Law Times

Law Times • may 14, 2018 Page 3 www.lawtimesnews.com Disbarred lawyer ordered to pay nearly $800,000 BY MICHAEL MCKIERNAN For Law Times A disbarred lawyer is ap- pealing after a judge sentenced him to seven years in jail for his role in a $1.5-million small-business- loan fraud. In R. v. Kazman, Ontario Superior Court Justice Nancy Spies also ordered 62-year-old Marshall Kazman to pay almost $800,000 in combined restitu- tion and fines in lieu of forfei- ture. Kazman acted on his own behalf at trial, but he hired crimi- nal lawyer Richard Litkowski to represent him for the purposes of sentencing. Litkowski, an associ- ate at Toronto firm Hicks Adams LLP, says Kazman has appealed both the sentence and the con- viction, and it has received bail pending the outcome. "In terms of the length of sen- tence, our position is that it's too long and doesn't ref lect some of the mitigating circumstances put before the court," Litkowski says. According to Spies' April 12 decision, Kazman and his co- accused Gad Levy were convict- ed of five counts of fraud over $5,000 in relation to loans ob- tained from a number of banks and one count of money laun- dering following a five-month trial. Kazman and Levy were also found guilty of commit- ting the frauds for the benefit of or at the direction of a criminal organization they formed with a third person who earlier pleaded guilty, Miriam Cohen. Spies found the three con- spired to obtain a number of fraudulent loans under the federal government's Canada Small Business Financing Pro- gram, which had been set up in the mid-2000s with the aim of spurring economic growth by making funds available to bor- rowers with limited experience and security. After four initial loans were made to Cohen, Spies found the group branched out to find new borrowers. The trial focused on 16 loans made between 2007 and 2010, almost all of which defaulted within two years, of which Spies found 12 were tainted with fraud. At the sentencing, Litkowski argued that Kazman was not as culpable as Levy, but Spies found he played a "key role" in the scheme and that his legal experience was valuable to the operation. In addition, she found Kaz-man took a leading role in laundering the proceeds of the fraud as signing officer for a number of construction com- panies that provided borrow- ers with fraudulent invoices to present to the lenders for pay- ment out of loans. "The funds then f lowed back and forth between various other companies owned by Ms. Co- hen and Messrs. Kazman and Levy who benefited in varying degrees from payments made to various companies that they owned and to them personally," Spies wrote. Despite an avalanche of char- acter reference letters presented on behalf of Kazman, concerns about his health following a 2013 heart attack and Kazman's active role in his 12-year-old son's life, Spies accepted the Crown's rec- ommendation for a seven-year total sentence of incarceration, including five years for the fraud convictions and one year for money laundering, all running concurrently, plus a further two years consecutively for the crim- inal organization count. Litkowski argued that the fraud convictions should result in a two-year sentence to run concurrently with one year for the money laundering count, but Spies rejected the proposal as clearly "unfit." One of the aggravating fac- tors she considered related to Kazman's disbarment in 2006. In Law Society of Upper Can- ada v. Marshall Kazman, a 2-1 majority of the disciplinary panel stripped Kazman of his licence to practise after find- ing him guilty of professional misconduct over five real estate transactions. Although Kazman did not profit from the deals outside of the fees he collected, the panel found he prepared false affida- vits and that he was not a "dupe" but instead had "adverted to the probability that these trans- actions were fraudulent" and avoided making further inqui- ries "because he did not want to be fixed with actual knowledge." Spies said it was significant that Kazman became involved in the frauds before her while appealing the penalty in his law society case. Despite the fact Kazman is in receipt of social assistance, Spies also ordered him to pay $300,000 in restitution, after stating that she did not believe he had not profited from the purchase and sale of various properties during the period covered by the frauds. "This is the fraudster's di- lemma," explains Jacob Stilman, a partner at litigation and crimi- nal defence boutique Lo Greco Stilman LLP. "When you commit a fairly sophisticated fraud, courts are going to be very skeptical of anything that you say, whether you're acting for yourself or rep- resented by counsel," he adds. The judge also ordered Kaz-man to pay a fine in lieu of forfeiture of more than $480,000. Although a deadline for pay- ment has not yet been set, Kaz- man will see four years added to his sentence in the event he defaults. Richard Shekter, a litigator at Toronto firm Shekter Dychten- berg LLP, says fines in lieu of for- feiture are relatively new to the Criminal Code. "But it's a very powerful tool that is now quite commonly requested by the Crown," he says. LT NEWS Visit gpllm.law.utoronto.ca Questions? gpllm@utoronto.ca Master the law. Canada's leading law school offers a graduate degree in four unique streams: Business Law Canadian Law in a Global Context Innovation, Law and Technology Law of Leadership Apply today. Untitled-1 1 2018-05-10 10:52 AM An Ontario Superior Court judge has sen- tenced a former lawyer to seven years in jail for his role in fraud and money laundering.

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