Ex-Toronto cop turned lawyer found guilty of misconduct in $1.7M fraud case

The Ontario Courthouse in Toronto is photographed on Monday, May 2, 2022. THE CANADIAN PRESS/Christopher Katsarov

A former Toronto cop turned lawyer has been found guilty of professional misconduct after a tribunal found that he was “naive” and “willfully blind” when he unknowingly helped fraudsters in an attempt to launder more than $1.7 million.

A decision released by the Ontario Law Society last week states that Ganesh Balaganthan — who officially became a lawyer in 2018 — failed to make reasonable inquiries about his first client and used his trust account “for purposes unrelated to legal services.”

The tribunal says their findings stem from a prior $2.1 million fraud scheme connected to the City of Surrey in 2019.

The documents state that the fraudsters “tricked the city into routing the money to the wrong account” as part of a phishing scam and that Balaganthan was then retained as part of a “scheme” to launder the ill-gotten funds.

Balaganthan, the documents say, was initially asked to “draft a joint venture agreement” and represent a client in the purchase of shares in a company.

Approximately $1.7 million was transferred into his trust account to help purchase the shares but when the deal went south he was asked to distribute the money to various individuals and entities, including parties not listed in the original joint venture agreement he had been retained to draft, the documents say.

“We conclude that the respondent was inexperienced and naïve. He was also dealing with tragically difficult circumstances in his personal life that had some effect on his judgement. Despite this, the respondent was not simply negligent. He was wilfully blind to the fact that he was being used as a tool in a money laundering scheme,” the decision notes. “He knew that the transaction was suspicious, but he turned a blind eye to it. He also failed to make reasonable efforts to find out the purpose of the retainer, and he used his trust account for purposes other than legal services.”

A closer look at the findings

After just over a dozen years working with the Toronto police, officials say Balaganthan left the city to train as a lawyer in England.

He was called to the bar in June 2018 and started his practice in May, 2019. He was then first contacted by the client implicated in the money laundering scheme on May 13, 2019.

The documents do say that Balaganthan “co-operated fully to assist in recovering the funds” as soon as he was contacted by bank investigators and made aware that he had participated in a money laundering scheme.

But the decision emphasizes that there were “numerous” and “obvious” red flags that should have prompted Balaganthan to ask questions sooner.

Balaganthan argued he was inexperienced, distracted by personal hardships, and duped by fraudsters.

Notably, the tribunal accepted that his family circumstances including serious illnesses affecting two of his children placed him under “significant” stress.

“We accept that personal stress played some role in reducing his ability to critically analyze the situation he found himself in,” the report noted.

But the panel said those factors do not excuse his conduct.

“He knew that the transaction was suspicious, but he turned a blind eye to it,” the decision stated.

The tribunal described him as “inexperienced and naïve” but emphasized that “there is not a sliding scale of professional responsibility that escalates with years of experience.”

“A new licensee who undertakes work for a client is held to the standard of a competent lawyer,” the documents state.

What is Balaganthan’s defense?

Balaganthan argued he was inexperienced, distracted by personal hardships, and duped by fraudsters.

Notably, the tribunal accepted that his family circumstances including serious illnesses affecting two of his children placed him under “significant” stress.

“We accept that personal stress played some role in reducing his ability to critically analyze the situation he found himself in,” the report noted.

But the panel said those factors do not excuse his conduct, noting that the case involved “numerous” and “obvious” red flags.

“He knew that the transaction was suspicious, but he turned a blind eye to it,” the decision stated.

The tribunal described him as “inexperienced and naïve” but emphasized that “there is not a sliding scale of professional responsibility that escalates with years of experience.”

“A new licensee who undertakes work for a client is held to the standard of a competent lawyer.”

Where did the money go?

At some point in June 2019, the fraudulent funds were alleged routed to Balaganthan’s trust account. Officials say he was “well aware” of the illegal transaction and even provided Balaganthan’s own notes that read: “$ is sitting in my account for a few days.”

Directed by his client, officials say Balaganthan then distributed money to various individuals and entities.

The tribunal noted that Balaganthan did not ask basic questions about the purpose of the transactions or the identity of those receiving large sums of money.

However, once investigators alerted that he had been involved in a major fraud case, the tribunal says Balaganthan “co-operated fully” and helped recover nearly all of the stolen cash. Though it should be noted that about $78,000 was never found.

Now the tribunal has scheduled a separate penalty hearing where according to officials could result in potential fines, restrictions or outright suspension/revoked legal licence.

CTV News Toronto has reached out to Balaganthan’s office for comment and will provide an update as soon as possible.