New book implicates Canadian lawyers in money laundering in a tale worthy of a John Grisham novel.
Lawyers, mouthpieces, mafia, and the mob. From the point of view of the legal profession, best-selling novelist John Grisham has a lot to answer for. More than anybody else, he’s promoted a connection in the popular mind between lawyers and organized crime. (Grisham, by the way, is a 1981 graduate of Mississippi State University School of Law, and practised law for nearly a decade in a small town in Mississippi, specializing in criminal defence and personal injury litigation.) In Grisham’s second novel, The Firm (1991), a law firm is a front for Mafia money laundering. Grisham’s official website (www.randomhouse.com/features/grisham/main.php) describes the book’s plot: “He made a deadly mistake. When Mitch McDeere signed on with Bendini Lambert & Locke of Memphis, he thought he and his beautiful wife, Abby, were on their way. Now the FBI has the lowdown on Mitch’s firm and needs his help.”
In the movie, Tom Cruise played Mitch McDeere. According to Publishers Weekly magazine, The Firm was number five overall on the best-seller list for the entire decade of the 1990s.
In Grisham’s fourth book, The Client (1993), “11-year-old Mark Sway and his younger brother were sharing a forbidden cigarette when a chance encounter with a suicidal lawyer left Mark knowing a bloody and explosive secret. . . .
Now Mark is caught between a legal system gone mad and a mob killer.” The film starred Susan Sarandon and Tommy Lee Jones.
Thus is the popular imagination titillated and the reputation of lawyers eroded. Now, in a modest Canadian way, the process continues, this time in a new book that will be found on the non-fiction shelves of your local bookstore: The Sixth Family: The Collapse of the New York Mafia and the Rise of Vito Rizzuto, by Lee Lamothe and Adrian Humphreys (Humphreys is a National Post crime reporter). Most of the book is what the title says it is, a description of the alleged ascent to criminal power of Montreal’s Rizzuto family.
But some of it singles out lawyers as significant figures in Canadian organized crime, and that part has attracted considerable attention. Lamothe and Humphreys claim that the Rizzuto family has a “lawyers’ branch” and that this branch is key to the family’s criminal success.
“Police say lawyers use status to aid Mafia” is the headline on an August page one National Post story about
The Sixth Family (the story is by reporter Allison Hanes). The subhead continues breathlessly: “Astounding misuse of Canadian legal system without precedent, new book suggests.” The National Post reported Humphreys as saying: “We have never encountered such systematic, large-scale, and apparently purposeful misuse of the legal system.”
What are these “Mafia lawyers” supposed to be doing? Not gunning down stool pigeons in dimly lit back alleys, or speeding down the St. Lawrence River in cigarette boats laden with illegal drugs.
No, regrettably perhaps, these lawyers are not like the colourful characters that populate John Grisham’s novels. They are just dull lawyers doing dull lawyerly things. Having meetings in their offices. Making telephone calls. Setting up companies. Buying cell phones. Opening trust accounts. Making bank deposits.
What’s wrong with that? Mafia dons are entitled to legal services just like everybody else. But, of course, it’s different if a lawyer knowingly assists illegal activity. There’s a difference, so to speak, between being a lawyer for the Mafia, and being a Mafia lawyer, although sometimes it may be difficult to know where to draw the line. A lawyer can do the title work when a mobster buys a house for his family. But can he do the title work when the mobster buys a warehouse that the lawyer knows will be used for a heroin smuggling enterprise?
How many lawyers are allegedly working for the Mafia? The National Post, in its front-page story, carefully deployed phrases like “a handful of practising lawyers” and “small number.” It says that the Lamothe/Humphreys book “reveals that no fewer than 11 lawyers from different law firms in Quebec have ‘raised police suspicions’” but adds that “the vast majority are above reproach.” No fewer than 11 lawyers? There are about 90,000 members of the bar in Canada. Astounding misuse of the Canadian legal system? I don’t think so.
The real issue is not the tiny handful of lawyers who go criminally astray (although the circumstances of a lawyer going bad may reveal much about the law and the system of justice). The real issue is the extent to which the structure and nature of the legal profession offer shelter to criminals. For example, can crooks hide behind the sacrosanct doctrine of solicitor-client privilege? Most recently, this question has arisen particularly in connection with money laundering (shades of Grisham’s The Firm).
Lawyers have a particular advantage as money launderers. The rule of solicitor-client privilege prevents forced disclosure of what a client tells his lawyer. The international financial community and the Canadian government, including the RCMP, think that solicitor-client privilege can be used by a lawyer to hide money laundering by organized crime and — dare one say it — by terrorists.
Yet, the Canadian legal profession was successful in pressuring the federal government to repeal (in 2003) regulations, made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which required lawyers to report suspicious financial transactions to a government monitoring agency. (A suspicious financial transaction is defined as one where there are reasonable grounds to suspect that the transaction is related to the commission of a money laundering offence.) Presumably to head-off further unpalatable government action, all the law societies in Canada then adopted a model rule, developed by the Federation of Law Societies,
that prohibited lawyers from accepting cash in $7,500 or greater, subject to limited exceptions.
The 2004 Report of the Auditor General of Canada commented that the exemption for lawyers is “widely regarded as a serious gap in the coverage of anti-money laundering legislation.” A 2004 study by criminologist Dr. Stephen Schneider of York University reported that of 149 major money-laundering and proceeds-of-crime cases solved by the RCMP between 1993 and 1998, lawyers played a role in half of them. In most cases, the lawyers were unaware of the criminal source of funds. But, writes Schneider, “ÃƒÆ’Ã‚Â¢Ãƒâ€¹Ã¢â‚¬Â Ãƒâ€¦Ã‚Â¡ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â¢ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€¦Ã‚Â¡ÃƒÆ’Ã†’ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â¡ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â¨ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â¬ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Â¶research also identified cases where a lawyer should have become suspicious of the circumstances surrounding a particular transaction, such as the use of a large amount of cash in small denominations to purchase real estate. A 2005 RCMP report suggested that by insisting on an exemption from money laundering regulations, lawyers are left “bearing the brunt of increasingly desperate criminals with vast sums of dirty drug cash needing conversion into something that can be spent without arousing suspicion.”
In August, Peter Shoniker, prominent Toronto lawyer and one-time Conservative Party power broker, pleaded guilty to a count of laundering $750,000. Approached by an undercover RCMP corporal who asked for help in laundering money allegedly stolen from a pension fund, Shoniker said he would use his status as a lawyer to evade police surveillance. (At the time of writing, Shoniker has yet to be sentenced.)
On the same day that Shoniker pleaded guilty to money laundering, so did George Radojcic, a Niagara Falls, Ont., lawyer: he accepted $8,400 from an another RCMP undercover officer, who told him it came from cocaine sales. Radjocic was sentenced to two years less a day of house arrest.
It’s not just about cash. Unwittingly or not, lawyers may be given, not money to be laundered, but information, about past or future crimes, to be guarded. When does the obligation to inform the authorities trump solicitor-client privilege? The basic distinction is clear: information about past crimes is always protected, but knowledge of crimes planned for the future is almost certainly not. What if the lawyer does not have the information himself, but knows that his boardroom and telephones, largely immune from police prying, are being used to plan crimes? (In their book, Lamothe and Humphreys claim that this is one of the legal services provided to the Mafia.) The law here is more uncertain, but the risk to a lawyer is that, in aiding and abetting criminal activity, he loses the status of lawyer and becomes just a crook himself.
There are real concerns, and in particular the exemption of lawyers from money laundering regulations should be reconsidered. But is there mob rule in the legal profession? Of course not.