A Toronto lawyer has had his licence revoked for his role in a set of mortgage scams that began shortly after he entered the profession.
A disciplinary panel of the Law Society of Upper Canada found Dunstan Dan Senjule was a knowing participant in 23 fraudulent transactions over a period of 2 1/2 years, the first of which occurred within months of his call to the bar in April 2002.
The 23 suspicious mortgages on 15 different properties were worth a combined total of $5.9 million. While he later attempted to make amends, the money to do so came from other clients, the ruling noted.
“The evidence of fraudulent activity on the part of Mr. Senjule is clear and cogent,” Bencher Ross Murray wrote on behalf of the three-person panel in a decision earlier this year. After a further hearing on penalty, the panel issued its findings late last month disbarring Senjule and ordering him to pay $85,000 in costs.
Murray, again writing for the panel, acknowledged Senjule had made partial restitution but said that wasn’t a mitigating factor in this case.
“Unfortunately, Mr. Senjule actually took money from other clients in order to make his restitution,” Murray wrote. “Furthermore, he made restitution only after the law society notified him that they were investigating.”
The LSUC’s costs amounted to $170,000, double the amount Senjule must pay. About $90,000 went to expert fees, including a forensic auditor’s report that identified serious concerns with Senjule’s conduct.
“A reasonably competent lawyer would have either known or suspected that the lending transaction on the 15 properties were artificial and either would not have participated in the transaction or would have informed the lenders of the artificiality or suspected artificiality,” the report states.
According to a law society factum filed in November, the transactions bore several hallmarks of fraud, including price escalations, unpaid deposits, and payments to and from non-parties to the mortgage.
Senjule closed his first suspicious transaction in October 2002, just six months after his call to the bar. The final one came in June 2005 shortly before the law society stepped in.
The obviousness and repetition of the red flags constituted evidence of fraud that was “impossible to ignore,” according to the factum. At the very least, the law society said, Senjule had been wilfully blind in failing to ask simple and reasonable questions about the transactions, such as why vendors were still willing to close despite shortfalls in the closing funds that ranged from $8,000 to as much as $316,000.
Senjule repeatedly disbursed mortgage funds in the days, weeks, and months before registering a transfer and charge or searching title. In five cases, he failed to register a charge or transfer at all, leaving the lender completely exposed without any security for the loan.
In some cases, Senjule acted for the vendor, purchaser, and lender without the latter’s consent, according to the factum. The law society also said several properties were resold within short time periods for much higher prices.
In two cases, the Royal Bank expressly asked Senjule to check for significant escalations, but he failed to report them. One property increased 79 per cent in five months, while the other went up by 16 per cent over four months.
In 11 of the transactions, Senjule paid all or most of the mortgage funds or sale proceeds to non-parties, including one recipient who was a witness at his wedding.
In addition, the law society factum pointed out that the lawyer would have received numerous publications from the LSUC and LawPRO about fraud prevention and red flags to watch for during the period in question. But it also revealed that Senjule would have had more experience with the issue than the average lawyer.
In June 2002, before any of the fraudulent mortgage transactions took place, he was present when law society investigators paid a visit to the office he shared with his wife, who is also a lawyer, to investigate complaints about her involvement in suspicious mortgages. Regina Senjule would eventually receive a five-month suspension in 2007 for her actions.
Senjule couldn’t be reached for comment. A receptionist at his office said he was out of the country and won’t be returning until mid-September.