'Red flags' for money laundering raised in B.C. misconduct findings on honorary consul for Ukraine

A lawyer who also serves as the honorary consul for Ukraine in Vancouver committed professional misconduct when he helped complete 15 real estate deals referred to him by a convicted drug trafficker, the Law Society of B.C. Tribunal has found.

Lubomir (Mir) Ihor Huculak failed to make reasonable inquiries about the legitimacy of those deals, even though they "were replete with objectively suspicious red flags" for money laundering, Jamie Maclaren wrote on behalf of a law society hearing panel in a decision on Aug. 5.

"As senior counsel with extensive experience in criminal and real estate law, the respondent either knew that some of the circumstances surrounding the transactions were suspicious, or he was reckless or willfully blind to them," Maclaren wrote.

"Whichever the case, he failed to be on guard against becoming the tool of unscrupulous persons and he failed to carry out his gatekeeper function in relation to money laundering and fraud."

The panel also found that Huculak committed misconduct by misappropriating $4,711.58 in trust funds during one real estate transaction, and by failing to verify his clients' identities in another.

In an email to CBC, Huculak rejected the findings of the tribunal and said he planned to appeal the decision.

"It seems to me that the law society are targeting small or one-person law firms and especially lawyers with foreign names," he wrote.

"In my case, because I was working with an individual who was jailed in the U.S.A. and paid his dues to society, they basically said that I should not have taken any referrals from him."

Huculak dismissed the suggestion that his clients were involved in money laundering as "nonsense" and said the misappropriation of funds was a result of being overworked and having no staff.

"It was only a small amount involved which I repaid as soon as the law society brought it to my attention," he wrote.

He said the decision will hurt his position as honorary consul by damaging his reputation and potentially interfering with his ability to notarize documents and provide pro bono legal services to Ukrainians.

Misconduct concerns raised during compliance audit

The law society decision uses the initials M.K. to refer to the former realtor convicted of drug trafficking in the U.S. However, Vancouver Sun articles referenced in the decision suggest the client was Michael Krapchan, who was sentenced to prison time in 2009 after he pleaded guilty in California to conspiracy to traffic cocaine.

According to the decision, the allegations of misconduct arose after a 2016 compliance audit of Huculak's practice. Investigators zeroed in on 15 real estate transactions that M.K. had referred to Huculak between January 2011 and May 2015.

The decision says that M.K. wasn't a party to those sales, but "gained some financial benefit" through the referrals.

Several of the deals also involved a person identified as E.A., who was described in media reports as the leader of the "[EA] Drug Trafficking Organization,"the decision says.

Newspaper coverage from the time shows that U.S. officials used those words to describe a man named Elmar Akhundov, but note that he was not charged alongside Krapchan and his co-defendants in the California case.

E.A. acted as buyer in two of the suspicious cases identified by the law society, two as seller, held power of attorney for the seller in another, and received a payout in one transaction "despite having no stated interest in the subject property," the decision says.

The law society decision details numerous "red flags" that it says should have prompted Huculak to ask more questions about the transactions.

That includes the media reports mentioning both M.K. and E.A., as well as the "allegations of criminal activity" Huculak heard when he represented E.A. during litigation over an estate, the decision says.

Also concerning to the law society werethe "obviously close relationships and business connections" between the people involved in the deals, "despite their portrayal to banks and mortgage companies as arm's-length interests," and the fact that M.K. and E.A. both received payments for transactions they weren't directly involved in.

The decision also notes that deposits were paid directly to the seller without any records verifying payment; closing dates came quickly after Huculak received instructions from M.K., with little or no direct contact between Huculak and the clients; and the mortgages were all high-ratio with "very low" commissions.

Huculak was called to the bar in B.C. in 1963, and served as honorary consul for Sri Lanka before taking on the role with Ukraine.

Depending on the outcome of Huculak's intended appeal, the law society tribunal has yet to decide on discipline for his misconduct.