A boutique law firm in Toronto found itself at the center of a $7 million embezzlement case, despite passing a financial review by the Law Society of Ontario following revelations that the managing partner had been misappropriating client funds for personal expenses. The Law Society’s routine examination of Cartel & Bui LLP in the summer of 2022 did not raise any concerns, despite significant withdrawals from the firm’s trust account for payments to American Express and a child-care center.
The embezzlement scheme, led by Singa Bui and her husband Nicholas Cartel, went undetected for several months until a complaint was lodged with the Law Society about potential financial misconduct. It took additional time before a formal investigation was conducted, leading to the firm being placed under trusteeship after over $7 million was siphoned from clients, predominantly from real estate transactions in Southern Ontario.
Critics have raised doubts about the Law Society’s effectiveness in safeguarding the public from lawyer fraud, citing instances where deeper scrutiny could have prevented substantial losses for clients. While the Law Society’s audits aim to ensure regulatory compliance, they are not primarily designed to detect fraudulent activities within trust accounts, leaving room for exploitation.
Real estate transactions, where lawyers manage significant funds in trust accounts, present heightened risks for misappropriation. Recent cases, including the Cartel & Bui scandal, underscore the urgency for stronger oversight and accountability measures within the legal profession to protect clients from financial misconduct.
The revelation of numerous questionable transactions in the firm’s bank statements, such as payments to American Express and a child-care center, should have triggered immediate action, according to experts. The misuse of trust accounts, intended solely for client funds, highlights the need for enhanced regulatory mechanisms to prevent such breaches of trust.
Despite admissions of guilt from Bui regarding the embezzlement activities, Cartel maintains his innocence and denies involvement in the financial wrongdoing. Both lawyers face potential disbarment and criminal charges, with ongoing disciplinary proceedings by the Law Society Tribunal. The gravity of the situation underscores the imperative for stricter oversight and accountability in legal practices to uphold the integrity of the profession and protect clients from financial exploitation.