His London housing project got $1.4M in investments. Now, the money is nowhere to be found

For the second time in his career, a lawyer and home builder at the centre of a stalled townhouse development in east London has had his licence suspended by the Ontario Law Society, this time over allegations that $1.4 million in buyers' deposits may have been "misappropriated and/or mishandled." 

In an Oct. 30 decision, the Law Society temporarily suspended Philip Ugochukwu Okpala of Oakville from practising law after investigating his alleged mishandling of buyer's deposits. Those deposits were for purchases of units in an unbuilt 34-unit townhouse development at 1154 Hamilton Rd. Okpala acted as a vendor and lawyer in the transactions through his company, Lynphyl Homes Limited. 

CBC News has also learned that Ontario's Home Construction Regulatory Authority (HCRA) is moving to not renew Okpala's licence to build and sell new homes, also in response to allegations he misappropriated buyers' deposits. His licence is set to expire next month and Okpala can contest the HCRA's decision in a hearing.

CBC News has acquired a sworn affidavit from the law society's forensic auditor Yvonne Skilton, who was called in to investigate in June of this year following complaints from multiple buyers made to the HCRA in 2023. 

According to Skilton's affidavit, buyers complained they signed purchase agreements for the condo units from 2021 to 2023, and paid deposits to Okpala but had seen no progress on construction. Some of the buyers wanted out of the deals and their money returned. Also, he wasn't responding to their request for updates.

The affidavit said the HCRA began investigating in 2023 and repeatedly asked Okpala to provide details about balances of trust accounts for the deposits. However, Okpala failed to provide a full accounting of the money.

"It appears that the lawyer did not provide the trust account records that the HCRA was requesting at that time," Skilton wrote. 

Skilton's report lists a total of 18 buyers' deposits submitted to Lynphyl. They range from $52,500 to $139,575 and together total just over $1.4 million. The purchase prices for the units were in the $500,000 range.

The auditor's report also flagged that Okpala deposited $65,000 of purchasers' money into an account that was not listed as a trust account. 

"The holder of this account is unknown," Skilton wrote. "The lawyer [Okpala] did not disclose this account as being a trust account."

The handling of clients' money deposited into lawyers' trust accounts is governed by strict Law Society rules. In general, the money is held in trust with the lawyer acting as an intermediary during real estate transactions until the transaction is complete and the money is released. 

The Law Society's rules say trust money must be handled with "special care" and not be "co-mingled with the licensee's or the firm's operating funds." 

However, the Law Society's auditor's report said the funds in Okpala's trust account fluctuated in ways they found concerning.

"My review suggests that the lawyer did not hold sufficient funds in his trust account vis-a-vis the purchasers' deposits on a consistent basis," she wrote. At one point, the balance was below $6,000.

In response to the auditor's questions about the deposit money in trust, the report said Okpala gave a vague answer, saying the funds "were duly paid to Lynphyl Homes Limited or as directed by them."

This failed to clear up questions about the trust money.

"It is unclear what the lawyer meant by his statement that he had provided the funds to Lynphyl, given that he is a director, officer and principal of Lynphyl," wrote the auditor, who also said Okpala "has failed to provide several crucial documents." 

CBC News reached out to Okpala for comment through phone messages and emails, but did not receive a response. He is described in documents as a 53-year-old who was first licensed as a lawyer in 2007. 

It's not the first time Okpala has been in trouble with the Law Society. 

He received a temporary suspension in 2017 after he was found to have facilitated three fraudulent mortgage transactions. He was restricted from practising real estate law for one year and ordered to pay $20,000 to the Law Society. 

The tribunal's decision found that his misconduct fell short of outright fraud because it did not appear to be intentional and that, overall, "he was not competent to practise real estate law." 

In its 2017 decision, which you can read here, the Law Society chalked up Okpala's misconduct in part due to his lack of understanding of real estate transactions as a recent immigrant from Nigeria. 

Questions over builder's licence

Despite his public reprimand for misconduct on previous real estate deals, Okpala was able to act as both lawyer and builder in the Hamilton Road development because he was licensed by the HCRA in December 2021.  

In an written proposal of their intention to not renew his licence sent to CBC News on Thursday, HCRA said they were aware Okpala had been reprimanded in 2017 by the Law Society when they were vetting his licence application. 

However, the HCRA said they decided to grant the licence because in the 2017 cases, the Law Society had found that Okpala did not appear to have knowingly committed fraud.

"The Law Society held that Okpala was a dupe in a mortgage scheme and that, while careless, he did not intentionally participate in the fraud," reads the HCRA's notice. "It appeared that this was a competency issue, not an ethics issue."  

HCRA said once they began to investigate buyer's complaints about the Hamilton Road project, they discovered Okpala's conduct fell well short of their standard for licensees.  

"There is nothing about Okpala's conduct that would provide reasonable grounds to believe that any corporation he manages would conduct its business with honestly, integrity, or in accordance with the law," the notice said.

HCRA's statement said when Okpala did finally provide the statements of his trust account after months of pressing him for them, the documents failed to show the buyer's deposits were safely held in trust. 

"Okpala had claimed that all the London Project deposits were deposited into this trust account. The HCRA's review of the statements provided did not support this claim," the statement said.  

The HCRA statement also said at least some of the deposit money didn't go into Okpala's trust account. 

"It appeared that some of the deposit funds were deposited into different bank accounts," the notice said. HCRA also managed to have Scotiabank freeze Okpala's trust account.

Development for new homes in limbo

London-Fanshawe MPP Teresa Armstrong said regulators like HCRA need to do more to protect buyers from bad actors in the real estate business. 

"This situation is deeply concerning, and there are many questions that need to be asked," she said. "Why was this developer able to get an HCRA licence despite multiple infractions? Why wasn't more done to protect London consumers? When housing is so hard to come by, people are relying on the province to do their job and conducting good oversight to protect people." 

Meanwhile, the proposal to turn the vacant property into housing remains in limbo. 

City council's planning committee approved Lynphyl's application for the 34 townhouses in March of 2023. At the time, councillors on the committee expressed elation that a notorious eyesore might soon transform into badly needed housing.

Earlier this month, a council committee approved a city staff recommendation that the decrepit commercial building on the property be demolished.

Staff told council the demolition cost, along with past fines to the owner for non-compliance of property standards rules, could add up to more than $100,000, an amount that will be added to the property's tax bill.