What Martin Wirick left in his wake
On August 26, 2008 the RCMP arrested Martin Keith Wirick — a disbarred BC lawyer — and his former client Tarsem Singh Gill. The charges include allegations of theft and fraud relating to more than 100 real estate transactions between 2000 and 2002. They are also charged with uttering forged documents and possession of stolen property. Wirick was released on bail and is scheduled to make his second court appearance in November.
Families, financial institutions and the legal profession were left to pick up the pieces with the help of the Law Society in the wake of disbarred lawyer, Martin Wirick. At its worst, his misappropriations caused many to fear they might lose their homes. At its best, the situation demonstrated the fabric of the entire legal profession when it stepped up to deal with the Wirick crisis as it unfolded, compensating his victims and restoring public confidence.
When Wirick's story came to light in 2002, the sheer number of misappropriations quickly became the most ever by a lawyer in BC. His impact was enormous on the Special Compensation Fund, which was designed to compensate victims who lost money through a lawyer's misappropriation. Since 1969, the total amount of money paid out from the Fund was approximately $52 million. Wirick's fraudulent actions teetered near that more than 30-year total with an incredible $38.4 million paid to date.
Not surprisingly, Wirick's misconduct initiated the largest investigation ever undertaken by the Law Society. The accounting documents alone — including client ledger cards, cancelled cheques, cheque stubs and bank statements — filled 64 four-inch binders. And in the first two months following the appointment of a custodian of Wirick's practice, the Law Society copied all of Wirick's files and accounting records — the photocopy paper alone cost more than $11,000.
The claims of innocent homeowners were finalized by the end of 2005. Today, there are only eight claims outstanding, which are all related to a single strata complex, made by one particular financial institution. The custodianship of Wirick's former practice is expected to be wound up in 2009.
How did the scheme work?
The scheme was complex. Much like a house of cards, with each card propping up another in a structure that would inevitably collapse under its own weight, the frauds were intertwined. Wirick's dealings were so complicated that the proceeds of one single conveyance could be traced to more than 40 other transactions.
Wirick's major client was developer Tarsem Singh Gill and his companies or nominees. Gill, or one of his companies or nominees, would purchase a property, redevelop it and sell it. Wirick would receive the sale proceeds. Then, instead of paying off the prior encumbrances, as he had undertaken to do, he misdirected the down payment and mortgage funds to Gill, his nominee or one of his companies.
Wirick's actions remained undetected for three years. The delay in the provision of mortgage discharges by financial institutions had allowed the scheme to remain under the radar. However by May 2002, the house of cards structure had begun to collapse.
What did lawyers do to fix things?
For its part, the Law Society reacted to the crisis by immediately taking steps to protect Wirick's clients and other affected parties. The society moved quickly to ensure that hardship cases received immediate attention. A custodian of Wirick's practice was appointed, and the Law Society conducted an extensive audit and investigation.
In cases where a financial institution had begun to foreclose on an innocent victim, the Law Society retained counsel to represent the victim's interests. Further, the society encouraged all potential claimants to file as early as possible — regardless of potential overlaps — to ensure a quick and thorough evaluation of all claims.
While the Law Society Rules at that time capped the annual aggregate payments made from the Fund at $17.5 million, the Benchers agreed to remove the limit to ensure all valid claims would be covered.
At the time the Wirick claims were discovered, there was approximately $7 million in the Special Compensation Fund, plus $15 million of insurance. More money was needed, and BC lawyers provided it. In 2003, the Law Society increased the assessment paid by lawyers for the Special Compensation Fund from $250 to $600. Although the fee has now been reduced from its high point, lawyers will still be paying for Wirick's misconduct in their 2009 assessments.
BC lawyers demonstrated their professionalism, shouldering a significant financial burden so that the Special Compensation Fund could protect the innocent victims. Ultimately, every lawyer in the province paid for the deception of one so that the society could fulfill its responsibilities in protecting the public. Because of the Law Society's actions, not one of the hundreds of innocent homeowners lost their homes.
The impact on one family
The Law Society's efforts have been well received by the Ng family. They are but one of the families who suffered from Wirick's misappropriations.
In July 2001 Allan and Sanlly Ng moved into their new Vancouver home with their children and Allan's parents. After about a year in their house they received a letter from their lawyer advising them there were two mortgages worth nearly $400,000 still on their house and registered ahead of their own mortgage.
Sanlly remembered feeling confused and frightened. In October 2002 they submitted a claim to the Law Society.
The Special Compensation Fund Committee took the necessary steps to ensure the family and their bank would be restored to the positions they would have been in had Wirick honoured his undertakings and dealt with their real estate matter as it should have been.
Of the experience, Allan told the Law Society last year, "we were very relieved and very grateful to the Law Society for its fair and fast handling of our claim. We knew from newspapers and television that many people had suffered losses through Mr. Wirick's actions, and that the Law Society had received hundreds of claims, totalling millions of dollars," recalled Allan. "We had lost faith in lawyers. The way the Law Society has responded to those claims, including ours, has restored our trust in the legal profession."