A B.C. lawyer found to have committed professional misconduct after improperly flowing more than US$10 million through her trust accounts for a Chinese client looking to purchase property in B.C. in 2015 has partially lost an appeal case brought forward by the Law Society of BC.
Suspicious transactions improperly vetted by Florence Esther Louie Yen had resulted in two findings of professional misconduct from a .
Yen was suspended from her practice for three months.
But Yen appealed the findings to a , which found the hearing panel erred in one of its determinations of professional misconduct — that Yen had failed to record the source of funds for some transactions.
Thereafter, the to the B.C. Court of Appeal.
On Dec. 17, the three-judge appeal panel ruled Yen had, in fact, broken law society rules; however, it did not amount to professional misconduct.
Key to the appeal ruling was that the judges did not find Yen’s breaches were done in bad faith and the poor record keeping was an oversight.
Furthermore, there was no evidence of actual harm arising from Yen’s breach of the rules as her client did not suffer any harm, and wire receipts had been preserved for the society’s investigation.
In the original decision, there was no finding that actual money laundering or other actual dishonest or illegal conduct occurred, the hearing panel ruled.
However, the panel noted the breaches originated from money laundering red flags that should have prompted inquiries from Yen.
As such, the review board upheld the proven allegation that Yen did not make reasonable inquiries about the circumstances of numerous transactions that amounted to approximately US$10 million and $1.27 million being disbursed through her trust accounts via dozens of transactions between 2015 and 2017.
Yen’s client from Hong Kong moved the money from a variety of sources, including Panama, Singapore, and a Singapore bank via Luxembourg.
At no time did Yen ask any further questions of her client as to why the trust fund was being used to receive and disburse funds where the firm was not doing any legal work in connection with the disbursed funds, the panel found.
The decision stated how Yen’s client “PL” contacted Yen from Hong Kong and advised that “his uncle’s foundation wanted to invest in Canada, that there was a property that he was looking at purchasing and that he would be receiving funds from his uncle as a gift or loan. He asked for instructions on how the uncle could wire monies into the firm’s trust account.”
Yen opened 16 files for PL or related companies, including for purchases of commercial buildings in Vancouver, Surrey and Chilliwack and on Vancouver Island and related lease matters. Yen also created a family trust for PL, incorporated companies and drafted a shareholders' agreement, and acted for him in connection with the purchase, joint venture, and financing of property near Victoria.
It was in August 2017 that the Royal Bank had further questions about the trust activity, including why the money was coming in via wire transfers from Panama, and wanted details about the uncle’s source of wealth in Panama.
The client explained to Yen that the money came from the uncle’s business as a registered and exclusive brand agent of China’s number one brand of rice wine and for the China National Tobacco Co.
“There is no indication that [Yen] was aware of this level of detail, or had ever asked similar questions of her client as the Bank required, before August 2017,” the panel noted.
