A disbarred lawyer convicted of stealing money from Toronto diet doctor Stanley Bernstein, “will never get involved in a situation like this again,” her counsel said Wednesday while asking a judge to consider imposing a 12-month sentence in a provincial jail.
Norma Walton, 49, a mother of four, was convicted by a jury in June of illegally obtaining two $3-million mortgages without the consent of Bernstein, with whom she had formed a real estate partnership. During their run, they acquired 31 GTA-area properties — until he turned off the tap over suspicions of financial irregularities.
On the final day of Walton’s sentencing hearing Wednesday, defence lawyer Howard Cohen said there are many “exceptional circumstances” around the case. They include a crushing $66-million civil judgment hanging over the head of Walton and her husband that, unusually, survives any declaration of bankruptcy.
The Waltons “may be hamstrung” forever, dogged by creditors and unable to have a “second start” as bankruptcy laws intended, Cohen said.
The prosecution is seeking a six-year term in federal prison but concedes a lesser sentence may be appropriate depending on the amount of money the judge decides was transferred illegally from the two mortgages.
Bernstein invested more than $100 million in real estate properties Walton was entrusted to develop. Cohen said it’s clear Walton got in over her head and believed she could match his contributions — as required by their partnership agreement — by “moving money in places where it was needed.”
Those included properties in which Bernstein had no stake and her personal bank account. “What really went on is she tried to do what she could, using pooled money, to make things profitable and fulfil her obligations to Dr. Bernstein,” Cohen said.
The pressure on Walton was impossible, Cohen said, in light of everything including the non-involvement of her husband Ron Walton who, despite also being a lawyer with an MBA, had “dropped out of sight,” leaving her alone to run their real estate company.
Cohen said Norma Walton believed she had the right to do what she did to manage the 31 properties she jointly owned with Bernstein. “The pressure on her was unbelievable” and she was “overwhelmed,” he said. Cohen also criticized Bernstein for not exercising oversight in the partnership, saying that had signalled to Walton that he thought her capable of handling their growing real estate portfolio herself, using the funds as she saw fit.
On Tuesday, prosecutor Craig Power suggested Walton was driven by greed. Cohen rejected that, saying she took out $6 million in two mortgages because she wanted to prove she could “work miracles.”
“The real greed was from Dr. Bernstein,” the “fabulously wealthy” physician in his 70s who let her run the show because “all he was concerned about was the bottom line,” Cohen said.
“He was throwing money at her; she thought she could make everything work.”
During his submissions, Cohen made no mention of the money Walton used to buy a mansion in the exclusive Bridle Path community in North York. The house came up several times at her trial, though her theft conviction did not relate to its purchase.
Superior Court Justice Michael Code said one of the things he must decide is whether Walton “believed she had the right to use improper means to achieve a noble objective.” The judge added the strongest mitigating factors in favour of leniency are that the financial transactions took place over a short, two-week period, that they were part of a legitimate business enterprise, not a scam, and that she had made efforts at repayment.
At the end of the proceedings, Code asked Walton if she had anything to say, as is customary during sentencing hearings. She nodded and rose slowly from her chair.
“You were tough but fair throughout the trial to me, and I just want to say I hope you do the same in your sentencing,” Walton said, sounding less confident than she in her testimony during her trial.
Code told her his decision is not easy.
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“To some extent my hands are tied by the law, but sentencing is a very discretionary process … so I want to think about it,” he told her.
Code scheduled Sept. 13 as a target date for sentencing.