Lawyer couple found in contempt of court amid evidence they stole millions from homebuyers

Two Toronto lawyers accused of embezzling nearly $7 million from real estate clients have been found in contempt of court for failing to produce financial records and answer questions about the missing funds.

Singa Bui and her husband Nicholas Cartel face potential penalties, including fines or imprisonment, and are likely to face misconduct charges from Ontario’s regulatory body for lawyers, according to two experts in legal discipline.

"Although they must know what happened to the funds, they have refused to provide this information," ruled Ontario Superior Court Justice William Chalmers in late August.

"Instead of attempting to comply with the orders to the best of their ability, I find that the defendants have taken active steps to hide their finances and to frustrate the court's efforts to determine what happened."

This case highlights the vulnerability of homebuyers and sellers to fraud by lawyers handling their transactions, especially given that these transactions are often the most significant financial deals in their lives.

In a phone interview last week, Cartel expressed his disagreement with the judge's decision and stated his intention to challenge it.

"He ignored the facts," Cartel said. "I've delivered all documents in my possession, delivered thousands of pages of real estate files… I will be bringing a motion to address this, to have it set aside or varied in some regard."

Trust Account Deficits
Bui and Cartel, the sole partners at the now-defunct Cartel & Bui LLP, operated out of a stylish loft in Toronto’s Liberty Village. Bui primarily handled home sales, while Cartel focused on class actions and litigation.

By 2022, discrepancies began to emerge in the firm’s trust account, as revealed by a court-ordered forensic audit.

Trust accounts for lawyers are strictly regulated because the funds belong to clients, not the firm.

The audit uncovered potentially inappropriate payments, including $2,190 monthly for child care and over a million dollars in transfers to American Express cards used for high-end purchases at brands like Christian Dior and Hermes.

Initially, shortfalls were covered by incoming funds, but by February 2023, client payouts from real estate transactions began to lag.

Cartel took out a $1.2 million mortgage on his and Bui’s home. Although he claimed the loan was for repairs due to a major plumbing issue, the forensic audit found the funds were deposited into the Cartel & Bui trust account and used to cover shortfalls.

Additionally, during seven home sales last fall, the firm allegedly failed to pay off clients’ mortgages as required, resulting in a total of $3.3 million in retained funds instead of being disbursed properly.

In a notable case, more than $2 million from homebuyers for a Toronto property vanished from the firm's trust account shortly before the deal collapsed, with the buyers not recovering their funds.

Judge Rejects Husband’s Denials
Cartel has consistently claimed that Bui managed the firm’s and their personal finances and that he was unaware of the issues. He has also cited Bui’s illness and hospitalization as reasons for not recovering the firm's files or addressing the missing funds.

In December, Bui, through her lawyer, denied Cartel’s involvement in the mishandling of trust funds and asserted that no other firm associates were responsible.

The judge criticized this stance in his contempt ruling, deeming it “inconceivable” that Cartel was unaware of the missing funds and “inconsistent with common sense” that he wouldn’t have inquired with his wife.

CBC News was unable to reach Bui through email or her previous lawyers.

The judge will soon review submissions to determine an appropriate penalty for the couple. Typically, in contempt cases, offenders can avoid sanctions by complying with court orders.

Matthew Wilton, a Toronto litigator who represents lawyers in disciplinary matters, noted that while jail is a possibility for severe contempt cases, lesser penalties, such as fines, are more common.

Cartel and Bui’s law licenses have been provisionally suspended since April while under investigation. The contempt finding does not affect their current status, according to a law society spokesperson.

However, it could strengthen the case for their eventual disbarment.

Justin Jakubiak, who represents professionals in regulatory issues, emphasized that a contempt finding is "incredibly serious" as it challenges the core obligations of the legal profession. "Lawyers must respect the legal process and judges. If they fail to do so, it questions their ability to practice appropriately."