Winnipeg Free Press - PRINT EDITION

Shamray sues former attorneys

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MICHAEL Shamray's name is back on the court docket, but this time he is a plaintiff and the defendants are his former lawyers.

Shamray is suing the Winnipeg law firm Aikins MacAulay & Thorvaldson and several of its current and former lawyers and partners for about $1.3 million. He is claiming the firm was "in breach of their continuing fiduciary duties" surrounding a conflict of interest that lead to Aikins' lawyers being disqualified from representing Shamray in the middle of his defence of his multimillion-dollar fraud case in 2004.

Shamray was convicted of four counts of fraud arising from the October 1998 bankruptcy of The Shamray Group (TSG) of companies in which about $50 million went missing and has never been publicly accounted for.

Shamray's suit alleges Aikins had already racked up fees of $1.45 million defending the former Manitoba business star before a Manitoba court disqualified Aikins from the case in January 2005 because of a conflict of interest.

Shamray eventually pleaded guilty to the fraud charges and was sentenced to two years in prison in April 2006.

This statement of claim says Shamray retained Aikins in October 1998, and was represented primarily by Bruce Taylor and Raymond Flett in respect to allegations at the time and "potential civil claims and criminal charges arising from those allegations."

The claim alleges Aikins was in a conflict of interest right from the start because of its association with Vision Capital Fund Limited Partnership.

Vision Capital was one of the victims of the Shamray fraud and was the party that filed the original complaint with the RCMP that eventually led to the charges against Shamray.

The conflict of interest arose from the fact that Duncan Jessiman acted as Vision's lawyer in its business dealings with Shamray before and after he joined Aikins as a partner in April 1998.

In the statement of claim against Aikins and 12 of its current and former lawyers, it acknowledges that when the conflict of interest came up, Shamray and TSG "agreed to assist the law firm (Aikins) in opposing the disqualification motions."

After the court disqualified Aikins from the case in January 2005, Aikins' managing partner, Ed Warkentin, told the Free Press "that both parties were fully aware of the relationship throughout and to our knowledge agreed to our continuing involvement."

The statement of claim says Shamray incurred $159,212.74 in legal fees regarding the disqualification proceedings, a loss of $1 million in the value of services Aikins had already rendered in his criminal defence, another $150,000 in legal services he had to duplicate in matters unrelated to the criminal action, and another $25,000 in time and expense in finding other lawyers.

Winnipeg lawyer Robert Tapper represents Aikins.

"I fully expect to receive instructions to vigorously defend Aikins," Tapper said.

"I know the transaction which is at issue and Aikins' position that it holds very strongly is that it has no responsibilty to... Michael Shamray arising out of any legal services to this gentleman or to his company which, as you know, has had its share of difficulties with the law."

It took more than three years for the RCMP to lay fraud charges against the former rising star of the Manitoba business scene and then another four years-plus before Shamray pleaded guilty and was sentenced.

Republished from the Winnipeg Free Press print edition June 22, 2010 B3

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