A long-time Toronto-area real-estate lawyer has been charged with money laundering in connection with a drug investigation where the RCMP froze more than $7-million in suspicious assets.
In addition to the money-laundering accusation, Kenneth James, 71, a solicitor whose law office, James and Associates, is based in Concord, Ont., has been charged with fraud over $5,000 and possession of proceeds of crime.
Also charged is Rosemary Cremer, 61, who faces one count of money laundering and one count of possession of proceeds of crime.
Ms. Cremer is an employee at Mr. James’ law firm.
In addition to raiding Mr. James’ office on Thursday, police also executed a search warrant at Ms. Cremer’s Willowridge Road residence.
Mr. James lives at Ms. Cremer's residence but investigators are not aware of a personal relationship between the two, said Detective Inspector Derek Matchette of the RCMP's Integrated Proceeds of Crime unit.
Land records show that the house, which was purchased for $221,000 two decades ago, was re-mortgaged last February for $130,869. That debt was discharged two weeks ago.
The RCMP said they also filed money laundering and possession of proceeds of crime charges against Mr. James’ law firm and two companies, Eveline Holdings Limited and Sterling Capital Inc.
Court documents in previous litigations show that Mr. James has acted as Eveline’s solicitor in Ontario and that at one point he got part of a disputed $2-million sum to be wired to Eveline off-shore accounts in the Turks and Caicos.
The RCMP said the charges filed this week stemmed from a two-year investigation into the exportation of drugs from Canada that began in June 2010 with the force’s GTA Drug Section. A primary suspect and other people have been arrested but details are under a publication ban.
“Criminal organizations frequently use sophisticated means to launder the profits of their crimes . . . By removing those illicit profits and bringing to justice those who assist criminal groups we are able to disrupt organized crime that affects all Canadians,” RCMP Inspector Mark Pearson, the officer in charge of the Toronto Integrated Proceeds of Crime Unit, said in a statement.
Mr. James has previously been named in a number of civil litigations and one criminal case.
In an Ontario Superior Court decision last year in a Mississauga real-estate fraud case, the court heard that “fraudulently obtained funds” were moved between several accounts including one belonging to James and Associates.
Canadian trustees of the Church of Jesus Christ of Latter-day Saints have also alleged in court litigations that in 1990, Mr. James was the solicitor in a number of real-estate transactions where Mormon church properties were flipped and the profits pocketed without the church’s knowledge. The church eventually dropped its action against Mr. James.
Mr. James also faces an ongoing disciplinary proceeding before the Law Society of Upper Canada, which he has been fighting. In May of 2010, the legal profession’s regulator alleged he had participated in or knowingly assisted with “fraudulent or dishonest conduct” in connection with 12 Toronto-area mortgage transactions. If he is found to have violated the profession's rules, he could lose his licence to practise law.
Law enforcement agencies have long identified lawyers, and the use of their trust accounts by potentially unscrupulous clients, as weak links in worldwide efforts to crack down on money laundering.
But Canada’s legal profession has waged a battle in court for over a decade, successfully resisting attempts to include it under Ottawa’s anti-money-laundering regime. The rules, among other things, require bankers and others who handle money to report certain suspicious transactions. The Federation of Law Societies of Canada argued the rules threatened lawyers’ independence and required them to betray their clients.
Instead, law societies across the country have brought in their own rules to combat money-laundering, including the banning of lawyers from accepting cash deposits into their accounts of more than $7,500, excluding payments of legal fees.
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