John Casuga was disbarred by the Law Society of Alberta in 2009. (CBC)

A massive alleged mortgage fraud based in Calgary has touched the ranks of Alberta's Liberal party, CBC News has learned.

Lawyer John Casuga, the former president of the Calgary Buffalo riding association, is among the hundreds of Albertans being sued by the Bank of Montreal.

CBC News has also learned the Law Society of Alberta disbarred Casuga on Nov. 26, 2009, for his actions related to the alleged mortgage fraud. Law society documents obtained by CBC show Casuga faced a disciplinary hearing on 26 citations including:

• Failing to honour undertakings to other lawyers on numerous occasions.
• Failing to maintain or file proper financial records.
• Improperly withdrawing from his trust account.
• Improperly employing a disbarred lawyer.

The most serious citation against Casuga, 37, is that he "assisted a client in committing a fraud," states the law society document.

Casuga admitted to all of the citations, except the one involving fraud. The law society forwarded the evidence from its internal investigation to the Alberta Justice department to determine if Casuga should be charged criminally.

According to Alberta Justice records, no charges against Casuga have been filed.

Alberta Liberals conducted preliminary review

The Bank of Montreal has accused Casuga, Calgary Conservative MP Devinder Shory, and 17 other lawyers of negligence in relation to legal work that the bank says resulted in the loss of more than $30 million through falsely inflated mortgages. None of the allegations contained in the lawsuit has been proven in court.

The alleged fraud scheme involved the recruitment of hundreds of people — mostly new immigrants — whose names and credit were used to apply for falsely inflated mortgages.

Calgary Liberal MLA Kent Hehr said he had no information on the Bank of Montreal mortgage issue. (CBC)

Corey Hogan, the executive director of the Alberta Liberals, said the party has conducted a preliminary review.

"At this point we don't feel there is any reason to be concerned," Hogan said Tuesday. "We will be reviewing further in the next couple of days but it doesn't look like any party lists were misused."

Kent Hehr, the Liberal MLA for Calgary Buffalo and a Calgary mayoral candidate, declined repeated interview requests on Tuesday.

In an email, Hehr, who is a lawyer, said he had "no information on any matters surrounding the Bank of Montreal mortgage issue."

According to Hehr's statement, Casuga was replaced as riding association president on Feb. 5, 2009, when "he did not stand for re-election."

But the constituency association's annual financial statement, obtained by CBC News, is dated March 17, 2009, and is signed by Casuga.