Ottawa law firm to get back frozen funds sent to alleged fraudsters

The alleged fraudsters impersonated clients of the law firm and bank employees in emails and requested that funds be transferred to different accounts than those originally provided by the clients.

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An Ottawa law firm that mistakenly transferred nearly $1 million to alleged fraudsters will be getting its money back from a frozen account, according to a Superior Court ruling this week.

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McGuinty Law Offices was assisting with four real-estate transactions in June 2022, according to the facts laid out in the judge’s ruling, when, “Unbeknownst to McGuinty Law, fraudsters had breached the law firm’s email system before the closing dates.”

The alleged fraudsters impersonated clients of the Ottawa law firm and TD Bank employees in emails and “requested that the proceeds of the transactions be transferred to different accounts.

“Unsuspecting foul play, employees of McGuinty Law transferred (through wire transfer) the proceeds of three of the four transactions from the firm trust account to accounts that were not controlled by the clients.”

According to the ruling from Superior Court Justice Jaye Hooper, a total of $959,102.05 of trust funds were fraudulently diverted.

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The firm recovered a portion of those funds once the fraud was discovered, and TD Bank was able to trace and place a hold on some of the accounts.

The owner of one of the accounts objected, however, and the bank could not release the money — or identify the account holder — without a court order.

McGuinty Law pursued an application to unseal the account holder’s identity, which was swiftly granted in an earlier decision by Ontario Court Justice Charles Hackland, who ruled the order was “required urgently to deal with a major fraud/theft from a law firm.”

The account was registered to a numbered company, 138 Canada Inc. and its owner, Bean Baring.

Baring represented himself at the hearings, which were initially scheduled to commence in December, but were delayed until a Punjabi interpreter could be arranged to translate documents for Baring.

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Attempts to reach Baring by this newspaper were unsuccessful. McGuinty Law did not immediately respond to a request for comment on Thursday.

According to the case summary, Baring’s corporate account was the recipient of one of the mistaken transfers and at one point held $656,570.15 in disputed funds.

TD Bank was successful in recovering some of the deposits from other accounts, and, following a court order, Baring’s corporate account was found to hold a little more than $250,000 in disputed funds.

Baring did not deny that he controlled the corporate account in question, Hooper’s ruling states.

He did not file any documentation or written submissions in court, according to the case summary, but instead relied on oral submissions that the judge acknowledged “were, at times, difficult to follow.”

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Baring told the court he was “also a victim of fraud” and had sold a property in India with the proceeds of the sale to be deposited in his corporate bank account.

Baring told the judge the house sale in India was not valued at $650,000, but said he “understood” that the deposit came from the sale of the house and unspecified “other” sources.

He did not identify other sources and did not explain how a “mixed deposit” could find its way into his company’s bank account.

Baring did not provide any documentation to support a sale of land in India and could not provide any details of the sale, including the sale price, the judge noted.

Baring told the court he sold the land for “between 20-30 million rupees,” according to the case summary.

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He offered no explanation about the deposits or withdrawals made from the account following the original June 2022 deposit of $656,570.15.

“Baring’s oral explanation as to why he thought he was entitled to retain these funds was not credible, and I rejected it completely,” Hooper wrote in the decision.

The judge noted that the proceeding was intended to recover money that had been mistakenly transferred and the court “(did) not have to determine if the respondent was part of the fraudulent scheme or not. All that was demonstrated was that an error was made and funds were paid into the respondents’ bank accounts that should not have been deposited.”

Hooper ruled in favor of McGuinty Law and found the firm paid the money “under a mistake of fact.”

Baring was ordered to release the remaining funds to McGuinty Law and to pay legal costs to the firm of nearly $7,500.

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