SINGAPORE: A conveyancing lawyer linked to a housing loan cashback scam where property buyers artificially inflated sales prices to get more bank loans was fined for his role on Wednesday (Jun 10).
Mohammed Lutfi Hussin, 54, was fined S$5,600 for falsely certifying that documents related to a property transaction were correct, despite never meeting the buyer, his client Mohammad Naseeruddin Allamdin.
Based on the mortgage and transfer documents he certified, Maybank disbursed a loan of S$2,230,000, with the buyer defaulting on mortgage repayments soon after.
This property was one of four landed private properties linked to the scams in 2014 and 2015 involving S$11.4 million in total.
Lutfi pleaded guilty to two charges under the Land Titles Act on Wednesday, for falsely certifying that he had witnessed the execution of a mortgage by Naseeruddin and falsely certifying that the property transfer was done correctly.
The incident occurred in 2014, when Lutfi was an advocate and solicitor, and director of law firm Lutfi Law Corporation.
He was a conveyancing lawyer, involved in the transfers of legal titles of property at many stages from the search for a property, the sale and purchase agreement, and executing the transfer.
He was entrusted with the duty of ensuring that proper procedures are observed throughout the legal conveyancing process, said the prosecution.
In 2014, Naseeruddin's property agent, Kok Chiew Leong, approached a conveyancing secretary at Lutfi's firm and said he had a buyer who wanted to take a loan from Maybank to buy a property at 35 Saraca Terrace.
Kok liaised with the secretary to prepare the conveyancing documents and cheques, and the secretary later met with Naseeruddin and directed him to sign the relevant documents.
The law firm acted for Naseeruddin in this transaction, which was completed in April 2014. Lutfi signed the mortgage instrument stating that he had witnessed Naseeruddin signing on it as well and certified that it was correct for the purposes of the Land Titles Act.
However, Lutfi had not witnessed Naseeruddin signing on the mortgage instrument and had not even met Naseeruddin at any point, relying entirely on his secretary to prepare the documents including the mortage instrument.
He also signed on another document - the certificate of correctness to the transfer instrument - implying that Naseeruddin had accepted proprietorship and was of full age and legal capacity.
However, he had not met Naseeruddin nor contacted him to ask if he had accepted the transfer of the property. Instead, Lutfi signed conveyancing documents left on his desk without examining their contents, assuming that they had been prepared correctly.
It was only when he was questioned by officers from the Commercial Affairs Department that he became aware that his law firm had acted on Naseeruddin's behalf for the property.
LUTFI COMPLETELY ABDICATED PREPARATION OF DOCUMENTS: PROSECUTOR
Deputy Public Prosecutor Suhas Malhotra asked for a fine of S$6,000. Each offence was punishable with a maximum fine of S$5,000, as the offences occurred before amendments to the Land Titles Act increased the maximum fine to S$25,000.
Mr Malhotra said the entire system of conveyancing is premised on formal documentation and proper processes, and the conveyancing lawyer's role is key, as he is entrusted with "the fundamental duty of protecting the consumer's interests by ensuring that the proper procedures are observed".
"Lutfi had completely abdicated the preparation of all conveyancing documents to his secretary, and was in gross dereliction of his statutory duties to certify the correctness of the mortgage and transfer instruments," said Mr Malhotra.
"In doing so, Lutfi had unwittingly facilitated a fraud which resulted in Maybank disbursing a loan of S$2,320,000."
He said this was "exactly the sort of situation that a conveyancing solicitor is supposed to avoid".
If Lutfi had met his client and spoken to him, there may have been a possibility that Lutfi would have realised the buyer was not really interested in buying the property and pulled the plug on the transaction, said the prosecutor.
Defence lawyer Tan Hee Joek said that the case differed from another case, in that the buyer had turned up physically at Lutfi's law firm where employees verified his identity.
The "only problem", he said, was that Lutfi did not meet the client personally.
HE DID NOT KNOW CLIENT WANTED TO CHEAT BANK: DEFENCE
The lawyer said the prosecutor was speculating by saying that Lutfi could have prevented the fraud if he had dealt with the buyer personally, and "trying to lay the burden" on Lutfi to say he could take some responsibility for the fraud by Naseeruddin on Maybank.
"He had absolutely no idea that the client had a motive to cheat the bank into disbursing loans that he was not able to honour," said Mr Tan. "It is not a job for the lawyer to ascertain whether this client has the means to buy this property."
In response to an argument by the defence on the time it took to prosecute this case, the prosecutor said six police reports were lodged over four landed properties, with many individuals involved including conveyancing solicitors, buyers, sellers, property agents and bank officers.
"This was an extremely complex investigation that has resulted in a substantial number of individuals being charged," said Mr Malhotra.
He said there was no undue delay in prosecution given the investigations' complexity and scale, attributing the delay instead to the nature of the fraud.
District Judge Marvin Bay agreed with the prosecutor that there was a "serious dereliction and abdication" of Lutfi's responsibilities as a solicitor.
"A solicitor's role is to meet and advise his clients and also to apprise him of all legal consequences," said Judge Bay, adding that false representations can have severe consequences especially in conveyancing transactions.
He accepted however that Lutfi was not complicit in the fraud by his client and had been deceived himself.
"Nevertheless, it would be a legitimate expectation that solicitors will conscientiously and attentively apply themselves to diligently undertake their duties to ensure that they are not made instruments of fraudulent activities," said the judge.
Eleven people were charged in December last year over the scams. So far, only one other woman has been fined for her role, while the other cases are pending.