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West Vancouver lawyer suspended over use of trust accounts

Ruling on professional misconduct imposes six-month suspension
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A West Vancouver has been suspended by the Law Society of B.C. for not making enough inquiries about the use of his trust accounts | Mike Wakefield, North Shore News

West Vancouver lawyer suspended over use of trust accounts

The B.C. Law Society has issued a notice suspending a West Vancouver lawyer for six months after ruling that he committed professional misconduct by allowing more than $25 million in offshore money to flow through his trust account on behalf of corporate clients without making reasonable inquiries about the circumstances around the transactions or providing substantial legal services.

Donald Franklin Gurney will be suspended for six months beginning Nov. 1, 2017.

In addition to the suspension, Gurney must also hand over to the law society the $25,800 that he was paid for the use of his trust account. Upon resuming his practice, Gurney will also be subject to conditions including that he flag for authorities any transaction going through his trust accounts involving foreign senders or recipients of money or foreign financial institutions.

The suspension follows a decision by a law society disciplinary panel in May that ruled Gurney committed professional misconduct by using his trust account to send and receive multimillion-dollar sums on behalf of four companies between May and November 2013 without making reasonable inquiries about the transfers.

The amounts of money transferred ranged from $5.8 million to $7.4 million at a time.

All of the transactions dealt with offshore lenders in countries including Belize, Nevis and the Marshall Islands providing loans to a new client, whom Gurney did not know well, according to the panel’s written decision.

The four line-of-credit agreements were all unsecured, already signed when received by Gurney, one-page in length and remarkably similar, according to law society documents.

“This is one of those circumstances in which one would have to ignore the sea of red flags that were raised by these transactions,” according to the decision.

Gurney asked his clients whether the transactions involved funds that “had anything to do with money laundering or were the proceeds of crime” and was told they did not. But the law society noted Gurney made no other inquiries about who the principals or owners of the lending companies were, whose signatures were on the documents, the status of its incorporation, or when the documents were drawn up.

The law society ruled Gurney had “ignored the fundamental obligations of a lawyer to act as the gatekeeper of his trust account” in not doing that, and had profited by charging “one-tenth of one per cent of the value of the funds that passed through his account.” The law society described that as “renting his trust account.”

During the earlier hearing, Gurney and his lawyer Paul Jaffe argued that because “schemes such as money laundering were relatively new and had not been a risk during much of his career,” Gurney, 74, would have been less suspicious of the transactions.

Gurney maintained during the law society’s disciplinary process that he had done nothing wrong.

In statements issued on the decision through his lawyer, Gurney stated despite a two-year investigation, the law society never found any evidence of actual wrongdoing or illegal activities connected to the transactions. He added if the same rules were applied to all lawyers, many transactions involving Chinese capital flowing into the Lower Mainland for real estate purchases would come under much more rigorous scrutiny.

In his statement, Gurney questioned the fairness of the process and stated he was disappointed in the decision.

Gurney stated he was “considering our appeal options.”