UPDATE – Nov 9, 2018 https://www.canlii.org/en/on/onlst/doc/2017/2017onlsth164/2017onlsth164.html
LAW SOCIETY TRIBUNAL
Citation: Law Society of Upper Canada v. Lesperance, 2017 ONLSTH 164
Date: August 3, 2017
Tribunal File No.: 17H-025
The Law Society of Upper Canada
– and –
David Sylvio Lesperance
Heard: May 17, 2017, in Toronto, Ontario
LESPERANCE – lnterlocutory Suspensions – Based on the evidence: there appeared to have been a misappropriation or mishandling of a substantial amount of a client’s money; the Lawyer was not co-operating with the Society’s investigation; he was no longer in Canada, having left sometime in 2015; the Lawyer had not complied with the Society’s requirement that he disclose his current contact information; and the current location of the Lawyer’s law practice was unknown to the Society – The Lawyer’s licence was suspended on an interlocutory basis.
ON Lawyer remains in Poland as Law Society files notice of motion 4 interlocutory suspension or restriction https://t.co/1m7XIbGikk
— nobledreamer (@nobledreamer16) May 19, 2017
While this particular post is not about a tax-compliance professional per sé, it IS about a person with whom many of us have had interactions and from whom we have been assured we WILL BE CAUGHT in one way or another. Given that, I find it extremely ironic to come across what follows in this post. How many of you who have paid a retainer or left any other type of funds when using a lawyer, ever worry about that person absconding with it?
David S Lesperance used to post comments on Brock. Here is an example of the first of many on the post “Americansabroad in Canada may soon be unable to receive payments from Government by USCitizenAbroad, September 16, 2013.
First comment Continuing to ignore the issue; yell at your foreign banker for closing your account; hoping and praying that FATCA and the Qualified Intermediary Regime will be revoked; etc. are all a waste of time. It is time to either comply with the law or expatriate. Complaining is just a waste of time.
I believe my first real exchange with him occurred sometime back on a WSJ article “The Law That Makes U.S. Expats Toxic” October 10 2015 (paywalled-I can’t get around it with the Google News action). Unfortunately, while I have my own comments via my profile, I cannot access the article nor his comments. This limits what I would like to address for the most part. The first set of comments was his reaction to my referring to him as a tax-compliance professional. He did not agree with that label. It was an exchange where I felt constantly challenged at being tripped up especially because I could not (yet) refute the idea that the Qualified Intermediary program (QI) would “out” us hands-down. And I let him have the upper-hand to a certain degree, because he was a professional and I assumed he would know more than I. We seemed to develop a respectful, civil relationship. On several occasions since, I posted comments for him as he could not log on for some reason. I was aware he was in Poland visiting family as he explained it.
Later comments on Brock:
Comment on US Intention to Pursue Enforcement in Spite of Foreign Law
Comment on Do Canadian or Australian etc Tax Attorneys Advising on United States IRS Compliance Typically Comply with the Professional Code of Conduct of their Law societies?
I was very surprised to see some of the Tweets on Twitter when Keith Redmond tried to warn Accidentals not to put themselves into the US tax system. It is interesting that without any proof as to the ability of IRS able to collect via QI, he presumes it and treats Keith in a manner I found inappropriate and unprofessional. I believe the point of contention was to prove that actual Accidental Americans had been “outed” due to QI. This was not provided, nor has it been since that time. There were others that ganged up in more “attacks” that I will not put up here. Brock/Wed Rally Tweeps will remember this extremely unpleasant incident. After that, I declined to post anything further on his behalf. What is ironic, is a number of exchanges that took place privately, up to as late as March 16, with no indication of any actions such as this:
Law Society of Upper Canada Files a Notice for Interlocuatory Suspension or Restriction Against David Sylvio Lesperance Filed March 10, 2017
Wareh vs Lesperance
I still, all things considered, find this incredibly difficult to believe. And I suppose until one has had due process, all things are allegations only. I will not outline the discrepancies other than to mention the amount involved is just short of €900,000. Please read the links above for the whole story. Point Eight from the Law Society Motion states:
And then I came upon this:
This Man Can Help You Escape the IRS Forever
The Canadian-born lawyer is among the world’s leading champions of transnational exit plans for the superwealthy. Business is booming. Lesperance says he has expatriated more than 300 ultrarich Americans to date—he calls them “golden geese”—and has set up contingency plans for countless others. Thiel is not a client, but Lesperance says several household-name techies are. Mad Max scenarios aside, their goal is tax avoidance. If that means giving up an American passport, so be it.
Of course tax avoidance is completely legal. Carried interest is a share of the profits of an investment paid to the investment manager.It is treated as a return on investment (capital gains) as opposed to income as compensation for services. There have been many Recent regulatory attempts by the Democrats to tax this as regular income. Dave Camp’s 2014 Ways & Means Proposal suggested raising it from 23.8 percent to 35 percent. You can bet your booties all this is legal but it certainly does not flow with the spirit of the law. And it is clear the wealthy are quite upfront about why they are doing it.
He got into the golden-goose game as a newly minted lawyer in 1990, when he was approached by a Detroit attorney who wanted to quit the United States for tax reasons. The client had already stowed part of his $15 million net worth in an “offshore bucket” and purchased citizenship in St. Kitts and Nevis. Lesperance helped him relinquish his US passport and set up permanent residency in Canada. For three years, the client commuted daily from Windsor to Detroit to wrap up his business while still fulfilling Canada’s residency requirement. He then declared himself a nonresident citizen of Canada and moved to Australia, where a retiree incentive program permanently exempted his offshore trust from taxation. “I thought it was very cool and very cute,” Lesperance says.
I thought it was very cool and very cute,” Lesperance says.
I wonder how “very cool and very cute” FINCEN would find this.
This statement is rather disturbing. Here we have a lawyer, with whom some of us have engaged online etc, who has had one message for quite some time, that we needed to comply because of US law & he ability of the U.S. to collect levies. I presumed that Mr. Lesperance took such a position:
1) because he felt no one else had noticed and his observation was important
(though why any need for FATCA if that were so?) and
2) because he believed in tax compliance
It was probably inevitable that the lawyer would one day act upon his own counsel. When we first spoke, in 2015, Lesperance had arranged a backup citizenship for himself, but he wouldn’t say where. That goose has now flown. You can find him in sunny Portugal.
But perhaps not for the reason as stated in this article. (The author of the article has been advised of the actions of the Ontario Law Society; the article remains online).
Karen Alpert and I have been working on a paper to outline whether or not the QI program can do what Mr. Lesperance claims it can. We hope to put it up in the reasonably near future.
I have yet to thoroughly research whether or not Canada has an extradition treaty with Poland.
The following 2 items/links are courtesy of Sora Fon at American Expatriates FB
Treaty between Canada and the Republic of Poland on Mutual Legal Assistance in Criminal Matters
295 COMMENTS from The Law That Makes U.S. Expats Toxic, A measure targeting tax evasion pushes Americans out of bank accounts—and jobs—abroad.
By Colleen Graffy.
He has kept nearly 900,000 euros of other peoples’ money.He did not complete the work. They have filed affidavits. I don’t understand why that is minor…?????
“So if we set aside Norman Diamond’s experience 15 years ago – quite possibly an edge case – then is there any record of anyone ever having Canadian funds seized via the QI route? (That does not include withholding from US investment income etc.) Not to my knowledge.”
Hmm. I think TD Waterhouse in Canada did not only send their questionnaire because of me, i.e. I think they also had other customers that were duals. Also if I recall, there was a default answer saying that the customer wasn’t a US citizen. Maybe I was the only one who made the effort to correct the answer and submit it to them. Maybe other dual customers were smarter than me, so they lied, and they didn’t have funds seized by the QI route. I bet we won’t hear from them here.
It sounds like something bigger than non-payment of fees to me too, that the suspension is related to his not cooperating with the Law Society in a client complaint regarding his handling of funds in the Polish distillery matter.
The Law Society has him in the Suspended category, not the Administratively Suspended one.
The Motion for Suspension is dealing with the allegation that:
“(1) … the Respondent mishandled a substantial amount of money … entrusted to the Respondent by a client”
“(6) The Respondent is not cooperating with the Law Society’s investigation into his professional conduct. Despite repeated requests for the relevant client file and books and record, the Respondent has not produced such documentation.”
My take from the motion is that a client did complain about his treatment of them, and that the grounds for the suspension aren’t not accurately completing an information return, but the grounds are not providing the files and records requested by the Law Society for their investigation of the complaint. The role of Mr. Lesperance’s information return, annual report, in this is that it’s relevant to the allegation that’s been made against him.
The Law Society wanted to see his books and he apparently did not provide them. You can’t not let the Law Society see your books and expect to keep your licence. That’s a serious matter. The Law Society’s oversight on financial matters, whilst generally routine and often pesky, protects the consumer, which really is important. Certainly if a client alleges financial wrongdoing, I think it’s very reasonable that the Society require the lawyer to provide documentation to refute the allegation. Apparently Mr. Lesperance didn’t do that.
@Karen & Patricia Moon: many thanks for the detailed explanation re: QI agreements. Looking forward to the paper.
For anyone else with insomnia, here’s a link to the 2000 QI agreement (Rev. Proc. 2000-12).
A mere sixty pages long – absolutely tiny compared to its ever-expanding descendants!
You know, this is yet another damn good reason to just renounce, and rejoice.
If it isn’t the US Government turning predator, it’s the compliance condors, the hustlers, etc…. taking advantage of a bad situation for their own gain. It’s always those fuckers that have no ethical qualms about milking a crisis for all they can get out of it, and they make the problems appear to be 1000x worse than it really is.
Is the government a threat? Yes, but, it is also slow, clumsy, half blind, stupid, and its left hand doesn’t even know what its right hand is doing. Sure, it can get its hands on some juicy prey, but it’s not a very effective predator, compared with the condors trying to lure you into the predator’s mouth, so that it can chew on your half eaten bones later. What is a condor, but a scavenger, anyway?
Yes, Trish and Pacifica,
There will no doubt be more forthcoming issues with respect to this lawyer. I believe USCitizenAbroad and I were commenting on the administrative suspension(s) which have been adjudicated. Admin suspension encompass a range of things from overdue fees to not responding to communication to not providing access to financial reports etc. Obviously, absconding with client funds and other matters are far more serious, which generally can lead to full disbarment and are dealt with in a different way,not just administratively. What concerns me, is when the law societies have concrete proof that a lawyer has committed a criminal act, they don’t report that- immediately or ever, to the proper authorities. Dealing in house with these matters does not to me anyway, effectively protect public interests. I take issue with that just as I take issue with health care professionals who commit what would be considered criminal matters and yet the associations do not report that. That protectionism and bias does not sit well with me.
When I swore my oath as I was called to the bar I took that very seriously as a member who became an officer of the court. It always pains me when lawyers abuse that privilege. But then, I am old school and very appreciative of the honour of being called to the bar. I consider it a calling more than a profession per se. With privilege comes duty.
It does. But from looking at the Law Society directory, I don’t think Mr. Lesperance is on Administrative Suspension. They ‘re listing him as on Suspension. From occasional looks over the years — definitely not a scientific survey –“Administrative Suspension” seems to crop up a lot more often than “Suspension” does.
My take on the notice of motion is that it’s based on his non-responsiveness to the investigation. I can’t see Mr. Lesperance’s suspension as based on “form crime,” as was suggested by another commenter, in that the motion reads to me that the barreau wants to find out why there is a discrepancy between Mr. Lesperance’s report and the allegation against him. It seems reasonable to me that the barreau would want to find out if this allegation was based in fact or was frivolous/mistaken.
BTW, This is really weird, I was having brunch today with a friend and we were talking (not related to this at all) about administrative suspensions in the Québec bar and people being late with their fees. It struck me later that it was the first time in five years we didn’t talk about this US mess. We usually do and she recommends her American (and alleged American) clients check out Brock for additional support in dealing with it.
Anyway I think if Mr. Lesperance had been Suspended for Administrative reasons, the Law Society would list him as Administratively Suspended, as that seems to crop up a lot more than Suspended does, and, in my reading, it’s pretty clear in that motion that more than an administrative matter is going on here. I don’t see where Administrative Suspension is coming from – I’m seeing this term in comments on Brock, but not on the Law Society’s website, where they do use it but not for Mr. Lesperance.
I completely agree with you on this. It is a privilege, one that’s earned through years of study. Lawyers can, have, and continue to change lives for the better — I’m thinking of what we call in Québec droit social (housing, criminal, immigration, consumer, family). But in any field of law, including business law and tax law, it’s all about us all living and working together in this society, and doing the best job you can for your client. I agree too that duty comes with this privilege and it pains me too when a lawyer abuses that privilege.
Agree, Pacifica, there is a lot more going on in that lawyer’s matter that hasn’t been disclosed yet; but absconding with client funds, the role the undisclosed ‘loan” played mentioned could lead to full disbarment.And sadly, this isn’t the first case of a lawyer fleeing Canada when facing sanctions.Greed funds a lot of plane tickets.
Glad to hear you enjoyed lunch where our issues were not the main topic. May you have many more of those days. I am struggling with finding a way to calm my mind about our lawsuit lately. Maybe yoga?
“And sadly, this isn’t the first case of a lawyer fleeing Canada when facing sanctions.Greed funds a lot of plane tickets.”
True. But even more sadly …
Now we see that 100% of Canadians living outside of Canada are thieves, even if we might not yet all be terrorists and child molesters. This is why we all have to be FATCA’ed and forced to renounce even if that will make us stateless. But wait, that can’t happen. Canadian politicians don’t support FATCA and CBT, and that’s why we don’t need Brock, right?
@ Canadian Ginny…I have a Ginny, too! My grandmother, Ginny is 93 years old and lives in Indiana. She always said gardening was cheaper than a psychiatrist! Someone once said “Fear can keep you up all night long, but faith make a fine pillow.” Rest.
@ Ann #1
I love your Granny Ginny’s saying. There are monsters who feed on fear so whenever possible we have to try not to feed them. When I think of all the straight-shooting articles Lynne-Blaze has written I realize how fearless she is to come right out and write what we all have on our minds and in our hearts. And speaking of fearless … how about our three plaintiffs!!!
Has any final adjudication occurred in this matter?