.

62The respondent actively transferred funds between different trust accounts seemingly to cover shortages in various accounts. This conduct supports a finding that she had actual knowledge of the transactions and their impropriety. In the alternative, the evidence establishes wilful blindness, which amounts to knowledge for the purposes of professional discipline. In either case, the respondent knew that she was facilitating improper practices involving 9058 ONT and did so using her trust accounts: Law Society of Ontario v Barnwell, 2023 ONLSTH 31 at paras 102-104.

63We therefore find that the respondent had actual knowledge of her misuse of trust accounts.

64Although the precise nature of the relationship between the respondent, 9058 ONT, and Corp A is not fully established, the evidence supports a finding that the respondent participated in the improper and dishonest use of her trust accounts. There is no evidence that any of the transactions were connected to the provision of legal services. In several instances, the respondent made a cheque to herself and/or transferred funds to her general account without the justification of payment for legal services.

65As described earlier, the respondent provided documents to a financial institution to legitimize the activities of Corp A, including documents relating to its corporate status and lending activities.

66There were significant deficiencies in those documents. The retainer agreement was neither signed nor dated. Corp A purportedly retained the respondent to collect debts arising from short-term mortgage lending transactions. However, one of the alleged borrowers, 9058 ONT, was incorporated on October 4, 2022—nearly two months after the August 15, 2022, loan agreements.

67These inconsistencies undermine the credibility of the documentation and raise serious concerns about the legitimacy of Corp A’s activities. Despite this, the respondent actively presented these documents to the bank in support of Corp A’s lending activities. Several of the documents were incomplete or facially unreliable.

68The panel did not receive any information from the parties to explain or refute these inconsistencies.

69Based on the evidence, we find that the respondent used her trust account for purposes unrelated to legal service, contrary to Rule 3.2-7.3 of the RPC.

70We also find that the respondent knowingly assisted or facilitated dishonest or fraudulent conduct in her representation of a corporate client.

ALLEGATION 3: MISAPPROPRIATION OF TRUST FUNDS

71The Law Society alleges that between approximately November 2022 and February 2023, the respondent misappropriated or, in the alternative, misapplied, $3.5 million, more or less, from the funds she held in trust on behalf of clients and third parties, including the following amounts:

• $778,570, more or less, from Arti Sood;
• $582,976, more or less, from AA;
• $771,302, more or less, from BB and CC; and
• $300,000, more or less, from DD.

72Since the respondent was facing shortages in her trust accounts, she used other client funds to attempt to cover the shortfall.

73The evidence establishes the following.

Funds owed to Arti Sood

74On November 24, 2022, Mr. Sood, the principal of 2931393 Ontario Inc., advanced around $1,124,214, and on December 23, 2022, a further $728,355, totalling $1,852,569, in trust to the respondent.

75The mortgage transactions related to these funds did not close; and Mr. Sood’s company demanded that the respondent return the mortgage funds.

76Between May and December 2023, the respondent returned $1,074,000 to Mr. Sood’s company, but to date Mr. Sood’s company has not received the rest, about $778,570.

Funds owed to AA

77AA was the principal of a numbered company incorporated in Ontario (AA’s Company).

78In November 2023, AA retained the respondent regarding the registration of a second mortgage on a property owned by AA’s company.

79Around November 14, 2023, the respondent received about $526,270 in mortgage proceeds in trust for AA into BNS-1.

80The respondent did not advance the funds to AA as required.

81The respondent gave AA two cheques totalling $250,000 from BSN-1 dated December 8, 2023. Both cheques were returned for insufficient funds, which the respondent claimed was due to miscommunication and clerical error.

82To date, the respondent has not advanced the funds to AA despite acknowledging that the funds were owed and promising to do so.

Funds owed to BB and CC

83BB and CC are trustees for an estate.

84In October 2023, the respondent was retained to act in the sale of a property belonging to the estate.

85The sale of the property closed on November 2, 2023, and the proceeds of the sale, $775,612, went into the respondent’s BNS-1 trust account.

86In a reporting letter dated January 26, 2024, provided to BB and CC by the respondent, she stated that the net sales proceeds of $771,302 were owing to the estate and that a cheque was enclosed. No such cheque was enclosed.

87The respondent communicated again with her clients to advise the sale proceeds would be available February 5, 2024.

88To date, the respondent has not disbursed the funds to BB or CC despite reassurances she would do so.

Funds owed to DD

89DD agreed to advance mortgage funds to a corporation which the respondent represented.

90On February 3, 2023, the respondent undertook, among other things, to return DD’s funds if the transaction failed to close.

91On February 6, 2023, counsel for DD advanced approximately $950,000 to the respondent in trust.

92The transaction for which the funds were advanced did not close, and the parties agreed to use $650,000 to fund a different transaction.

93On July 31, 2023, the respondent gave DD a personal undertaking regarding the remaining $300,000. She would hold the funds in trust until the transaction closed. The transaction did not close.

94DD demanded the return of the $300,000. To date, the respondent has not returned the $300,000 which she held in trust for DD.

95Other funds received in November 2022 were similarly not returned when required and appear to have been used by the respondent to cover shortages in her trust accounts.

96The respondent also transferred funds from her trust accounts into her general accounts without explanation or apparent justification.

97In performing the above actions and transactions, the respondent temporarily masked trust shortages in one or more of her trust accounts, using other clients’ funds. The shortages arose from dishonoured cheques issued by 9058 ONT, which, nevertheless, received the benefit of the earlier disbursements.

Finding

98Misappropriation is defined as the “knowing unauthorized use of client property by a lawyer or paralegal for their own purposes, on the basis that the knowledge may be actual knowledge, willful blindness or recklessness”: Law Society v Wilkins, 2021 ONLSTA 15 at para 103. Misapplication, by contrast, involves the unauthorized use of client property where there is no direct benefit to the licensee.

99The Law Society submits that this case involves misappropriation, rather than misapplication, for two reasons. First, the respondent derived a benefit by continuing to practise law while concealing trust shortages using other clients’ funds. Second, by using client funds to cover deficits, the respondent avoided immediate scrutiny by her financial institution and the risk of litigation that would have followed had the shortages been disclosed.

100We agree. The evidence establishes that the respondent knowingly misappropriated client funds. She actively participated in these improper transactions and could not have been blind to the implications and the consequences. By improperly using trust funds from other sources to cover shortfalls and facilitate transactions involving Corp A and 9058 ONT, the respondent derived an economic benefit. While the precise financial benefit cannot be quantified, the benefit is substantial, and the amount is not determinative. The fact that a benefit was obtained, and that she had knowledge of what she was doing, is sufficient to support a finding of misappropriation.

101Based on the evidence, the respondent misappropriated significant amounts of money from her clients, approximately $3.5 million, in part for her own benefit.

102We find that the allegation of professional misconduct is established.

ALLEGATION 4: BREACH OF AN UNDERTAKING TO NOT TO RELEASE MORTGAGE FUNDS WITHOUT CLIENT AUTHORIZATION

103The Law Society alleges that the respondent breached an undertaking, dated November 24, 2022, given to Arti Sood to not release any part of the mortgage funds advanced to the respondent until given authority to do so, contrary to Rule 7.2-11 of the RPC.

104As described above, on November 24, 2022, Mr. Sood advanced approximately $1,124,214, and on December 23, 2022, a further $728,355, totalling $1,852,569, on behalf of his company to the respondent, in trust.

105These funds were advanced in connection with a mortgage transaction in which the respondent acted for the borrowers and were deposited in the respondent’s BMO-1 account.

106The respondent undertook not to release the funds until certain conditions were met, including being authorized to release those funds by Mr. Sood’s company.

107The mortgage transactions did not close, and Mr. Sood’s company demanded that the respondent return the mortgage funds.

108The respondent returned $1,074,000, but not the total amount, leaving a balance of approximately $778,570.

109The respondent’s BMO-1 trust account closed February 2023 with a zero balance. This was because some of the funds had been transferred to parties other than Mr. Sood without his authorization or direction to do so.

Finding

110We therefore find that the evidence establishes that the respondent released the funds without being authorized to do so by Mr. Sood on behalf of his company, thereby breaching her undertaking.

ALLEGATION 5: FAILING TO CO-OPERATE WITH AND RESPOND TO FIVE LAW SOCIETY INVESTIGATIONS

111Since April 4, 2024, and continuing, contrary to s 49.3 of the Act and Rule 7.1-1 of the RPC, the respondent has failed to co-operate with and respond to the following five investigations: CAS-139080-V3J5N0, CAS-143404-G4Z6L3, CAS-141906-T9B2D0, CAS-143096-M7L4S3, and CAS-141604-V8S3W4.

Investigation 1 (CAS-139080-V3J5N0)

112On December 13, 2023, the LSO investigator provided to the respondent a letter in person regarding investigation 1. The letter requested the immediate production of numerous documents. The respondent retained counsel and provided the LSO with some documents and an authorization to obtain her TD and BMO bank records.

113The respondent provided the LSO with a letter dated January 8, 2024, from the Canadian Association of Mental Health excusing her from work for the next week to focus on recovery.

114However, the respondent has not provided required bank reconciliations, trust receipts, disbursement journals, other related documentation, or her written representations on various questions.

115On February 5, 2024, the respondent’s counsel advised the LSO that the respondent was under medical care at a hospital.

Investigations 2 (CAS-143404-G4Z6L3) and 3 (CAS-141906-T9B2D0)

116On February 14, 2024, the Law Society investigator advised the respondent by email about investigations 2 and 3 and requested production of documents and representations. The respondent did not respond to this request.

117The LSO investigator repeated her request around March 7, 2024. The respondent replied that she had returned to work and that she would be working on those requests.

Investigations 4 (CAS-143096- M7L4S3) and 5 (CAS-141604-V8S3W4)

118On the same day, March 7, 2024, the LSO investigator advised the respondent by email about investigations 4 and 5.

119On March 25, 2024, the LSO requested that the respondent produce documents and written representations for all five investigations by April 4, 2024. The LSO received an absence notice that the respondent was out of the office until March 18 due to a medical reason.

120The respondent did respond to the LSO email of March 25, 2024, but did not provide any of the documents requested in that email. There are therefore large numbers of questions still unanswered and large amounts of documentation still unproduced.

Finding

121Licensees are required to make good faith efforts to co-operate with the Law Society: Law Society of Ontario v Diamond, 2021 ONCA 255 at para 50. Despite assurances that she would co-operate fully, the respondent failed to submit any written representations or provide full or proper disclosure. In or around March 2024, she ceased communicating with the Law Society entirely.

122We find that the respondent failed to co-operate fully with the Law Society regarding the five investigations. This allegation is therefore proven.

CONCLUSION

123We find the allegations made in the notice of application are supported by the evidence and constitute professional misconduct.

124The scheduling coordinator is directed to schedule a penalty hearing.