High-flying lawyer goes on trial for writing bad cheque allegedly to cover for collapsing firm
A Toronto lawyer who co-founded a law firm with his wife that collapsed in a spectacular flameout three years ago, when millions of dollars of client money was discovered missing from the firm's trust account, is on trial on a charge of fraud stemming from the police investigation into the case.
Nicholas Cartel is self-representing against criminal charge stemming from probe into $7M embezzlement
Zach Dubinsky · CBC News
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A Toronto lawyer who co-founded a law firm with his wife that collapsed spectacularly three years ago, after millions of dollars in client money was discovered missing from the firm's trust account, went on trial Monday on a fraud charge stemming from the police investigation into the case.
Nicholas Cartel, 62, faces one count of fraud over $5,000 based on allegations that he deliberately wrote a bad cheque for $300,000 in an attempt to cover up a shortfall in the trust account at Cartel & Bui LLP, the firm he ran with his wife.
The alleged fraud occurred in February 2023, when Cartel & Bui LLP was handling a property sale for a client. The law firm needed to pay out $2.22 million in proceeds to the client but didn't have sufficient funds in its trust account because Bui had been embezzling money from it for years, according to her own evidence in a separate civil case.
Bui is facing 32 criminal charges in a separate case stemming from the embezzlement.
The February 2023 incident foreshadowed a series of events in which more than 25 property owners and buyers in southern Ontario ran into problems closing on real estate deals because money was missing from the Cartel & Bui trust account.
One couple lost $2.16 million they had entrusted to the firm to buy a house in Toronto, while other clients — or home-purchase insurers — were out as much as $729,000.
Cartel is not facing criminal charges in relation to those other cases, and has long maintained his innocence. He says he operated a separate legal practice at the firm focused on class actions and litigation, while the theft of client money occurred in the real estate side of the business run by his wife, Singa Bui.
With respect to the criminal charge alleging that he deliberately wrote a bad cheque, Cartel does not deny writing it but says his actions didn't amount to fraud.
He also maintains that prosecutors have improperly withheld evidence from him and misleadingly presented other evidence. At the outset of his trial Monday, he told the court he intends to bring an application under the Charter of Rights and Freedoms to have his criminal charge stayed.
Bank employees testify
At the start of Monday's trial in provincial court in Toronto, prosecutor Dihim Emami called a witness from Royal Bank of Canada's investigations department to testify about records associated with the personal chequing account on which the $300,000 cheque was drawn.
The witness, Adkin Holder, a former Toronto police fraud-squad detective, testified that the account's opening documents showed it belonged to Cartel and that for months before the bad cheque was written, the account had a negative balance.
He said that because of that, a $300,000 cheque would have failed to cash, and the receiving bank could have been at risk of losing the money if it was unable to recover it from the person who wrote the cheque.
Cartel later asked Holder whether it was possible the account was in fact a joint account at the time the bad cheque was written, which Holder agreed was possible.
Prosecutors then entered records showing that the account statements bore only Cartel's name, while statements for other joint accounts bore both his name and Bui's.
A second witness, from TD Bank, where the law firm had its trust account, began testifying Monday afternoon about transactions in that account and is expected to resume Tuesday.
Already jailed for contempt of court
Cartel has already spent 30 days in jail over the collapse of his firm, after a judge in separate civil lawsuits against him and his wife ruled in August 2024 that he had committed contempt of court by failing to produce records or answer questions about where the missing trust-account money went.
He filed an appeal of that ruling, but it was dismissed this past August because he failed to move it forward.
He is also on the hook for millions of dollars in default judgments against him obtained by former clients of his firm, though has said he will contest them.
His attempt to overturn one of those judgments, for $500,000, was rejected by the Ontario Court of Appeal in February.
Defendant dismissed his criminal lawyer
Cartel hired veteran criminal lawyer Richard Posner to defend him late last year, but split with Posner 4½ months later amid a dispute over his fees and trial strategy, according to records obtained by CBC from a separate case in which Cartel challenged Posner's billings.
Those records show Cartel wanted his lawyer to try to get his charge dismissed as an abuse of process — a rare remedy available when a defendant can show that the prosecution's conduct seriously compromised the accused's right to a fair trial.
"In my respectful view, there is no basis for advancing an abuse of process claim in this case," Posner emailed Cartel, according to documents from their fee dispute.
"If you want to bring this motion, you will need to discharge me and find another lawyer or represent yourself."
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At another point, Cartel and Posner differed over whether they should agree at trial to certain of the prosecution's alleged facts.
"Why dispute or make the Crown prove things that are plain and obvious from the business records? In my view, it makes no sense to do so, but the choice is yours," Posner wrote to Cartel.
Ultimately, Posner wrote to Cartel in April of this year: "Based on the tenor and content of your email, along with your previous communications with the members of my office, it is my respectful view there has been a breakdown in our solicitor-client relationship. Accordingly, I will be requesting to be removed from the record on the next court date."
Cartel replied: "I was going to terminate your services Monday, in any event…. I have long ago lost any faith that you or your firm could represent my best interests."
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Cartel told CBC News on Monday, on the sidelines of his trial, that he and Posner had settled their dispute out of court.
He is representing himself in his criminal trial. The judge, Rachel Grinburg, referred to that fact in court several times Monday, emphasizing that she wanted to ensure the proceedings were fair to him.
His law licence has been provisionally suspended since April 2024 by the Law Society of Ontario, which has levelled 20 disciplinary accusations against him, including 12 counts of misappropriation of client funds.
Bui was disbarred by the Law Society in December.
ABOUT THE AUTHOR
Zach Dubinsky is a CBC investigative journalist. His reporting on offshore tax havens (including the Paradise Papers and Panama Papers), political corruption and organized crime has won multiple national and international awards. Phone: 416-205-7553. Twitter: @DubinskyZach. Email zach.dubinsky@cbc.ca
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