Case exposes vulnerabilities in homebuying process
A husband-and-wife law firm in Toronto is facing multiple lawsuits and a police investigation after allegedly embezzling millions of dollars from homebuyers' trust accounts.
Nicholas Cartel and Singa Bui, partners of Cartel & Bui LLP, are accused of failing to pay off sellers' mortgages in at least six southern Ontario home sales, despite receiving funds from buyers to do so.
The Law Society of Ontario has provisionally suspended both lawyers and shut down their firm amid 15 lawsuits claiming a total of $15.5 million in damages. The cases revealed a vulnerability in the homebuying process that relies heavily on lawyers' undertakings and good faith.
According to lawsuits filed by seven homebuyers, the firm allegedly took their money, paid out the home equity to sellers, but held onto the remaining funds meant for mortgage payoffs.
"The general public needs to know that their money isn't safe in a lawyer's trust account," Anthony Ingarra, a mortgage agent who lost over $310,000 in dealings with the firm, told CBC News.
In another case, Thierry Cohen-Scali, a Florida-based engineer, alleges the firm is withholding $465,000 meant to be returned to him after obtaining necessary tax clearances from the Canada Revenue Agency.
Balvinder Kumar, a veteran real estate lawyer, highlighted the risks associated with wire transfers in property transactions: "Wire transfer has become a norm and that is very risky, because in spite of the fact that the lawyers are giving undertakings, it may or may not happen."
Court and law society documents suggest the couple used clients' funds to pay their own mortgages, credit card bills, and business taxes. The judge described their lifestyle as "fairly extravagant," with Cartel requesting monthly living expenses of $30,655.
Read next: Why a real estate lawyer should be part of every property deal
While Bui initially shouldered the blame for the missing funds, Cartel maintains he had no role in financially managing the firm. However, the Law Society's decision to suspend him states he "appears to have misled" another lawyer and failed to cooperate fully with investigations.
The Law Society of Ontario has faced criticism for its delayed response to complaints about the firm. Despite reports of financial irregularities dating back to April 2023, an audit of the firm's bank accounts only began in late November.
Cartel has repeatedly promised to "make whole" those who have lost money, but there is little evidence of follow-through. He is appealing his license suspension and claims to be in discussions with the Law Society about resolving his case, a statement the LSO representative has flatly denied.
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