Court freezes accounts of separatist lawyer as First Nation alleges misappropriation

The personal and pro cant accounts of attorney Jeff Rath, 1 of the leaders of Alberta’s separationist movement, were temporarily frozen as part of a legal dispute over millions of dollars in trust funds that a First Nation alleges were  misappropriated. 

Alberta Court of King’s Bench Justice Michael Marion granted the temporary order to freeze Rath’s accounts after an emergency hearing last week. The full matter will be heard in court on Wednesday. 

Tallcree First Nation Chief Rupert Meneen requested the urgent hearing after Rath failed to account for $6 million in retroactive charges to the First Nation’s trust account by its deadline of June 17. Rath’s professional corporation is the trust’s sole trustee.

According to court documents, the Tallcree First Nation asked the court for a rarely used Mareva order over concerns the funds would be “dissipated, transferred, concealed, or placed beyond reach before this matter can be heard in the ordinary course.”

The judge agreed that a strong prima facie case existed to grant the temporary order.

Lawyers for the Tallcree First Nation found additional information about the trust fund after  another Court of King’s Bench judge on June 26 removed Rath as trustee and appointed BMO Trust Company to take over. 

Account statements forwarded by BMOshow that in February 2025, $8.5 million was deposited into an investment account. Rath PC had opened the account to comply with a judge’s order to hold the money separately pending the outcome of an appeal by the Tallcree First Nation to have the money go back to them.

On Nov. 4, the First Nation’s appeal was dismissed by the Court of Appeal, which meant the original order to have the money repaid to the trust account was upheld. 

Thirteen days later, the statements show Rath PC wrote a cheque for $8.5 million on the trust account to itself.  

The First Nation’s lawyer noted in a June 23 letter to Rath and his legal counsel that there is no record of that money being moved to the trust fund’s investment accounts. 

Rath responded to the lawyer via an email on July 3 that he was entitled to the 20 per cent contingency fee and that the band council approved the amount through a resolution. 

He said in a separate email that same day “that all funds were properly paid out pursuant to the terms of the trust.”

Meneen’s originating application lays out a timeline that started in 2017 when the Tallcree First Nation received $57.6 million from the federal government after the two parties settled an agricultural benefits claim. 

The First Nation retained Rath to put the money into a trust. Rath drafted the declaration of trust and made his professional corporation the sole trustee. Rath’s fees were set at $11.5 million or 20 per cent of the settlement. 

The First Nation asked the court in 2018 if those fees were reasonable. The subsequent ruling found the fees were excessive, which was upheld by the Court of Appeal. Rath was ordered to return $8.5 million dollars to the trust. 

What followed were years of legal action by the First Nation aimed at getting the money back. 

After the Supreme Court of Canada declined to hear Rath's appeal, an Alberta Court of Appeal judge ordered Rath to refund the money in November 2023. The same judge ordered the money, along with interest, be refunded seven months later. 

In July 2024, band manager Mike Cardinal asked Rath to provide the trust’s financial statements going back to 2021. 

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The affidavit states that Rath took several months to provide the financial statements for 2021, 2022 and 2023. The financial statements for 2024 and 2025 took longer. 

They arrived on June 1, 2026, in response to a court order. 

What the First Nation found were amounts charged to the trust “that are extraordinary, unprecedented in the Trust’s history, and deeply concerning,” according to court documents filed by the First Nation.

Cardinal said Rath didn’t tell the First Nation the charges had been made. 

They included administration fees and professional fees totalling $6,012,960 “in the same fiscal year Rath PC was ordered to pay $8,518,075  into court,” another court document said.

“The timing and scale of these unprecedented charges strongly suggest that they  misappropriated the trust’s own assets to fund the court-ordered repayment of the improper and unreasonable contingency fees.”

The affidavit further alleges that $1,278,322 charged for “reimbursement of external legal expenses incurred for prior legal proceedings” were related to the costs Rath incurred to defend his own contingency fee. 

The court will look at extending the temporary order on Wednesday. 

Provincial affairs reporter

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