Former Calgary mayoral candidate Bill Smith accused of misappropriating funds

The Law Society of Alberta is investigating allegations that former Calgary mayoral candidate Bill Smith misappropriated funds held in trust by his law practice. 

Chiara Fritzler says she and her husband are out around $10,000 after they hired Smith for the sale of their house in January of last year.

That money was placed in a trust account until all conditions on the sale were met, but Fritzler says she was told those funds have been drained.

Those allegations against Smith — who came in second to Naheed Nenshi in Calgary's 2017 mayoral race — have not been proven in court. 

Smith no longer practising

Fritzler hired Smith just two months before his practice, the Law Shop, was placed under the custodianship of another lawyer, Eugene Bodnar. 

Court documents show Smith requested to be listed as inactive by the Law Society of Alberta on Feb. 27, 2018, saying he was unable to continue practising law "due to health concerns."

Bodnar was given control of the practice on March 7, 2018, with the purpose of winding down its operations and dispersing funds from trust accounts.

"We met with [Smith] and when we were there, he seemed a little bit out of it and we found out a couple of days later that this was attributed to the fact that he had a concussion from some exercising incident that had happened a little while previously," said Fritzler. 

"So he went off work and was nowhere to be found after that, which sort of started our issues with him representing the sale of our house. So we originally thought that the issues with a trust account and us being unable to get our money back was due to him not really being compos mentis, for lack of a better word."

It was not until Fritzler was contacted by Bodnar that she learned Smith was no longer in charge of his practice. She also says she was told at that time that she might not be reimbursed her money. 

"He was low cost and I trusted him," said Fritzler. "I voted for him."

Law society investigating

The Law Society of Alberta confirmed it is investigating the allegations against Smith. 

"The complaint process is a private proceeding between the lawyer and the law society," Colleen Brown, the manager of communication for the society, said by email. 

"However, we can confirm that we are currently reviewing Mr. Smith's conduct as it relates to these allegations (of trust misappropriation)."

Brown says Smith, who has not responded to repeated CBC requests for comment on this story, has been notified of the allegations. 

Smith told Postmedia, through a spokesperson, that he was made aware of the allegations on Monday. 

Past financial troubles

It isn't the first time that Smith has been accused of mishandling finances.

In 2010, he was sued for $2.2 million by a mortgage company, which alleged he did not properly draft documents before releasing funds to the mortgagors, who then walked away with the money. 

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That case was settled out of court, but the details of the settlement are protected by a confidentiality agreement.

In another instance, a civil enforcement company was hired in 2017 to seize more than $24,000 in property from Smith's business for failure to pay an outstanding loan. 

A bailiff's report shown to CBC News in 2017 revealed that Smith paid the sum owing days after Consolidated Civil Enforcement began searching for assets to seize.

Toll of the missing money

Fritzler says the missing money has taken a toll. The reason she and her husband sold the house in the first place is because she had been laid off and they could no longer afford to keep it. 

She was also pregnant at the time of the sale and is now the mother of a nine-month-old girl. 

Fritzler says she is not suing Smith, but working with Bodnar and the law society to recover her money. 

She says she's speaking up now because Smith is back in the news, promoting a new vision for a field house redevelopment at the Foothills Athletic Park. 

Brown says if the Alberta Lawyer's Insurance Association determines funds were misappropriated by a member, "there may be a claim for reimbursement to the client for the portion that was misappropriated."​

Bodnar would not comment on the allegations, but said he should be finished wrapping up Smith's practice in two weeks.