Two law firms at the center of a HK$62 million property fraud case have been shut down, says the Law Society.
The society said it has probed Flora Lam & Co, Solicitors in Wan Chai and Li & Associates in Sheung Wan following a police investigation in September.
Police arrested 12 people, including a barrister, two solicitors and a legal executive for conspiracy to defraud on September 1 over the alleged HK$62.7 million scam.
Sources named the barrister as Devin Sio Chan-in and the two solicitors as Wai Pui-shuen and Flora Lam Yan-fong.
The signatures of property vendors and borrowers were allegedly forged as part of the scam, in which a syndicate involving the law firms and financial companies allegedly posed as homeowners of flats whose actual owners had passed away.
"The Council of the Law Society had reason to suspect dishonesty on the part of the sole proprietor of the Lam firm, which allegedly signed off on the conveyancing documents as the witness to the allegedly forged signatures," said society vice president Amirali Nasir.
Lam's and Li's firms ceased practice immediately upon commencement of the intervention, the society said.
The Lam firm office in Wan Chai and the Li firm office in Sheung Wan were both closed yesterday, with a notice stuck on the front door that the society had intervened in their operation with immediate effect.
The notices said two law firms, Deacons and Ronald Tong & Co, were appointed as the intervention agents for the Lam firm and the Li firm respectively.
All inquiries on the intervention should be directed to the two intervention agents, which will contact clients of the two firms to advise them of the situation and what necessary steps to take.
The society said the intervention has just begun and more time is needed to determine how many clients are affected.
The two firms' involvement was revealed in police investigation that later triggered the society's own probe into the two firms.
Following its investigation, the society said its council suspects the Lam firm's sole proprietor signed off on conveyancing documents as the witness to the allegedly forged signatures of the dead property sellers.
The council also suspects that a former employee of the Li firm signed off on the conveyancing and legal charge documents as the witness to the allegedly forged signatures of sellers and borrowers, who were either dead or have migrated from Hong Kong. The council believes that both firms had allegedly breached the Solicitors' Accounts Rules, including allowing unqualified persons to be authorized signatories of client accounts and making improper withdrawal of money from client accounts.
The council added it had no choice but to exercise its statutory powers to intervene into the practice of the two firms for the protection of their clients and the public.
The scam came to light when an "owner" of a flat on Wing Kwong Street in To Kwa Wan marked for redevelopment sought compensation from the Urban Renewal Authority. The real owner died 21 years ago.
Similar suspected fraudulent transactions for seven other vacant flats involving dead owners were also detected.