Peter Wolkove — November 1, 2001
Professional Conduct Decision
What is a professional conduct decision?
An investigation into a Licensed Insolvency Trustees (LIT)'s professional conduct is initiated when there is information to suggest that the LIT has not properly performed the duties of a trustee or there has been improper administration of an estate or lack of compliance with the Bankruptcy and Insolvency Act (BIA).
In some cases, the findings are sufficiently serious to support a recommendation for sanctions against the LIT's licence (cancel or suspend a LIT's licence (subsection 13.2(5) of the BIA) or impose conditions or limitations (subsection 14.01(1) of the BIA)).
The professional conduct decision is deemed to be a decision of a federal board, commission or tribunal and may be judicially reviewed by the federal court.
In The Matter Of Professional Disciplinary Proceedings Under the Bankruptcy and Insolvency Act ("the ACT")
Province of Quebec
District of Montreal
Mr. Michel Leduc
Senior Analyst in the Montreal District Office of the Office of the Superintendent of Bankruptcy
(hereinafter "the Senior Analyst")
Mr. Peter Wolkove
(hereinafter "the Trustee")
Presiding: The Honourable
Benjamin J. Greenberg, Q.C.
Delegate of the Superintendent of Bankruptcy
(hereinafter sometimes referred to as "the Delegate")
Montreal, September 28, 2001
Decision on the Sanction
Whereas the Hearing on the Merits was held on June 14, 2001 on the matter of the complaint regarding the professional conduct of the Trustee; and
Whereas the Senior Analyst's Report dated March 30, 2000 dealt with two separate bankruptcies, one (2329-6288 Québec Inc., hereinafter "2329") in which Mr. Wolkove had not acted as Trustee and a second (Can Am Up Tac Limitée, hereinafter"CAN AM") in which he had acted as Trustee; and
Whereas the Delegate's jurisdiction having been questioned in regard to 2329, also on June 14, 2001, the undersigned heard representations from counsel for both parties on that matter and subsequently decided that he did not have jurisdiction; and
Whereas the Trustee was reproached with having acted in a situation of conflict of interest in the Estate of CAN AM, by having accepted to act and having acted as Trustee for that Estate even though one of the shareholders thereof was a business partner of the Trustee in an investment and development venture in Spain; and
Whereas in his Decision on the Merits dated August 31, 2001, the undersigned found that the complaint which had been brought against the Trustee to the effect that he had acted in a conflict of interest with respect to CAN AM was established and maintained; and
Whereas the parties, their counsel and the Delegate met on September 20, 2001 to permit counsel to lead evidence and/or make their representations on the appropriate sanction to be imposed; and
Whereas consequent to the undersigned's Decision on Jurisdiction dated July 25, 2001, determining that he did not have jurisdiction in respect of 2329, the Senior Analyst has withdrawn his original recommendation for a restitution order in favour of 2329 pursuant to Section 14.01(f) of the ACT and has moreover revised his original recommendation of a four year suspension order under Section 14.01(d) of the Act to one of a four month suspension order, during which period the Trustee would not be permitted to be appointed and/or act in any matter under the Act; and
Whereas the Senior Analyst has urged the Delegate to consider the following aggravating factors which have been disclosed by the evidence:
- the Trustee acted with full knowledge of his actions;
- the Trustee's vast experience of 37 years as a Trustee in bankruptcy and as a Chartered Accountant;
- failure by the Trustee to declare to the Official Receiver that he was acting in a possible conflict of interest while filing the assignment and thereafter by carrying out the engagement, and further, by failing to declare same to the creditors in the Trustee's preliminary report filed for the purpose of the first meeting of creditors; and
- the Trustee has evidenced no remorse for his actions nor any intention of admitting to any wrongdoing, going so far as to blame the Official Receiver for failing to notice that the conflict of interest box had not been filled out on the Estate Information Sheet; and
Whereas the Senior Analyst emphasized the fact that the sanction must be representative of the seriousness of the wrongdoing and underline the concept of exemplarity and deterrence; and
Whereas the Trustee pleaded that the undersigned should consider the following attenuating circumstances which have been established in evidence:
- at his present age of 74, the Trustee no longer intends to practise as a Trustee in bankruptcy and, in fact, since more than one year has no longer practised as such nor as a Chartered Accountant;
- during his entire career spanning 37 years, the Trustee demonstrated good conduct and has an unblemished disciplinary record, both before and after the events of the present case, which occurred ten years ago;
- he is consequently to be considered and treated as a first-time offender;
- the Trustee did not personally benefit or gain in any way as a result of the conflict of interest in this case; and
- the conflict of interest for which the Trustee is to be sanctioned herein did not result in any loss or negative consequences to the Estate of CAN AM or the creditors thereof; and
Whereas the Trustee has suggested that the Delegate acknowledge and ratify the Trustee's undertakings made orally and of his own volition at the September 20, 2001 Sanction Hearing, to no longer practise until the end of his services contract with John Lucka (J. Lucka & Associés Inc.), Trustee, which will remain in effect until June 30, 2003 and, following that date, that the Trustee will not seek the renewal of his licence; and
Whereas the Trustee's counsel has urged the Delegate, in addition to such acknowledgement and ratification, to impose a reprimand on the Trustee, without any suspension; and
Whereas the sanction must not be tailored to reflect only the specific needs and situation of each Trustee, but should also take into account the integrity of the bankruptcy and insolvency system; and
Whereas in professional conduct matters, the purpose of the sanction is not primarily to punish the professional, but also to have the effects of exemplarity and deterrence, so as to also protect the public and the integrity of the profession of bankruptcy Trustee; and
Whereas, on the other hand, the principle of exemplarity and deterrence must not be over emphasized to the point where it becomes oppressive to the offender; and
Whereas in the case of Trustees in bankruptcy, conflict of interest constitutes a serious infraction which strikes at and undermines the core of a Trustee's responsibilities, directly impacts the integrity of the bankruptcy and insolvency system and negatively affects the general public's perception of and confidence in that system; and
Whereas even though the Trustee is no longer practising as a Trustee and has no disciplinary antecedents, the seriousness of a conflict of interest infraction is such that the sanction must be more than a reprimand or be merely symbolic.
Each duplicate original of this Decision On The Sanction signed by the Delegate is equally valid and authentic and may serve as such for all legal purposes.
I, THE DELEGATE OF THE SUPERINTENDENT OF BANKRUPTCY, having weighed and considered all of the foregoing and all of the facts and circumstances in this case, DO HEREBY SUSPEND THE LICENCE OF MR. PETER WOLKOVE, TRUSTEE IN BANKRUPTCY, FOR A PERIOD OF THREE MONTHS, during which he will not be permitted to be appointed and/or act in any matter under the Act.
This ORDER will come into effect on NOVEMBER 1, 2001.
the original signed by
The Honourable Benjamin J. Greenberg, Q.C.
Delegate Of The Superintendent
Maîtres Pierre Lecavalier and Louis-Philippe Delage
Counsel for the Senior Analyst;
Maître Bruno J. Pateras, Q.C.
Counsel for the Trustee.
This document has been reproduced as submitted by the delegate of the Superintendent of Bankruptcy.
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