Complaint Letter to the PEI Law Society Against Billy Dow
The Latin motto for the PEI Law Society was adopted from the provincial Coat of Arms and reads: “Parva Sub Ingenti” which translates: “The small under the protection of the great.” This official declaration that, like the provincial government, lawyers rule over the rest of us, should give us pause. That they also rule over themselves – in that they are self-regulated – should give us even greater pause.
With their understanding of the law – and access to the legal system – lawyers can indeed protect the small if they so choose; however, without proper oversight and trustworthy disciplinary procedures and processes to address wrongdoing, they can also easily act out of self-interest to ingratiate themselves or serve those who are not at all small and weak, but large, wealthy and powerful.
The evidence I am providing should convince any reasonable person that inappropriate and illicit actions by Mr. Dow, warranting significant disciplinary action, did in fact happen. I trust that the PEI Law Society will therefore find merit in my formal complaint against William F. Dow (aka “Billy” Dow).
I’m filing this complaint (see letter below) with two supporting documents: Appendix “A” – previously posted as “A Conspiracy to Commit Fraud – Preamble to Part 2: The E-gaming Loan” ; and Appendix “B” posted as “A Conspiracy to Commit Fraud -Part 2: The E-gaming Loan.”
I look for the day when the PEI Law Society’s motto will be changed to: “Magna Dominata est in multa” – “The great ruled by the many”.
Law Society of PEI
49 Water Street,
April 3, 2019
Re: Complaint against William F. Dow
By this letter and accompanying documents (Appendices “A” & “B”), I am formally filing a complaint with the PEI Law Society against William F. Dow (Carr, Stevenson and MacKay).
The page on the PEI Law Society’s website providing information on the complaint process states that there is no time limit for filing a complaint, noting that complaints should name the lawyer, indicate what he/she did or failed to do, as well as the time of the alleged complaint(s).
My complaint relates to a number of actions (or failures to act when actions were warranted) covering the period February, 2010 to January 2013, during which time Mr. Dow was retained by the PEI government as outside counsel on the E-gaming and Financial Transaction Platform projects (subsequently referred to in this letter as the “e-gaming project”).
In particular, I believe that Mr. Dow violated numerous provisions of the PEI Law Society’s “Approved Code of Conduct,” throughout the nearly three-year period he acted as legal counsel for the PEI government on the e-gaming project, by failing to protect the interests of his client (PEI government & PEI residents).
Although the nature and style of my supporting documents are somewhat unconventional for a complaint to the PEI Law Society, I trust that you will nonetheless take the time to review the material contained in both appendices. The information in both articles is presented in a narrative style to make it more understandable and contextualized: both documents have already been published on my blog: “Ethical and Social Commentary on Life in PEI,” [https://Kevinjarsenault.com].
These two documents are part of a series of articles on e-gaming (“A Conspiracy to Commit Fraud”) and present the findings of a two-year investigation into this matter. A considerable number of source documents supporting the claims made in these articles – and this letter initiating a complaint – are too voluminous to provide in hard copy form. However, they can be easily accessed and downloaded from links contained in these two documents from my website.
As described in my articles, the nature of my complaint against Mr. Dow is two-fold: (1) that Billy Dow had a conflict of interest while representing the government on the e-gaming file; and, (2) that Billy Dow both acted and failed to act in ways that did not properly serve and protect his client, the PEI government, especially regarding his handling of the $950,000 e-gaming loan issued to the Mi’Kmaq Confederacy of PEI from the PEI Century Fund.
I identify some of these actions (and failures to act) with more precision below; however, the more substantive information and contextual details supporting these allegations will not be restated here; again, they can be found in the supporting documents (and the sources provided therein).
Previous Complaint Against Billy Dow
I am aware that a previous complaint alleging that Mr. Dow had a conflict of interest with his involvement in the e-gaming file was previously filed with the PEI Law Society by the former Leader of the PEI New Democratic Party (Michael Redmond), and resulted in a disciplinary committee ruling that Mr. Dow was not in a conflict of interest.
Redmond’s complaint related specifically to Mr. Dow’s involvement in the signing of a Memorandum of Understanding (MOU) in the late summer/fall of 2012 between the PEI government and Trinity Bay Technologies (TBT) [a wholly-owned subsidiary of Capital Markets Technologies (CMT)]. This issue is not the basis of my complaint.
New documents have recently come to light, as a result of filings with the PEI Supreme Court, revealing that Mr. Dow’s involvement in the e-gaming file did not begin with his involvement with the MOU in 2012, but that he was retained by the PEI government to act as outside counsel on the entire e-gaming project much earlier, in February, 2010. Mr. Dow continued to act in that capacity up to and beyond the date the PEI government ended the e-gaming project on February 24, 2012.
Conflict of Interest
My allegation that Mr. Dow was in a conflict of interest stems from the fact that while acting as the PEI government’s legal counsel on the e-gaming file, Mr. Dow purchased shares in Capital Markets Technologies (CMT) in July, 2011 when CMT was in discussions with the PEI government on possible involvement with e-gaming; in particular, discussions pertaining to the establishment of a financial transaction platform in PEI and the recruitment of gaming companies to PEI. The details pertaining to this matter are contained in Appendix “A”.
The Law Society of Prince Edward Island’s “Approved Code of Professional Conduct” defines a conflict of interest as follow:
“A ‘conflict of interest’ means the existence of a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person.” (p. 9)
On page 3 of the Code of Professional Conduct, section 3.4-1 it further states:
“A lawyer must not act or continue to act for a client where there is a conflict of interest, except as permitted under this Code.”
Section 3.4-1, para. 1 goes on to say that:
“The risk must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation arising from the retainer. A client’s interests may be seriously prejudiced unless the lawyer’s judgment and freedom of action on the client’s behalf are as free as possible from conflicts of interest.” (my emphasis).
It is my contention that having invested in Capital Markets Technologies, a company which the PEI government and the “E-gaming Working Group” (Mr. Dow attended meetings of this Group as the PEI government’s legal counsel on the file) were in discussions with to be the company that would provide gaming company recruitment services – as well as to establish a financial transaction platform owned by Simplex (CMT had exclusive North American rights to Simplex’s technology) providing the technical infrastructure required for e-gaming and other financial services – Mr. Dow had a conflict of interest, and he should not have been acting as legal counsel for the PEI government on this matter.
Section 3.2-2 of the Code of Conduct states:
“When advising a client, a lawyer must be honest and candid and must inform the client of all information known to the lawyer that may affect the interests of the client in the matter.”
Having purchased shares in CMT, Billy Dow clearly had a conflict of interest with the e-gaming file, yet he failed to inform his client, the PEI government, of his investment in CMT until September, 2012, which was long after his legal work on the e-gaming loan (as well as other matters related to the e-gaming file) was undertaken. I believe that Mr. Dow had both an ethical and legal obligation to disclose this information from the date he made the investment (July, 2011) and to also remove himself and his law firm as legal counsel on this file.
Dow’s legal work on the E-gaming Loan
In addition to a complaint that Mr. Dow was knowingly acting as legal counsel for the PEI government on an ongoing project file in which he had a conflict of interest, there are also specific actions (and failures to act) which Mr. Dow undertook (or didn’t undertake) which failed to protect his client’s best interests; actions which were, in fact, contrary to, and in violation of, various established government procedures, protocols and laws. The full details and sources for these actions (or failures to act) are contained in Appendix “B”and include:
- Authorizing the advancement of $50,000 to another Law Firm (McInnes Cooper) prior to the signing of a “Letter of Offer” for the loan – with no security agreement in place, which was required by Treasury Board policy and the Financial Administration Act;
- Authorizing the advancement of an additional $700,000 to McInnis Cooper law firm prior to the e-gaming loan general security agreement being in place in contravention of PEI policy and laws;
- Failing to ensure that the Borrower (Mi’Kmaq Confederacy of PEI) – and the agent acting on behalf of both the Mi’Kmaq Confederacy and PEI government as the e-gaming/Financial Transaction Platform “project manager” [McInnes Cooper] – complied with section 1.1 of the Loan Agreement stipulating that the proceeds of the loan “…will be used by the borrower to finance the continued development and establishment of an interactive gaming regulatory and taxation model for the province of Prince Edward Island.” Mr. Dow knew – or should have known – that when he advanced the initial transfers of $50,000 and $700,000 they were not for “continued development,” but for past expenses incurred by McInnis Cooper law firm unrelated to the budget deliverables presented in the Loan Agreement (Appendix “A” of the Agreement);
- Failing to ensure that the Borrower (Mi’Kmaq Confederacy of PEI) – and the agent acting on behalf of both the Mi’Kmaq Confederacy and PEI government as the e-gaming/Financial Transaction Platform “project manager” [McInnes Cooper] – were in compliance with section 1.2 of the Loan Agreement stipulating that “Disbursements will be based on 100% of actual invoiced costs as summarized in Schedule ‘A’ ” [Schedule “A” being the budget amounts for the specified deliverables].
- Failing to act on section 2.5 of the Loan Agreement to protect his client (the PEI government) when the e-gaming project was terminated by the PEI government on February 24, 2012; specifically, insisting that the $750,000 advanced on the loan – but not yet “released” for use, since the necessary security agreement had not yet been registered – be returned by the borrower, as stipulated in section 2.5 where it states: “…all previous advances to date shall be refundable by the Borrower to the Lender;” in the event the e-gaming project ended.
- Registering the security for the e-gaming loan on February 28, 2012, after his client (the PEI government) had terminated the project, thereby releasing the $750,000 previously advanced to McInnes Cooper law firm in contravention of section 2.5 of the Loan Agreement; and,
- Authorizing subsequent advances for the remaining balance of the $950,000 e-gaming loan months after the project ended ($100,000 in December, 2012, and the final $100,000 in January, 2013) in contravention of section 2.5 of the Loan Agreement.
It is my belief that the client’s (PEI government’s) interests were seriously prejudiced as a result of Mr. Dow’s personal financial interest in the e-gaming project [his purchase of shares in Capital Markets Technologies], especially, but not necessarily limited to, his handling of the e-gaming loan which the PEI government issued to the Mi’Kmaq Confederacy of PEI (MCPEI) in a Letter of Offer dated December 12, 2011 – which was legal work on the e-gaming file that Mr. Dow undertook for his client after purchasing shares in CMT.
I also believe the evidence shows that Mr. Dow assisted in, and possibly encouraged, dishonest and illegal acts associated with his handling of the e-gaming loan in that many of these actions were in direct contravention of Treasury Board policy and provisions of the Financial Administration Act, as was verified by the Auditor General in her final report on the E-gaming, Financial Transactions Platform, and Loyalty Card initiatives. Again, the details of her allegations of inappropriate and illegal activities are contained in both attached appendices.
The Law Society of Prince Edward Island’s Code of Professional Conduct states in section 3.2-7:
“When acting for a client, a lawyer must never knowingly assist in or encourage any dishonesty, fraud, crime or other unlawful conduct, or instruct the client on how to violate the law and avoid punishment.”
Initiation of a Business Plan with TBT/Simplex
Another matter that may warrant disciplinary action against Mr. Dow is his initiation of a Business Plan (MOU) with Trinity Bay Technologies Inc. (TBT), which he apparently undertook without direction to do so from his client.
Although Mr. Dow has stated that he was unaware at the time that Trinity Bay Technologies Inc. was a wholly-owned subsidiary of CMT – the company he had an investment in at the time he initiated the Business Plan – his taking this action would suggest otherwise. That he did in fact undertake this action was verified by the Auditor General. She referred to this action only as “unusual”; however, it would seem that it was entirely inappropriate, and likely violated one or more provisions of the PEI Approved Code of Conduct.
Dishonesty, Fraud when the Client is an Organization
Section 3.2-8 of the Code states:
“A lawyer who is employed or retained by an organization to act in a matter in which the lawyer knows that the organization has acted, is acting or intends to act dishonestly, fraudulently, criminally, or unlawfully, must do the following, in addition to his or her obligations under rule 3.2-7: [my emphasis]
(a) advise the person from whom the lawyer takes instructions and the chief legal officer, or both the chief legal office and the chief executive officer, that the proposed conduct is, was or would be dishonest, fraudulent, criminal or unlawful and should be stopped;
(b) if necessary because the person from whom the lawyer takes instructions, the chief legal officer or the chief executive officer refuses to cause the proposed conduct to be stopped, advise progressively the next highest persons or groups, including ultimately, the board of directors, the board of trustees, or the appropriate committee of the board, that the proposed conduct was, is or would be dishonest, fraudulent, criminal, or unlawful and should be stopped; and,
(c) if the organization, despite the lawyer’s advice, continues with or intends to pursue the proposed wrongful conduct, withdraw from acting in the matter in accordance with the rules in section 3.7. [My emphasis].
I have no knowledge concerning whether Mr. Dow acted on provisions (a) & (b) of section 3.2-7; however, the documentation clearly shows that he failed to withdraw from acting as the PEI government’s counsel on the matter in accordance with the rules in section 3.7.
Regardless of whether Mr. Dow was acting on instructions from provincial government officers and agents – including the Minister of Finance at the time, Wes Sheridan – he nonetheless had a legal duty – and ethical obligation – to ignore such instructions (and report them to the appropriate authorities) if they contravened established government policy and law, and withdraw from the file: he did neither.
Mr. Dow was not acting on behalf of these officers and agents, but the provincial government (PEI residents), and as the PEI Approved Code of Conduct states in section 3.2-3:
“Although a lawyer may receive instructions from an officer, employee, agent or representative, when a lawyer is employed or retained by an organization, including a corporation, the lawyer must act for the organization in exercising his or her duties and in providing professional services.” [My emphasis].
It further states in section 3.2-3, para. 1:
“While the organization or corporation acts and gives instructions through its officers, directors, employees, members, agents or representatives, the lawyer should be satisfied that it is the interests of the organization that are served and protected.” [My emphasis].
Appropriate resolution or remedy
The PEI Law Society’s website page providing information and instructions on filing complaints states that a complaint should answer the following question: “What do you see as an appropriate resolution or remedy?”
Mr. Dow had a duty to his client to protect the funds in the e-gaming loan, yet he failed to ensure that key provisions of the Loan Agreement were met prior to disbursing those funds to the borrower. This was especially the case with sections 1.1 and 1.2 of the Loan agreement that stipulate that only invoices for future work indicated in the Loan Agreement budget deliverables would be reimbursed (1.1), and that claims would be exclusively based on paid invoices (1.2), yet neither of these conditions were met prior to Dow advancing the loan funds.
Equally as concerning is Dow’s failure to call in the loan when the project ended on February 24, 2012 since it was already in default at that time, given the repayment terms stipulated in the Loan Agreement. Rather than securing the previous transfers ($750,000) that had not yet been released to the borrower, which was required under section 2.5 of the Loan Agreement, he proceeded to register the security agreement four days after the project ended, thereby allowing the release of the money to the borrower.
Especially concerning was his authorization of the transfer of the final $200,000 almost a year later on a defaulted loan without paid invoices.
The obvious remedy for this part of my complaint is to have Mr. Dow restore all funds ($950,000) that were paid out in contravention of provisions in the Loan Agreement so as to reimburse the PEI government (taxpayers) of these unnecessary financial losses.
In terms of additional disciplinary action against Mr. Dow relating to my complaint that Mr. Dow failed to disclose a significant and persistent conflict of interest in this matter, I would leave that to the judgment and discretion of the PEI Law Society; however, I would hope it would be more substantial than reminding him of his duty with a recommendation that he do better in the future.
Kevin J Arsenault, Ph.D