A Law Society of BC panel has denounced a Vancouver-based securities lawyer it determined knowingly assisted multiple clients carry out a $78-million fraudulent stock scheme starting in 2011.
After investigating Ronald Norman Pelletier’s trust funds and ledgers, the panel found Pelletier had deposited about $31 million in both Canadian and U.S. dollars into his trust accounts on behalf of his clients. That included three companies, who he knew were being investigated for fraud by the U.S. Securities and Exchange Commission.
At least some of the funds, deposited between September 2014 and May 2018, were used to purchase a Vancouver property, renovate another and purchase a car in Toronto. The money was also used to buy a ring from Tiffany & Co., according to the June 26 panel decision, which found Pelletier committed professional misconduct on several fronts.
The decision found Pelletier “knowingly assisted or encouraged dishonesty, crime or fraud” and “assisted individuals to hide and use funds from securities and tax fraud.”
Pelletier’s actions amounted to a “complete abdication of the ethical standards to which lawyers are expected to adhere,” added the decision.
The panel found Pelletier had gone to “great lengths to protect his clients and their illegal money.” In one example, the panel determined he had bought 20 burner phones over 18 months because he feared U.S. authorities might tap his other phone lines.
Pelletier also used anonymous email addresses and nicknames to evade being found out by authorities. In 2016, he directed his office manager to alter invoices to erase a client's name, the panel determined.
The panel also pointed to a July 12, 2017, email from Pelletier to a client, noting his “true purpose was to enable his clients to use their illicit funds while relying on solicitor client privilege to protect those funds from the American authorities.”
By treating his trust account as a bank for his clients, the panel determined Pelletier was helping his clients “hide and benefit from their ill-gotten gains.”
One of Pelletier’s clients is United Kingdom citizen Kevin Miller, who filed a lawsuit against the society, in BC Supreme Court in November 2022, to reclaim about US$3 million and $583,000 from Pelletier’s trust account.
Miller neither admitted nor denied his role in the Jammin Java Corp. pump and dump fraud, in a with the SEC, in October 2017.
According to the claim, Miller has paid the SEC the repayment of $783,369 and $116,631 in interest, for his part in the scheme. Miller was also barred from penny stock trading.
The largest judgment was handed out to Wayne Weaver, a U.K. and Canadian citizen. Weaver was ordered to repay US$26.4 million and pay a $26.4 million civil penalty.
The scheme, according to the SEC, saw Weaver and other conspirators conceal shares in offshore shell corporations in blocks of less than five per cent, to avoid reporting requirements. False newsletters about Jammin Java and a sham financing arrangement designed to create the false appearance of legitimate third-party interest and investment in the company allowed the group to “pump” the stock value before dumping shares via fraudulent and misleading filings with the SEC.
It’s unclear from the law society decision and Miller’s civil claim how much money from Pelletier’s trust account is presently held by the society, via a custodian.
On June 1 the society responded to Miller’s ongoing claim by outlining the legal basis for continuing to withhold the funds, at least until a determination in Pelletier’s case is made.
The society states the Legal Profession Act does not provide a “jurisdictional basis for the relief sought by the petitioner (Miller).”
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