Toronto Rotary Club stalwart and charity volunteer Doug Hughes recalls vividly the day when he phoned the downtown law firm Coutts Crane Ingram, anxious to speak to partner Michael Ingram about the $2.3-million the lawyer was holding in trust.
Up ahead lay a thicket of unpleasant legal terrain, in which Mr. Ingram now stands accused by police of fleecing a charity, shipping much of the proceeds abroad and betraying the many people who had trusted him.
Adding to the strange tale’s complexity, the charity alleged to have been defrauded insists that it hasn't lost any money at all.
Mr. Hughes was a director of the defunct Laughlen Centre, a onetime long-term care facility for seniors that the City of Toronto had purchased in 2006 for $8-million.
Of that $8-million, roughly one-third was to go to the centre – still a legal entity at the time. Mr. Hughes, a retired Canada Housing and Mortgage Corporation manager, had doggedly been trying to discover what had happened to it.
On the telephone in December of 2009, he found out. He was told that Mr. Ingram, long-time chairman of the Laughlen Centre’s board of directors and a member of Coutts Crane for 38 years, had departed the stellar firm 18 months earlier and was no longer a partner or an associate. Mr. Ingram was not a member of the Rotary Club.
Then the other shoe dropped: Three days later Mr. Hughes got an e-mail from Coutts Crane informing him that Mr. Ingram had been removed from his position and that the $2.3-million was gone, too.
Mr. Hughes says that somehow, nobody at the law firm had apprised him of any of this until he made his phone call, an omission that became part of a successful lawsuit against members of the firm.
“I was in absolute, total shock,” he said recently, still raw from an unsettling experience that has bruised almost everyone involved – Coutts Crane, the Rotary Club and the former Laughlen Centre, linked by a shared interest in good causes and charity work.
The Rotary Club, which this year marks its 100th anniversary as a secular organization promoting an array of humanitarian initiatives, had had a long relationship with the Laughlen Centre until the facility, located on downtown Edward Street, closed its doors in 2004. It also has strong ties to Coutts Crane.
And the circumstances of the alleged theft are also unusual in that while police said the principal victim was the Rotary Club, club president Neil Phillips has insisted his organization hasn’t been defrauded at all.
Mr. Hughes didn’t know what to think.
“And so I called a couple of the partners who were former presidents of the Rotary Club of Toronto and said, ‘What’s going on?’” he recounted. “And they couldn’t talk.”
Fast-forward 21/2 years: Earlier this month Mr. Ingram was arrested and charged with embezzling the $2.3-million, none of which has been recovered.
Police believe the cash was disbursed across the United States, Canada, Bermuda and Switzerland, possibly beyond, and where the money trail ends is guesswork.
“It’s all still under investigation,” said Detective Constable Brenda Tuckwell of the Toronto police fraud squad.
“I can’t tell you who we’re looking at, or what entities, but we are looking at other possible victims.”
In their statement of defence in the lawsuit, Mr. Ingram’s former partners also alluded to “irregularities” involving “funds held in trust on behalf of a number of Ingram’s clients.”
Coutts Crane began scrutinizing Mr. Ingram in June of 2008, in response to a complaint, court documents show, and he was fired. The same month the firm reported him to the Law Society of Upper Canada, which oversees Ontario’s lawyers, and a few weeks later Mr. Ingram agreed to cease practising law.
In April of this year the society concluded he had engaged in “professional misconduct for the misapplication of over $3-million,” and he currently awaits the penalty phase, as the criminal case plays out.
Mr. Ingram, 69, has nothing to say about his troubles, He still lives in midtown Leaside, a Lexus in his driveway. When a reporter appeared on his doorstep seeking comment, he just shook his head without a word and closed the door.
Other players, however, have a good deal to say.
“It hurts, I was so mad,” said Rotarian and former Laughlen foundation member Ian Shaw, an accountant.
“You try to do something useful for people, and then some idiot rips you off.”
Former Rotary Club president Sandy Boucher said he was happy to see that Mr. Ingram was “in the process of being dealt with.”
“This is an extremely sensitive issue...all this mess has been around for three, four, five years,” Mr. Boucher said. He, too, maintains that the club sustained no real loss.
But no one is more embarrassed than Coutts Crane, headquartered on University Avenue and now in its 63rd year, specializing in litigation, corporate law and real estate.
“Mr. Ingram was terminated by the firm back in 2008, he’s not been with the firm for over four years, and we’ve had no contact with him,” Coutts Crane lawyer Robert O’Brien said in a brief interview.
“We reported him to the Law Society and co-operated fully with the society in their investigation. Yes it was hurtful, but it’s over, it’s passed us and we did the right thing.”
Mr. O’Brien was one of the eight defendants in the lawsuit, which was eventually settled for $1.5-million, according to three people familiar with the outcome. Asked about the alleged long delay in informing the Laughlen Centre’s board members about Mr. Ingram’s departure and the missing funds, Mr. O’Brien declined comment.
“He was president of the Laughlen Centre and he was on the board of directors...and that’s really an internal matter for the Laughlen Centre, I have nothing to say,” he said.
Until it ceased operations in 2004, the Laughlen Centre was home to more than 200 elderly residents, and when the city bought the building in 2006, the $8-million in proceeds was deposited in the Coutts Crane trust account.
More than $5,428,000 went to CMHC and the provincial government, to repay mortgages and loans, with the balance owed to the Laughlen Centre itself.
On learning its share of the funds was missing, the centre’s board members in August of 2010 launched a suit against Mr. Ingram, four of his former colleagues at Coutts Crane and three associates, seeking more than $2.5-million in lost funds, plus $1-million in punitive damages.
The suit accused the law firm of failing to adequately supervise Mr. Ingram, and thereby being “vicariously liable” for the alleged theft.
Not true, the defendants responded.
“CCI had reasonable safeguards in place to protect the funds in its trust account, which Ingram unilaterally and surreptitiously circumvented,” the statement of defence read, which also rebutted the Laughlen Centre’s claim that the delay in reporting the loss had been injurious.
Either way, the defendants agreed to settle the suit for $1.5-million. And because the Laughlen Centre had by then ceased to exist except as a legal entity, the money was paid, via a liquidation firm to the Rotary Club, which had long helped administer the centre and provide financial support.
And for the same reason, the Rotary Club is named in the criminal investigation as the chief victim of Mr. Ingram’s alleged theft, along with at least two smaller, unspecified charities.
But because the club had not advanced the funds it was now owed, Mr. Phillips, its president, maintains it has sustained no loss. “We haven’t actually been defrauded, I guess that’s the most important message, “ he said. “At this point, we haven’t been impacted.”