Prosecution case concludes against ex-solicitor

Two months into the multi-million euro theft trial of former solicitor Michael Lynn, the prosecution has concluded its case against him.

Mr Lynn (53) is on trial charged with 21 counts relating to the alleged theft of around €27 million from seven financial institutions. He has denied all of the charges against him.

It is the prosecution’s case that Mr Lynn obtained multiple mortgages on the same properties in a situation where banks were unaware that other institutions were also providing finance.

Mr Lynn, with an address at Millbrook Court, Red Cross, Co Wicklow, has pleaded not guilty to 21 counts of theft in Dublin between 23 October 2006 and 20 April 2007.

The financial institutions involved are Bank of Ireland Mortgages Bank Ltd, Danske Bank, Irish Life and Permanent, Ulster Bank, ACC Bank PLC, Bank of Scotland Ireland Ltd, and Irish Nationwide Building Society. 

The trial opened on 9 February before an extended jury panel of 15. It was initially set down for 14 weeks, and is currently estimated to conclude on schedule in mid-May.

Opening address

In his opening address, Patrick McGrath SC, prosecuting, told the jury it would hear of a method repeatedly adopted by Mr Lynn in which, it is alleged, he misled a number of financial institutions.

Mr McGrath said that Mr Lynn, then a practising solicitor, was engaged in “a web of deceit” in relation to mortgage applications he made, and that documents provided in these applications were untruthful.

These included statement-of-affairs documentation, which purported to be from an accountancy firm, but which were actually not, Mr McGrath said. Nor did these documents set out a full picture of his financial situation, the jury was told.

Mr McGrath told the jury that letters of undertaking provided during the mortgage applications, and which were purportedly signed by a solicitor and partner at Mr Lynn’s law firm, were in fact forgeries – signed by an employee of Mr Lynn. The court heard that the interests of the institutions were not registered.

Since it started, the trial has heard from about 30 witnesses who worked for the financial institutions in question at the time, along with several solicitors involved in various sales, and former employees of Mr Lynn. The jury has been shown document after document on big screens in court.

These included loan applications, solicitor undertakings, bank statements, building society statements, statements of affairs, tax-clearance certificates, valuation documents, and credit reviews.

Glenlion House

The jury was told that Mr Lynn applied to three different institutions for finance for the purchase of his €5.5 million family home ¬– ‘Glenlion’ in Howth, Co Dublin – and that he received over €11 million in total.

The first prosecution witness was Killian McMahon, a former internal auditor for Irish Nationwide.

In his evidence, Mr McMahon described how a €4.1 million mortgage taken out by Mr Lynn and his wife Brid Murphy for the sale of Glenlion House was written off in February 2008, just ten months after Mr Lynn had taken it out.

Bank officials from both Irish Nationwide and Bank of Scotland Ireland told the trial they would “absolutely not” have issued loans to Mr Lynn for Glenlion if they had been aware there were other mortgages taken out on the property.

Mark Mulcahy, a former branch manager at Irish Nationwide, Dun Laoghaire, told the trial that he was introduced to Mr Lynn, through a broker, as a young self-employed solicitor “who might be a good contact to meet”.

The pair began a business relationship, and Mr Mulcahy said he looked after a number of Mr Lynn’s buy-to-let mortgages for him in the early 2000s. When asked if they had a social relationship, Mr Mulcahy said they weren’t friends, but Mr Lynn invited him to three functions in the Burlington Hotel, Citywest Hotel, and Vicar Street.

“He had outgrown me and was doing bigger things then, and I hadn’t seen him for a number of years,” Mr Mulcahy said of the period up to the €4.1 million Glenlion loan in April 2007. 

At the time, Mr Mulcahy said he would fully recommend this loan for Mr Lynn, “given his excellent repayment record, strong financial position and valuable assets”, internal bank documents shown in court said.

Mr Mulcahy said, as far as he was aware, the Irish Nationwide mortgage was the sole mortgage on the property.

Mortgage condition

Andrew Snow, a former business relations manager with Bank of Scotland Ireland, told the trial that he first dealt with Mr Lynn when he applied to the bank for a €3.85 million mortgage to purchase Glenlion House in December 2006.

Internal documentation from this bank described Mr Lynn as a “strong, commercial, capable individual” who already had property loans with a value of €10.2 million with the bank.

His wife was described in bank documents as a nurse manager with an annual salary of €47,000, who had taken a career break to care for her sick father.

Mr Snow agreed with prosecution counsel that a condition of the mortgage was that it was “the only mortgage on the property”.

The court heard that after Mr Lynn’s matters came under investigation, the bank established that the undertakings provided by Mr Lynn & Co solicitors had not been complied with, and Bank of Scotland Ireland was unable to protect the security of Glenlion House.

“The bank therefore suffered a loss of not less than €3.85 million,” Mr McGrath said.

The court heard that Mr Lynn obtained another mortgage for Glenlion House with ACC bank in October 2007 – this time for €3.7 million. Will Nelson, a former fraud officer with the bank, said the application was approved, and the loan was drawn down by Mr Lynn in April 2007.

He said that all repayments of this loan were met monthly by direct debit until October 2007.

Investment properties

The trial also dealt with a number of investment-property loans Mr Lynn is alleged to have taken out with a number of banks. 

Former Bank of Ireland official Arthur King told the court that Mr Lynn was approved for a €2.7 million loan for eight investment properties in December 2006. He said that mortgage instalments were paid monthly to the bank throughout 2007, but payments ceased after September 2007. 

Mr King said that following the non-payments, enquiries were made which established that a number of other mortgages were drawn down on the properties by Mr Lynn from other financial institutions. He said that Mr Lynn was never registered as the owner of the properties. 

Noel McCole, a former business banking manager for National Irish Bank – later Danske Bank Ireland – said a €1.3 million mortgage loan was transferred to Mr Lynn’s account in relation to four investment properties in March 2007.

He said that repayments were made monthly on this loan, but ceased in October 2007.

He added that the bank was ultimately unable to establish security on the properties, and the bank suffered a loss of the total value of the loan. He told the trial he was now aware that undertakings regarding the properties had been given to other financial institutions.

Agreement breach

Sam Beamish, former director of business banking with Ulster Bank, said that, in October 2006, a €3.6 million loan was transferred to the account of Mr Lynn’s solicitor’s firm in relation to the purchase of 11 investment properties.

He added that, in October 2007, Mr Lynn came to be in breach of the agreement with Ulster Bank, and that the bank issued a letter demanding full and final payment of all outstanding loans. He said that no repayment had been made at the time he gave a statement to gardaí.

Killian McMahon returned to the box to give evidence in relation to ten investment property loans – amounting to €3.3 million – that Mr Lynn applied to Irish Nationwide for, in late 2006 and early 2007.

Under questioning from Feargal Kavanagh SC (defending Mr Lynn), Mr McMahon said he had no knowledge of any “secret loan deal” between Mr Lynn and the bank’s former boss, Michael Fingleton.

Mr Kavanagh told the jury that he was attempting to establish that the loan procedures were “more in the breach than in the observance”.

‘Giving money out willy-nilly’

Defence counsel said this was a case where a bank was “giving money out willy-nilly” and then came back to “whinge about it later”. 

John O’Brien, a former commercial lending manager with Irish Life and Permanent – later Permanent TSB – gave evidence in relation to the allegation that Mr Lynn stole €3.7 million from the bank in June 2007.

In April 2007, Mr Lynn had borrowings of €1.9 million with the bank when he applied for a €4.9 million loan to purchase eight residential investment properties in various locations in Dublin, the court heard. This €4.9 million loan is not on the indictment.

One of the conditions of this loan was for Mr Lynn to clear the outstanding balance of €1.9 million, the court heard.

‘Embarrassed and annoyed’

In an email to Mr O’Brien, which was shown to the court, the then Blanchardstown branch bank manager Ciaran Farrell wrote: “Due to confusion in Michael’s office, this was only done last week and he is embarrassed and annoyed about it.”

“I questioned him on it and it was down to clerical error and he will show us his account balance to show there was €6 million on deposit at the time,” the email continued.

Mr Farrell went on to say: “I do believe the genuinely [sic] of the delay in redeeming the mortgages, and his embarrassment in being told of this.

“This is based on meeting him, and the fact he has little or nothing to do with the running of his practice, and would be out of the country for weeks and months at a time.”

Shortly after the bank approved the €4.9 million loan in May 2007, Mr O’Brien and Mr Farrell met with Mr Lynn to discuss a €3.7 million loan involving 12 rental investment properties.

Along with this €3.7 million loan, there was a €5.5 million refinancing proposal relating to a property Mr Lynn had bought using a loan from Anglo Irish Bank, the court heard. This was for business premises Mr Lynn had recently moved to on Capel Street, called the Capel Street Premises.

Permanent TSB approved both of these loans in June 2007, which would have taken Mr Lynn’s borrowings with the bank to just over €14 million, the court heard.

The court was shown documents that the €3.7 million loan was drawn down, but was told Mr Lynn did not ultimately proceed with the €5.5 million loan offer.

Not the registered owner

The bank later established Mr Lynn was not the registered owner of the 12 properties involved in the €3.7 million loan, and there was no valid legal charge for the banks over the properties, the jury was told. It was never repaid, the court heard. 

Thomas Brennan, a former senior manager at Bank of Scotland Ireland, gave evidence of ten loans that Mr Lynn took out with the bank over a three-month period, between February and May 2007. 

The court heard that, in October 2007, a number of newspaper reports were published in relation to Mr Lynn’s business affairs.

“As a result of these reports, we arranged a meeting,” Mr Brennan said.

‘Intention to stay in the country’

During the meeting, Mr Lynn “asserted he fully intended to address the claims made against him,” Mr Brennan told the court. “He asserted his intention to stay in the country to address these issues.”

Mr Lynn also asserted his intention to “remain available to bankers to resolve this”, Mr Brennan said.

When John Berry BL prosecuting, asked if another meeting was held with Mr Lynn after this, Mr Brennan replied: “No.”

After the October 2007 meeting, the bank took the decision to review all of Mr Lynn’s affairs, the court heard. As a result of the review, it was found that nine of the ten properties were registered, and the bank’s interest had been secured, Mr Brennan said.

In these nine properties, the bank’s own solicitors were involved in registering the bank’s interest, the court heard.

In relation to the tenth property, Mr Lynn undertook to provide security, and a bank solicitor accepted this proposal, the trial heard. The bank was left at a loss of the mortgage value of around €224,000 in relation to this property.

The accountants

Accountant John Kinsella, a partner at Kinsella Mitchell & Associates, told the trial that documents purporting to be signed by his firm, which were used in Mr Lynn’s loan applications, were not his firm’s documents.

When shown a statement of affairs of Michael Lynn, which appeared to be signed in April 2007 by Kinsella Mitchell & Associates and bearing the firm’s stamp, Mr Kinsella said the stamp and signature on the document were not those of the firm.

He told the trial that there were other details in the document that showed it was not his document, and that the last statement of affairs prepared for Mr Lynn was in July 2006.

The legal executive

Elizabeth Doyle, a legal executive who worked for Michael Lynn’s company, Kendar Global Properties Ltd, told his trial that she often signed his signature on various supporting documentation in relation to bank loans.

Ms Doyle told the trial she did not ask questions because it was a “hectic office” and “there was a fear there”.

“Michael Lynn would have been a nice guy, but there was another side to Michael Lynn that there would have been a fear factor,” she told the court. 

Ms Doyle told the court she also signed Mr Lynn’s wife’s signature, and the signature of solicitor Fiona McAleenan, who she described as the practice manager for Michael Lynn & Co Solicitors – a claim that Fiona McAleenan later rejected when questioned by the prosecution. 

Ms Doyle said she never discussed this with Ms McAleenan, and said this was because Mr Lynn told her he would talk to Ms McAleenan about it himself.

Ms Doyle said that she noticed when signing some documentation that some of the listed properties “were also on other applications”. She said that, at the time, she was having some difficulties in her personal life and her “mind was all over the place”.

When asked by Mr McGrath if she believed Mr Lynn was going to register the various properties he had secured loans on, Ms Doyle replied: “I did.”

She said that she trusted Mr Lynn in relation to his dealings with the banks and Ms McAleenan.

‘Another side’

Under cross-examination from Paul Comiskey O’Keeffe BL, defending, Ms Doyle agreed that she socialised with Mr Lynn, and that several of her family members were employed by him at various stages.

In relation to her assertion that he had “another side”, Mr Comiskey O’Keeffe put it to Ms Doyle that Mr Lynn would say that he was driven and ambitious, that he expected the same work ethic from his employees, and that she, in particular, benefitted greatly as a result of this.

Mr Comiskey O’Keeffe put it to Ms Doyle that she was paid €95,000 a year, but she said she could not remember how much her salary was. “I know I was well paid,” she said. She did not accept that she got a bonus of €50,000 per year.

When asked if she and her husband had any investment properties, Ms Doyle replied: “We had one investment property, sorry two investment properties.”

Ms Doyle agreed with defence counsel that she and her husband had a car each, and that they also had a Land Rover jeep that they “drove only on Sundays”.

The firm solicitor

Fiona McAleenan spent six days testifying at the trial – four of which were under cross-examination. She was the longest witness in the box in the trial to date. 

Ms McAleenan told prosecuting counsel that her signatures were forged on a number of documents, including solicitor undertakings in relation to a number of Mr Lynn’s mortgage applications.

She said she never gave permission to Ms Doyle or Mr Lynn for her signature to be forged on such documents.

She agreed with prosecution counsel that a loan document on behalf of Mr Lynn and his wife Brid Murphy, which appeared on letterheaded paper entitled ‘Fiona McAleenan Solicitors’, was an “entire forgery”.

“No such firm ever existed,” she told the trial.

Ms McAleenan said she joined Michael Lynn & Co Solicitors in November 2004 as a litigation solicitor. She said she had very little knowledge of conveyancing, and had no involvement of it in the firm. 

She said she was aware that Mr Lynn was building up a property portfolio. “That was the general conversation in the office,” she said. She stated that she had no involvement in the purchases.

Ms McAleenan said she recognised her signature on a number of documents, but said she did not recall signing them. She said she would sometimes sign documents as a practising solicitor in the firm, but that Ms Doyle would bring them into her office for her to sign before taking them away again.

A number of documents named Ms McAleenan as a partner in the firm, but Ms McAleenan said she was never a partner in Michael Lynn & Co. She rejected Ms Doyle’s assertion that she was a practice manager with the firm.

‘First alarm bell’

Under cross-examination, Ms McAleenan said she received communication from two firms of solicitors, acting for two different banks, referring to loans on the same properties in late August 2007.

“That was the first alarm bell for me,” she told the trial.

She agreed with defence counsel that she immediately sought the advice of a friend, who recommended a solicitor and, as a result of this advice, she then contacted the Law Society.

She handed in her resignation to Michael Lynn & Co and left on the same day – 10 September 2007. 

When shown a copy of an undertaking from January 2006, Ms McAleenan agreed that it was her signature on the document.

Ms McAleenan said she was not aware of all the details in the undertaking, and said when she signed it, she accepted that it was correct, and trusted Ms Doyle in relation to that.

She agreed that the most serious document in a solicitor’s pack for a mortgage is the undertaking because, if that it is dealt with incorrectly, it may result in a solicitor being struck off.

“You should have appraised yourself of the situation in relation to this undertaking,” Mr Comiskey O’Keeffe suggested.

“I did not do so because I trusted Liz Doyle and Michael Lynn would comply with the undertaking. I didn’t act in such a way to preserve myself, and I didn’t think I would have to,” Ms McAleenan stated.

She said that she signed the undertaking and didn’t have any further involvement with it.

Ms McAleenan repeatedly denied having any involvement in conveyancing work in the firm.

‘Never a partner’

She agreed with defence counsel that she had been in partnership negotiations with Mr Lynn, but said that she was “never a partner”.

She said that an accountant had acted on her behalf for the negotiations, as she had no experience in such matters, and a percentage had been offered to her that she was not happy with.

Ms McAleenan said her recollection was that she was offered 10%, but she thought she had looked for between 25-30%. She said she had not looked into the financial details of the firm, as her accountant had done that.

Ms McAleenan said the reason the partnership never happened was because her accountant advised that she would need sight of more detailed documentation, and she never received those documents.

Ms McAleenan agreed with counsel that she wrote to the Law Society at some point in 2005 and notified them that she was a partner at the firm.

She said Mr Lynn had asked her to do so because he wanted to take on an additional trainee, and that trainee would have to be appointed to a partner. She said she wrote the letter to help the trainee, and also because she “was on the promise” of a partnership.

She said she didn’t recall telling the staff at the firm that she was a partner, and didn’t recall an email being sent to staff about it.

She acknowledged that, on the firm stationery, she was named as partner, but said she couldn’t recall if she had a business card that stated she was a partner. 

‘Horrified and disgusted’

Ms McAleenan said she did not recall Mr Lynn giving her €50,000 towards the purchase of her family home, and said she was “completely taken aback” by that suggestion. 

On her final day in the witness box, she strenuously denied that she was complicit in the practise of taking out multiple mortgages on the same properties. “I’m horrified and disgusted you would put that to me,” she told Mr Comiskey O’Keeffe.

The court heard that Mr Lynn was struck off the roll of solicitors in May 2008, following an investigation by the Law Society. No complaint was made against Ms McAleenan following this investigation, Patrick McGrath SC, prosecuting, told the court.

Being struck off was “the ultimate sanction” and “the most serious available sanction”, the jury was told.

The trial continues before Judge Martin Nolan, with the defence case expected to open in the coming days.