Meena Kumari and Teena Banga, who were partners at Kumari-Banga Solicitors on Newhampton Road, "breached the trust" of clients "made vulnerable by a combination of ill-health, poor education, and desperation for quick money", a disciplinary tribunal found.
The action surrounds a property scheme in which clients are said to have lost huge sums of money after selling their homes through speedyproperty.co.uk.
The Solicitors Regulation Authority (SRA) has so far made 12 payments to their clients totalling almost £875,000 as part of the investigation. It is claimed sellers lost out on tens of thousands of pounds through the scheme, as sale proceeds were funnelled elsewhere.
Money was paid to third parties as part of a process even Ms Kumari and Ms Banga did not understand, the SRA found.
At the Solicitors Disciplinary Tribunal, it was found proven that between 2013 and 2017 Ms Banga "acted in conveyancing transactions which she knew or ought to have known, bore a number of suspicious features; the hallmarks of fraud; and/or the hallmarks of money laundering".
It was found proven that Ms Kumari "caused or allowed her firm" to do the same.
Ms Banga was suspended for 18 months and Ms Kumari for two years. They have also been ordered to pay £60,000 costs. Their practice in Wolverhampton closed in 2018.
It was found proven both failed to ensure that they and/or the firm "carried out proper inquiries in relation to those transactions; properly advised her clients regarding the payments to third-party companies or obtained her clients’ informed consent to make the payments to those third party companies".
However, it was found the two solicitors had not been dishonest.
A report of STD's findings said: "(Ms Kumari and Ms Banga) had breached the trust of clients made vulnerable by a combination of ill-health, poor education, and desperation for quick money. Such clients had relied upon the First and Second Respondent to provide them with sound advice in circumstances where many were giving up their most valuable asset, their home.”
It continued: "While (their) actions had not been deliberately planned and calculated they had, through a reckless lack of care, facilitated others to take advantage of vulnerable people. This had been repeated over a period of about four years and the extent of the harm was spread across multiple clients. "
The SRA was alerted after being approached by a number of Kumari-Banga clients. A pensioner claimed he received just £68,000 from the £165,000 sale of his home in Wales.
An SRA spokesman previously said: "Some of Kumari-Banga’s clients came to us having suffered financial hardship because of the firm’s failure to account for their money.
"In those circumstances, the public can apply to our Compensation Fund for grants to recoup their losses. So far, we have made 12 payments from our Compensation Fund totalling nearly £875,000."
West Midlands Police is investigating separately Speedy Property, over which eight people have been arrested and released pending further inquiries.