Lynn’s solicitor was ‘deputised’ to change locks

Defence counsel for former solicitor Michael Lynn has told his trial that his client’s solicitor was deputised by the Law Society to change locks at the office of his legal practice in October 2007.

Mr Lynn (55), of Millbrook Court, Redcross, Co Wicklow, is on trial at Dublin Circuit Criminal Court accused of the theft of around €27 million from seven financial institutions. He has pleaded not guilty to 21 counts of theft in Dublin between 23 October 2006 and 20 April 2007.

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

Simon Treanor of the Law Society confirmed to Karl Finnegan SC, prosecuting, that the organisation’s records state that Lynn set up his legal practice in 1996, with its name changing to Capel Law during 2007.

He also agreed that there were no disciplinary records against Fiona McAleenan.

High Court order

Treanor agreed with Finnegan that, if the Law Society had concerns about a solicitor’s practice, it would act to try to protect the firm’s clients.

The jury heard that the Law Society appointed an accountant to audit Lynn’s legal practice around September 2006.

The solicitors’ body obtained a High Court order in relation to Michael Lynn and Co Solicitors on 15 October 2007, and its personnel went to the practice at the Capel Building on the same day. Files from Lynn’s legal practices were seized by the Law Society’s practice-closure unit, and IT equipment was removed from the office in early November.

Treanor told Paul Comiskey O’Keeffe BL, defending, that he could not find any reports to confirm if the Law Society changed the locks of the office of Michael Lynn and Co.

Comiskey O’Keeffe said that his instructions were that, once a High Court order was made, “one of the first things to happen is that the Law Society secure the practice by changing locks”.

He said Lynn’s then-solicitor was “deputised” by the Law Society to arrange for the locks to be changed.

One set of keys was given to an individual working for the organisation, with the other two sets retained by Lynn’s then-solicitor.

He said that his client’s position was that he didn’t have a set of keys and did not have access to the offices of Michael Lynn and Co after this point.

Treanor said that he did not find any records of this nature.

He told defence counsel that he was aware that the practice-closure unit secured premises, but added: “I don’t believe, as a matter, of course, they would change the locks”.

Inventory provided to gardaí

He was taken through several emails, and agreed that the Law Society’s head of IT was among those who went to the offices of Michael Lynn and Co. An IT expert was also brought in to assist.

Comiskey O’Keeffe put it to the witness that the Law Society also secured the firm’s former office in Blanchardstown, where an old server was stored.

Treanor said that he had no information on this, or whether this server was examined.

He said that he wasn’t aware whether the Law Society held a separate file about Kendar, and had no information about whether or not it took custody of Kendar’s servers.

Treanor agreed that he provided gardaí with a copy of an inventory of computers taken by the Law Society from the offices of Michael Lynn and Co, but could not be sure if it was a complete inventory.

Comiskey O’Keeffe said that his instructions were that there was a server room in the basement of the Capel Building, which could be accessed only through the practice’s office. Treanor said that he could only provide information based on the files.

‘Private personal residence’

Andrew Snow, former relationship manager with Bank of Scotland Ireland, confirmed that Lynn and his wife made a home-loan application to the bank for €3.85 million to buy Glenlion House in Howth in December 2006.

Snow told the jury that it was his understanding that this was a joint home-loan application to buy a private personal residence. He said that the bank would not have approved the loan if it had been aware that other financial institutions had also provided finance to purchase the same property.

He was taken through an assortment of documents, including letters, internal credit memos and application forms. Snow agreed that the bank sought a first legal charge over the property as security for the loan.

He confirmed that the loan of €3.85 million was drawn down on 19 April 2007. Snow said that it was never suggested to him that this money would be used for overseas investment.

Snow told Comiskey O’Keeffe that he did not accept that he, his colleagues, or the bank were negligent in dealings with Lynn.

Comiskey O’Keeffe asked Snow if he had seen a document from Kendar Portugal that confirmed that Lynn had provided it with a loan of €3 million.

Snow said that he was familiar with the front page, which was submitted as part of the application. He said that he had never seen other pages from the document.

Defence counsel suggested to Snow that this was not a consumer loan, as certain statutory information was not included in the loan offer. Snow rejected this, saying that he worked only with consumer loans.

Double mortgages

Cathal Power, Lynn’s brother-in-law, said in his evidence that he joined Kendar Holdings in July 2006.

He said that Lynn called him in August or early September 2007 and told him that the solicitor’s practice was being audited by the Law Society, and that he had double mortgages on two or three properties.

Power said that Lynn asked him to help with Kendar. He told the jury that he later went to a meeting at Lynn’s home with several others, during which Lynn explained the double-mortgaged properties, and said that this was wrong, and that he needed to ‘sort it’.

Power said that Lynn expressed concerns about the possible impact on Kendar’s public image. Power said that he understood that any issues related to Lynn and the legal practice only.

Power said that he discussed reassuring investors in Kendar that their money was safe during a call with Lynn in October 2007. Around this time, Kendar’s accounts were frozen, and the company could not operate.

The jury heard that Power would return later for cross-examination by the defence.

Capel Building

The property manager at Capel Building confirmed that Law Society staff went to Capel Law in October 2007 and ordered it to be closed, and for staff to leave the premises.

He said that the only instruction about security arrangements was that Kendar employees should not be allowed into Capel Law’s office.

He agreed that there was a connecting door between Capel Law and Kendar, which occupied the neighbouring office.

He said that Lynn called him in mid-November 2007 to advise that he was on the way to the building and wanted to remove files from Kendar’s offices. He said that he had no further dealings with Lynn after this.

Solicitor’s undertaking ‘of extreme importance’

Suzanne Bainton told the jury that she was a practising solicitor, and a member of the Law Society’s Conveyancing Committee.

She outlined how solicitors’ undertakings were developed to reduce the costs of residential lending for borrowers.

She agreed with Finnegan that the undertaking was of “extreme importance” within the system, which relies on the “implicit trust” placed in solicitors as professionals.

Bainton told prosecuting counsel that she had “never” come across the concept of a solicitor’s undertaking-only mortgage, where the bank would have “recourse” to a solicitor’s professional-indemnity insurance.

“The system isn’t perfect ... it wouldn’t work if deeds weren’t delivered and undertakings not compiled with. Banks do it because they have faith in solicitors, and as solicitors are insured.

“The client who is buying the house understands that the solicitor will put a charge on the property and give the deeds to the bank. If that doesn’t happen, the system doesn’t work.”

She added that banks could make a claim to a solicitor’s insurance if there had been professional negligence; however, cover for solicitor fraud does not exist.

Bainton agreed with Comiskey O’Keeffe that she was giving expert-opinion evidence, and that she had had no previous engagement with Lynn.

He said that his client’s position was that he had a practice of buying a property, ‘flipping’ it 12 months later, and did not register the charge in the meantime. Bainton said that this was “not something I’ve come across”.

She agreed that the letter of undertaking was not intended for use in commercial lending, though banks would accept it.

Comiskey O’Keeffe put it to her that it could be a disciplinary matter for solicitors if they did not comply with their professional obligations after signing an undertaking. She agreed that this obligation remained until the bank released the solicitor.

Defence counsel suggested that the terms of a solicitor’s professional-insurance cover might apply to a client in the case of fraud, but not the solicitor.

Bainton noted that she was not an expert in insurance, but that any claim would depend on the policy’s terms and conditions. “I’m not sure how the client can be covered, but not the solicitor,” she added.

The trial continues before Judge Martin Nolan and the jury.