Three law firms in the Greater Toronto Area have been placed into receivership following allegations of mishandling millions of dollars in client funds related to real estate transactions. The moves come amid growing concerns about the integrity of legal trust accounts and potential mortgage fraud within Ontario’s legal profession.
Last week, Ontario Superior Court Justice Sean Dunphy appointed the accounting firm Doane Grant Thornton LLP as receiver for Simran Law Professional Corp., based in Brampton, and JP Mann Law Firm Professional Corp., located in Mississauga. In a separate ruling, Justice Dunphy assigned AlixPartners Advisory Inc. to oversee RSG Law, a firm founded by former Liberal Member of Parliament Rajvinder Grewal. The firms are accused of misappropriating trust funds and failing to properly discharge mortgages from numerous transactions.
According to the court documents, Simran Law and JP Mann Law Firm were involved in at least 25 real estate deals since February, where over $18 million in mortgage funds from various smaller lenders were deposited into their trust accounts but never remitted to the intended recipients, including major Canadian banks. Justice Dunphy characterized these incidents as systemic and not merely the result of poor record-keeping, noting that none of the mortgages were properly discharged, and no funds have been returned or accounted for.
RSG Law faces more than 30 civil lawsuits alleging similar breaches, including manipulation of trust accounts and mortgage fraud, although these allegations have not yet been proven in court. Justice Dunphy described the scope of the alleged fraud at RSG Law as deeply troubling. Mr. Grewal has not been suspended but agreed to refrain from practicing law while awaiting a disciplinary hearing at Ontario’s Law Society Tribunal. His lawyer has stated that Mr. Grewal sold his shares in RSG Law in 2023 and has not controlled the firm’s trust accounts since.
The receivership applications were initiated by FCT Insurance Company Ltd., the title insurer involved in the disputed transactions. FCT is also linked to similar cases against Brampton lawyer Anil K. Sharma, who faces accusations of misappropriating nearly $5 million through comparable trust account abuses. Justice Dunphy criticized the Law Society of Ontario’s response to these ongoing matters as insufficiently swift or robust in addressing the seriousness of alleged frauds.
The Law Society has not publicly announced any professional sanctions against the lawyers involved and did not comment on specific investigations, citing solicitor-client privilege. It did confirm freezing Sharma’s trust account and its involvement in the receivership proceedings.
These incidents have intensified debate within Ontario’s legal community about the adequacy of oversight and safeguards designed to protect clients and the public from trust account abuses. Joseph Berljawsky, managing partner of a large real estate law firm and advocate for reforms, emphasized the need for stronger internal controls, such as requiring dual signatures on trust-account transactions and implementing mandatory monthly trust fund reconciliations submitted to the Law Society for verification. He warned that without meaningful changes, lawyers risk being excluded from the residential conveyancing process due to eroded trust from clients and financial institutions.
The recent series of cases has underscored vulnerabilities in the current regulatory framework, which relies heavily on lawyers’ professional honesty. Justice Dunphy’s comments suggest that without reform, financial misconduct in legal trust accounts may continue to pose a significant threat to the integrity of the legal system and the broader real estate market.