A Vernon lawyer has had his licence suspended for five years after he admitted to professional misconduct regarding a real estate transaction that started nearly 20 years ago.
David Leslie Schaefer was found to have acted in a conflict of interest in relation to a 2007 property transaction and subsequent actions related to the property, according to a Feb. 6 decision by the Law Society of B.C.
The Law Society also found Schaefer filed false information to a financial institution and filed misleading documents with the land title office.
Schaefer, 66, was president of the Greater Vernon Chamber of Commerce in 1996-97 and had practiced with Davidson Lawyers from 1986 to 1997, before practicing with Allan Francis and Pringle from 1997 to 2016. After May 2020, Schaefer was the sole legal practitioner of David L. Schaefer Law Corporation.
This is not the first time Schaefer has been reprimanded by the Law Society. Last year, he was suspended from practicing law for one month after he mistakenly withdrew more than $9,000 from his elderly clients' account, who he had power of attorney over, in 33 separate transactions. In that decision, Schaefer said he'd accidentally made the withdrawals because his own bank card was from the same bank as his clients', the cards were the same colour and the PIN codes were also the same.
Schaefer identified his mistake and immediately paid the clients back before the issue was reported to the Law Society in May 2020 by one of Schaefer's former partners. Schaefer acknowledged his mistake and voluntarily completed some legal courses.
As with that instance of professional misconduct, Schaefer admitted to the professional misconduct outlined in the Law Society's Feb. 6 decision.
Schaefer's latest finding of misconduct started in 2007 when he asked a long-time client of his to purchase a local property that he himself wanted to purchase but could not afford. According to the decision, Schaefer knew his client had available funds because he had just helped him sell his business.
The client agreed to purchase the property for $126,000 and the decision says Schaefer planned to buy it off the client for $140,000 once he could afford to do so, in an agreement that was not put down in writing. Schaefer therefore acted for the client in the purchasing of the property "despite having a personal and direct or indirect financial interest in" the property, the decision states.
Schaefer paid property taxes for the property over the following years but was never able to complete the purchase.
In 2013, Schaefer approached Canadian Western Trust to discuss lending $80,000 to that same client from his self-directed RRSP, so that the mortgage would be secured against the property. Schaefer swore a declaration to the financial institution that he was "arm's length" from his client, and that he wouldn't stand to benefit from the mortgage.
"(Schaefer) represented to Canadian Western Trust that the mortgage was bona fide," the decision states. "These representations were false or misleading."
The decision says Schaefer and the client did not deal at arm's length, Schaefer did in fact obtain an advantage from the mortgage, and the mortgage was not bona fide.
Later in 2013, Schaefer and his client entered into a Letter of Intent, agreeing that Schaefer would take $80,000 out of his RRSP as a "loan" to the client, who would keep $40,000 and apply it towards Schaefer's future purchase of the property. The client would then immediately advance the other $40,000 back to Schaefer. They agreed that Schaefer would pay all interest payments under the mortgage and pay property taxes on the property.
The Law Society, however, called this another conflict of interest.
The Society then says in June 2013 Schaefer filed "misleading" documents with the land title office with respect to the mortgage.
In 2015 Schaefer finally agreed to purchase the property for $65,000 and provided his client with $25,000 towards the purchase. However, the decision notes he listed the value of the property as $65,000 when according to BC Assessment, its value was $130,000.
"(Schaefer) obtained a benefit by purchasing (the property) from (the client) at a price lower than the 2007 purchase price and below the assessed value for 2015," reads the decision, adding he failed to ensure the purchase was "fair and reasonable."
In 2021, he paid $87,666 in payment of the mortgage and told Canadian Western Trust that the funds had come from his client when that wasn't the case.
In January 2022 Schaefer transferred the property into joint tenancy with his new wife and listed its value at $256,000.
The Law Society ultimately decided that because of the multiple acts of professional misconduct, Schaefer's lawyer licence will be suspended for five years. He is unable to practice law anywhere in Canada for that duration.
