A real estate lawyer from Vancouver, British Columbia, has lost his license to practice law for seven years after admitting to embezzling client trust funds to fuel his gambling addiction. Last week, Russell Sean McDonough inked a consent agreement with the Law Society of B.C. confessing to professional misconduct in 34 instances of misappropriation in around 22 months.
The agreement reads that the lawyer confessed to taking money from his clients starting in 2021 after accumulating a large amount of debt from gambling and running all of his credit sources to the ground. Then in April 2023, he tried to explain his reasons to the law society, elaborating that his life had become completely consumed by the thought of gambling.
Succeeding in Paying Back Clients
However, it should be mentioned that Mr. McDonough did manage to pay back more than CA$6 million of the CA$8 million on the misappropriated funds. But only CA$308,000 of that was from gambling winnings. The Lawyers Indemnity Fund, which provides liability coverage for lawyers in the Western province covered the remaining CA$2 million and reimbursed the clients.
The misconduct by the lawyer was uncovered in October 2022 after an audit of his firm’s books. He told the law society that his usual pattern of misappropriation included holdback funds in connection to property sales by non-Canadian residents. When he needed cash, he would find a non-local holdback file and write a cheque to his corporation for the entire amount.
There was an instance of Mr. McDonough forging documents to acquire a client’s signature, falsely claiming that there was a statutory CA$50,000 holdback from a property sale, so he could take advantage of the funds. He was officially given a gambling disorder diagnosis in October 2022 and has not gambled since then. He also attended residential treatment.
Also, the doctor who diagnosed the lawyer told the law society that gambling addictions can trigger an otherwise honest person to misappropriate client funds. Mr. McDonough has been a non-practising lawyer since the discovery of his conduct. He will be allowed to rejoin the Las Society of B.C. or any other Canadian Law society starting from August 1, 2030.
B.C. Puts More Funds into Tackling Problem Gambling
With the digitalization and the increasing popularity of online gambling, the Province of B.C. has decided to put more money into preventing problem gambling. In December 2023, Public Safety Minister Mike Farnworth announced a CA$1.4 million investment into the Centre for Gambling Research at the University of British Columbia for research on gambling-related harms and addictions.
Director of the Centre for Gambling Research, Luke Clarke noted that the funding highlights the gravity of gaining a deeper understanding of gambling issues via research on its psychological basis. He added that the experts have the task of decreasing harm associated with gambling problems, along with bolstering evidence-based gambling policy.
Source: Lindsay, Bethany “Lawyer who misappropriated $8M from clients to feed gambling habit banned from law for 7 years” CBC, February 5, 2024
