Biglaw partner disbarred over $1-million misappropriation to fund gambling
Calgary-based Bennett Jones LLP partner Gregory Liakopoulos hoped for a ‘big score’ to repay the trust funds
The Law Society of Alberta has disbarred a former Calgary partner with Bennett Jones LLP after finding he misappropriated just over $1 million from a trust to feed his gambling habit.
According to the disciplinary hearing committee report, Gregory Liakopoulos, who practised real property and commercial law, transferred the money to his own numbered company while acting as the sole trustee of the trust set up for the benefit of a British Virgin Islands company with real estate interests in Quebec.
Although the transfers were characterized as a secured loan, Liakopoulos later told law society investigators that the money was intended to cover his personal debts and fund his future gambling. His plan to repay, he explained, was based on a “big score,” winning the lottery or a bail out by his family.
“None of these was a feasible, timely or secure method for repayment to the Trust,” the three-member hearing panel wrote, before finding him guilty of three professional misconduct citations.
Disbarment was the only appropriate sanction, the panel concluded:
“While the misappropriation did not occur in a direct solicitor/client relationship, the conduct strikes at the very heart of issues of integrity and honesty. Any sanction short of disbarment in this case would undermine public confidence in the profession and send an inadequate and adverse message in terms of deterrence to the profession as a whole,” they wrote.
Following his call to the bar in 1988, Liakopoulos practised at McCarthy Tétrault LLP, before making the switch to Bennett Jones just under a decade ago.
According to the ruling, Liakopoulos first took on the trustee role back in in 2006 but by 2014, discussions were underway with the BVI-based beneficiary about the distribution of its remaining balance of approximately $1.4 million.
After a prolonged period of inactivity on the file, Liakopoulos withdrew his proposed $50,000 fee for the distribution transaction in August 2016 before it had gone through, or even been agreed. Then, between October 2017 and June 2018, he transferred a further $950,000 to bank accounts for his own company.
Liakopoulos, who said he has suffered from gambling addiction for almost 20 years, told the hearing that he had convinced himself that the broad investment powers granted by the terms of the trust allowed him to make the loans to himself.
However, the panel were not convinced, noting that the trust deed required security for loans, while the only assets in Liakopoulos’ company were funds taken from the trust.
“Liakopoulos made a loan to his personal company for his own personal benefit and then sought to justify that loan to himself through a tortured reading of the Deed. In no sense could the 109 loan and security be interpreted as acceptable or permissible even within the very broad confines of the language of the Deed. The arrangement was neither prudent, reasonable or in the best interests of the Beneficiary,” the panel concluded.
Things came to a head in late June 2018 when the BVI-based beneficiary informed Liakopoulos that it was ready to go through with the distribution and dissolve the trust. A month later, the lawyer broke the bad news that the money was tied up in a “non-liquid investment," suggesting that it would need 18-24 months to realize on the investment.
However, Liakopoulos did not tell the beneficiary that he was the sole owner of the company that had borrowed the funds. By August 2018, the decision says he had self-reported to the law society, before resigning from his firm days later, at Bennett Jones’ request.
In his evidence, Liakopoulos said that he had sought professional counselling for his gambling issues around 2004 or 2005, but took no other action between then and 2015, when he approached a friend for help with financial problems caused by his addiction.
The decision says the lawyer’s gambling accelerated around 2017, and persisted via video lottery terminals after he entered a voluntary casino ban with the Alberta Gaming and Liquor Commission.
In a letter to the hearing committee, a doctor treating Liakopoulos blamed the misappropriation on the lawyer’s gambling addiction and his "being ill with Mental Health problems."
However, the panel were critical of the letter’s late disclosure immediately before the hearing began, leaving no room for cross-examination or responding medical evidence.
“Counsel for Liakopoulos argued for the Committee to take an enlightened and sympathetic view to the important issues of addiction as they affect the profession. Those are no doubt pressing issues for the profession to address, but in the context of this Hearing, neither the Committee nor the LSA were presented with cogent and persuasive medical evidence of a causal link between the misappropriation behavior and the gambling addiction,” they wrote.
Follow us on Twitter @CourtReportCA
Story tips or comments to CourtReportCanada@gmail.com