The U of M is suing its former law dean Jonathan Black-Branch to recoup funds that were misappropriated during his deanship with the university.

In a statement of claim filed in Manitoba Court of King’s Bench on Aug. 12, the university is seeking damages in the amount of $660,944.60.

The university is being represented by Jeff Hirsch and Miranda Grayson of Thompson Dorfman Sweatman LLP.

The 33-page lawsuit states that Black-Branch “knowingly pursued a course of fraudulent, reckless, deliberate and high-handed conduct.”

In the recently filed lawsuit, the university claims that Black-Branch has been “unjustly enriched” from the misappropriated funds. It stipulates that he breached his contractual and fiduciary duties which “he attempted to conceal through fraud, deceit, or fraudulent misrepresentation.”

According to the lawsuit, Black-Branch “had access to various university funds, including operating funds, faculty of law endowment funds and the Desautels Fund.”

Black-Branch was appointed as dean of the faculty of law effective July 1, 2016 for a five-year term. He was also appointed as chair and director of the Marcel A. Desautels Centre for Private Enterprise and the Law effective May 1, 2017.

During this time, Black-Branch used $518,722.35 of university funds to pay for professional development programs.

This includes $151,895.26 on programs at Harvard University with transaction dates from Dec. 2017 to July 2018. Other incurred expenses include $176,589.87 toward an IE Brown Executive MBA, $58,275.96 for an Executive LL.M., $79,482.61 on a Yale Global Executive Leadership Program (YGELP) and $52,478.65 for a Masters in Social Innovation from the Cambridge Judge Business School.

“The defendant fraudulently caused the professional development fees to be paid for his own benefit, in breach of University Policy and the Desautels Agreement, and attempted to conceal the payment of the professional development fees,” stated the lawsuit.

Black-Branch also fraudulently obtained reimbursement for meals and accommodations associated with the professional development programs. This includes $4,435 toward courses taken at Harvard University and $3,662.05 for the YGELP.

Over nearly three years, he expended university funds on 201 meals at the Manitoba Club totaling $21,679.62. In part, he tried to conceal these payments by falsifying the names of people he dined with.

Black-Branch used $17,310.16 of university funds to cover membership fees to the Manitoba Club and the Oxford and Cambridge Club. The lawsuit also reveals that Black-Branch misappropriated $20,135.42 for personal expenses. University funds were spent on accommodation expenses during a visiting fellowship at the University of Cambridge, a personal donation to Yale University and telecommunication expenses at his residence in England.

The final claim states that Black-Branch diverted $75,000 to the Foundation of International Society of Law and Nuclear Disarmament (ISLAND) from the law programs and staffing fund — contrary to the fund’s purpose. Black-Branch was cited as the president of the board of trustees and/or a director of ISLAND.

Investigation and dismissal

According to the recent lawsuit, the university’s vice-president (administration), then Lynn Zapshala-Kelln, received a disclosure on or about Feb. 25, 2020 pertaining to Black-Branch’s financial activities as dean and director and chair of the Desautels Centre.

The university’s director of the audit services department, Janice Martin, was appointed to investigate the complaint.

Following an investigation, it was revealed that Black-Branch “had misappropriated various university funds… [and] that he had done so in a manner designed to conceal the misappropriation and to avoid the control and oversight of others at the university.”

“The university terminated the defendant’s employment on or around July 14, 2020,” reads the lawsuit.

Black-Branch was disbarred in the province earlier this year and fined $36,000 following a verdict by the Discipline Committee of the Law Society of Manitoba.

He was found “guilty of professional misconduct and conduct unbecoming of a lawyer in numerous breaches of his duty of integrity,” reads the Feb. 14 decision.

Evading scrutiny

The university relies on two main financial tools – Concur and EPIC – to cover the costs of supplies, services and expenses, according to the lawsuit.

Concur is the travel and expense tool whereas EPIC, an acronym for electronic and procurement and information centre, is the procurement tool for acquiring goods and services.

Claims submitted through Concur required approval from the claimant’s immediate supervisor, termed the “one over one.” The provost and vice-president (academic) is regarded as the one over one for the dean of the faculty of law.

Conversely, EPIC did not require one over one approval and was approved by the signing authority. The lawsuit states that the signing authorities in the faculty of law were the dean, two associate deans, the office manager and the financial officer.

“Invoices submitted by the defendant through EPIC, however, could be approved by the defendant or one of his subordinates with signing authority within the faculty of law, and did not attract one over one scrutiny,” reads the lawsuit.

Black-Branch is accused of “submitting, or directing his subordinates to submit, the claims for the misappropriated funds through EPIC, rather than Concur, to avoid one over one scrutiny.”

He is also alleged to have submitted claims to the financial tools with false, misleading and/or incomplete information.

None of the claims have been tested in court.

Changes to financial procedures

Mike Emslie, chief financial officer/comptroller of the university, said that “a directive was sent to all staff in 2020 requiring that professional development, travel or memberships be pre-approved and processed through Concur which enforces a one-over-one approval.”

“The university has significantly increased its oversight and analysis of expenditures to identify and investigate potentially problematic transactions which further reduces the risk of similar issues occurring in the future,” said Emslie.

Richard Jochelson, the current dean of the faculty of law, said “my own experience is that UM has done its due diligence in getting one over senior management to review dean expenses.”

He added that, “my expenses as a dean, regardless of systems used, including EPIC, do indeed have one over approval. If the expense is hospitality, the purchase of graduation regalia or even a textbook, ultimately it needs to be approved by a one over.”

The U of M administration said that “UM Audit Services developed the Fraud and Financial Irregularity Reporting Policy that came into effect in 2022 to provide the university community with a clear and concise framework to report fraud and financial irregularities. At the same time, UM developed online training to provide guidance and education to the UM community. Expenses of deans are also now audited every quarter.”

The administration also mentioned measures that were already in place to prevent fraud.

“An online tool was put in place in 2012 for people to anonymously report potential fraud. Additional measures include the Safe Disclosure (Whistleblower) Policy, which also complied with federal legislation/requirements.”

After being served the statement of claim, Black-Branch has sixty days to prepare and file a statement of defense, if served outside of Canada and the U.S. His last known address is England according to the lawsuit.