Complaints, Lawyer Discipline and Public Hearings

Summary of Decision on Facts and Determination

Florence Esther Louie Yen

Vancouver, BC

Called to the bar: September 1, 1995

Discipline hearing: October 29-31, 2019 and March 4, 2020

Panel: Nancy Merrill, QC (chair), John Lane and Sandra Weafer

Decision issued: September 18, 2020 (2020 LSBC 45)

Counsel: Mandana Namazi for the Law Society; Gerald Cuttler, QC for Florence Esther Louie Yen

FACTS

Florence Esther Louie Yen practised as an employee of a law firm and was a signatory on the firm’s trust accounts. She was retained by a client to incorporate a numbered company for the purpose of a restaurant business. Over several years, she provided a variety of legal services to the client and his partner, or their corporate entities.

The client contacted Louie Yen from Hong Kong and advised that his uncle’s foundation wanted to invest in Canada and that he was looking at purchasing a property. The client would be receiving funds from his uncle as a gift or a loan. He asked for instructions on how the uncle could wire money into the firm’s trust account.

Louie Yen authorized her assistant to provide the client the deposit information for one of the firm’s trust accounts and $500,000 USD was wired to the trust account. The money was received as $604,770.16 CAD.

The client called Louie Yen and said the offer on the property he was looking at was not accepted. The client said he wanted to access the money that had been forwarded to the trust account.

Louie Yen was unsure if she was able to release the funds, as the funds were forwarded from the uncle for a transaction that was not proceeding. She asked the firm’s bookkeeper to contact the Law Society to ask, but did not inform the bookkeeper of any details, such as the amount of the funds or information about the client or the sender of the funds. The bookkeeper spoke with the Trust Assurance department and made the general inquiry, stating that the funds were provided for a client by an uncle for a real estate transaction that had not proceeded. The Law Society called the bookkeeper back and told her that if it was a client of the firm, it would be fine. The only note kept of the call was made by Louie Yen’s assistant. The Law Society had no note of the call.

Louie Yen’s legal assistant wrote to the uncle at the email address provided by the client, confirmed that the firm would be paying out the funds to the client, and asked for a mailing address for the firm’s records. The uncle provided his mailing address in Hong Kong.

The funds were withdrawn upon the instructions of the client: $300,000 to the client and three cheques to law firms in the amounts of $18,500, $18,750 and $59,900 for purchase deposits. Louie Yen was not acting for the client with respect to these purchases.

A further $1.7 million USD was wired to the firm’s trust account from the uncle’s email address via Luxembourg. Two days later, a bank draft of $1,699,985 was sent to one of the client’s companies. There is no indication Louie Yen was providing any legal services to the client or to the company, and there is no indication she knew ahead of time the date of the transfer, the amount of funds or who the funds come from.

Approximately $1,849,971 USD was further wired to the trust account from Singapore and a US dollar bank draft of essentially the same amount was paid out the same day to the client, on his instructions. Again, there is no indication Louie Yen provided any legal services with respect to these funds or had advance information about the funds or who they would be coming from.

Of the approximately $200,000 remaining in trust, amounts were paid over the course of less than a month in varying amounts to law firms for purchase deposits, to investment funds and nearly $100,000 to the client, all on the instructions of the client. Louie Yen did not provide any services related to the purchase deposits or investments.

Over the next two years, funds continued to be deposited to the trust account in similar fashion, and monies were disbursed to a variety of other law firms, to investment entities, to companies controlled by the client and to the client personally.

A total of $9,949,688.99 USD and $1,274,764.96 CAD were received in trust, and the same was paid out of trust in a total of 45 transactions. Of the amount paid out of trust, only approximately $1.5 million USD was transferred directly to the credit of other legal files at Louie Yen’s law firm, which included the purchase of commercial property, transfers to a numbered company and the purchase of a property.

Louie Yen did not ask further questions of her client as to why the trust account was being used to receive and disburse funds for which the firm was not doing any legal work. She did not meet with or speak to the uncle who was providing the funds to her client, despite the funds coming in as wire transfers from a variety of sources, including Panama, Singapore and a Singapore bank via Luxembourg. After the initial call to the Law Society, she did not make further inquiries about the propriety of the activity in this file.

The transactions raised red flags with a Canadian bank, which inquired about the source and purpose of the funds. After emailing the client, Louie Yen’s assistant responded to the bank and stated the reason was for investments in real estate. The bank asked why a law firm was receiving funds intended as a gift between family members and why the money was coming in via wire transfers from Panama. The questions were directed to the client, who explained that the funds were dividend income from his uncle’s business as a brand agent of China’s number one brand of rice wine and for the China National Tobacco Company. There is no indication Louie Yen asked similar questions of her client before the bank inquired.

DETERMINATION

Louie Yen argued she made appropriate inquiries, given the client was a long-standing client and she had previously provided legal services to him. She opened 16 files for him or related companies during that time period, which included purchases of commercial buildings, creating a family trust for the client, incorporating companies and drafting a shareholders agreement and acting for him in connection with the purchase, joint venture and financing of a property. Her understanding was she was performing substantial legal services for the client and his related companies, and she believed this was sufficient reason for her to receive funds into trust, even if the funds were not connected to any specific legal file at the time of deposit or withdrawal from trust.

The panel stated that it is not enough that a lawyer does other legal work for a client that deposits money into the lawyer’s trust account – the legal work must be in connection with the trust matter. The panel found that Louie Yen’s trust account was used as a bank account, to which the client could make deposits and transfer money out at will.

The panel also considered that Louie Yen did not make any inquiries of the client despite numerous red flags, including: she had not seen the contracts of purchase and sale; she did not know the client’s uncle; the money came from a variety of sources; the value of the deposits was different than what was initially discussed; the client asked for the value of the deposit to be paid out within a day of deposit; there was no explanation as to why further deposits were made into trust; the money was being deposited into a non-interest bearing account despite the client’s concern about maximizing investments; and the money had been deposited from Panama at a time when the Panama Papers were in the media.

The panel determined Louie Yen committed professional misconduct by permitting the use of her trust account for deposits and withdrawals without providing any legal work in connection with the transactions, failing to make necessary inquiries, failing to record the results of the inquiries and failing to record the source of the funds with respect to three deposits.

2020 LSBC 45 Decision on Facts and Determination