Surrey defrauded by being tricked into sending $2.1M to fake email

The City of Surrey got swindled into sending a whopping $2.1 million to an account from a fraudulent email, according to a decision from the Ontario Law Society Tribunal.

The incident happened in 2019, according to the decision, which ruled on professional misconduct involving an Ontario lawyer who “knowingly” let the scammers launder $1.7 million of that money through his trust account.

“At some time in 2019, the City of Surrey (British Columbia) was defrauded of $2.1 million,” reads the decision. “Using a fake email, the fraudsters tricked the city into routing the money to the wrong account. The money ended up in an escrow account operated by an Ontario paralegal. The fraudsters then tried to launder the money.”

Part of the money laundering scheme was to engage the services of a recently-qualified lawyer, Ganesh Balaganthan, said the decision.

“To advance this scheme, an individual named Sung Hyang approached the respondent, and asked him to draft a joint venture agreement,” said the decision. “The four parties to the joint venture wanted to buy shares in a company. The respondent didn’t know Sung Hyang. He was the respondent’s first client.”

“The share purchase transaction was not concluded,” the decision detailed. “According to the terms of the retainer, that should have ended the respondent’s involvement. But then Hyang asked the respondent to recover the money that the parties to the joint venture agreement had assembled to buy the shares. The paralegal willingly transferred $1,738,287.10 into the respondent’s trust account. This was the first deposit into his newly-opened trust account. It was also the fraudsters’ attempt to launder the stolen money.”

Bank investigators then discovered the scheme, the decision said.

“The respondent co-operated immediately,” the tribunal decision said. “He was also contacted by counsel for the City of Surrey. He met with her and agreed to a consent order to be filed with the Ontario Superior Court. The order was to freeze funds and direct the disclosure of information in order to trace and recover the stolen money.”

Balaganthan, however, denied that he had committed misconduct, the decision said. The tribunal disagreed.

“We conclude that the respondent was inexperienced and naïve,” reads the decision. “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. He knew that the transaction was suspicious, but he turned a blind eye to it.”

Most of the $2.1 million has been recovered, according to the decision.

Surrey is also currently involved in legal proceedings to recover an estimated $2.5 million from a former employee.