Fingleton was Lynn’s ‘personal banker’ – defence

Former solicitor Michael Lynn was introduced to Bank of Scotland Ireland by Michael Fingleton, the chairman of Irish Nationwide Building Society, his defence counsel told his multi-million-euro theft trial yesterday (2 November).

Lynn (55) of Millbrook Court, Redcross, Co Wicklow is on trial 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 obtained multiple mortgages on the same properties, in a situation where banks were unaware that other institutions were also providing finance.

The financial institutions involved are Bank of Ireland, National Irish Bank (later known as Danske Bank), Irish Life and Permanent, Ulster Bank, ACC Bank, Bank of Scotland Ireland, and Irish Nationwide Building Society.

During cross-examination of Bank of Scotland Ireland worker Tom Brennan yesterday, Mark Lynam SC, defending, suggested that Lynn “was introduced to the bank by the chairman of another bank, Michael Fingleton”.

‘Personal banker’

He said it is the defence’s case that Fingleton was his client’s “personal banker” and when he “couldn’t approve a loan” for Lynn because he was on holidays, contact was instead made with senior staff at Bank of Scotland Ireland.

Tom Brennan said he wasn’t aware of this.

Mark Lynam said it is his client’s case that “it was inevitable he would get these loans” as “there was an understanding he was a high-value client”, and that there was to be “flexibility”, in that loans would “not be strictly enforced like other clients of the bank”.

Brennan replied: “This was not my understanding.”

In his direct evidence, Tom Brennan told John Berry BL, prosecuting, that he met with Lynn in April 2006 about a potential mortgage application, which didn’t proceed.

He said another proposal was made in November 2006 in relation to offices at Capel Street, Dublin, and ten residential properties.

An offer letter for €3.5 million was issued by the bank to Proper T Capital Ltd in January 2007, and returned signed by Lynn and his wife Brid Murphy, who were directors of this company. The terms and conditions of this offer included a requirement for the first legal charge (FLC) on the properties.

Not aware

Brennan said he was not aware that Lynn had sought finance from other institutions in relation to these properties, and the application wouldn’t have gone ahead if he was aware that finance had been provided by others to Lynn or Proper T Capel Ltd.

Tom Brennan confirmed he was aware of the publicity surrounding Lynn in October 2007.

During a meeting at this time, he said Lynn told him, “he would be sticking around to deal with the issues”. He recalled Lynn said it was a “misunderstanding”.

Tom Brennan confirmed that the bank had obtained FLC over nine of the ten properties.

Mark Lynam SC suggested to Tom Brennan that the statement of affairs “wasn’t crucial” as Lynn had a “relationship with the bank” or individuals within it who were “eager” to provide loans, and there was “knowledge in the bank that he would use the loans for other purposes”.

The witness said he couldn’t speak for anyone else, but that the statement of affairs was “important to me”.

Lynam also put it to the witness that his client had previously taken out loans with the bank and repaid them where the title was not registered.

Brennan said he was not aware the FLC was not registered for these properties.

‘Carte blanche’

During re-examination, Berry said it had been suggested to Brennan that Lynn had “carte blanche to do what he wanted to do with the money” due to his existing relationship with the bank.

He asked: “Was it your understanding that the process you engaged in was a façade or charade to allow Lynn to get money?”

Brennan said he would have expected Lynn to “point me to my superiors”.

Berry then asked if Lynn mentioned to him during the meeting in October 2007 that it was “all a charade”.

He replied he “never mentioned it”.

Retired National Irish Bank worker, Nicholas Robert Hamilton gave evidence that the bank approved loans for Lynn to purchase property in Dublin, not abroad.

‘Never met’ Lynn

It was put to him that Lynn said they met in 2007, which he denied. Hamilton said he “never met” Lynn, adding, “the first time I saw him was in court last year at the initial trial”.

When asked if he was aware of a secret deal between Lynn and National Irish Bank to allow monies to be used abroad, Hamilton said he had “no idea what he is talking about”. 

Paul Comiskey-O’Keefe BL, defending, put it to Hamilton that the defence said he had met with Lynn and was aware that the money was going to be used in relation to his client’s property business abroad.

Hamilton replied: “No, I never met Mr Lynn and never knew about using money abroad.”

He said he didn’t review or assist with the collection of documents for gardaí and was not asked to remove or delete information from the bank’s internal systems.

Hamilton also told Comiskey-O’Keefe that he didn’t recall approving the loan, but his former manager told him he had when they spoke “at the end of the trial last year”.

He said she rang him and they had a “general conversation about the loan” to Lynn, during which she mentioned she thought he’d approved it.

Arthur King said he was working for ICS Building Society, a subsidiary of Bank of Ireland in 2006.

He said he was aware that Lynn wrote to a senior business manager in September 2006 proposing the purchase of eight residential properties on an interest-only basis with an 85% loan-to-value ratio (LTV).

Jurors were shown a number of documents sent to the bank, including trading accounts for Kendar Holdings and Michael Lynn and Co Solicitors.

Application assessed

King agreed the application was assessed and the bank issued an offer letter that included the condition that an FLC be registered against the properties in favour of the bank.

He noted that the mortgage offered would be interest-only for the first three years, and then capital, also, would be repayable. This mortgage offer was also shown to the jurors. 

The jury was also shown other documents, including a solicitor’s letter of undertaking with Fiona McAleenan’s signature on it.

Fiona McAleenan gave evidence on Wednesday that she couldn’t recall signing this document, and it was not her signature.

A cheque for €2.74 million was issued by the Bank of Ireland to Michael Lynn and Co Solicitors in December 2006.

Bank became aware of an issue

King said repayments were made on the mortgage until September 2007; however, around the same time, the bank became aware of an issue. He said the bank carried out certain checks to confirm if there were loans registered in the name of Lynn.

“As far as I’m aware, they weren’t,” King said, noting that it then became apparent that the FLC had not been registered in favour of the bank.

King said the loan would not have been made if the bank “had known the letter of undertaking couldn’t be fulfilled”.

Mark Lynam SC put it to Arthur King that his client said that he “came on board to bail out or rescue” Bank of Ireland in relation to a loan taken out in 2003 by a third party. King said he wasn’t aware of this.

Lynam said it was his client’s case that he was given money to buy property abroad, and King replied that he wasn’t aware of this.

‘They could sue the solicitors’

Defence counsel then put it to him that his client’s case was that “he was being lent money and the bank understood [that] if something went wrong, they could sue the solicitors”, who would have professional indemnity insurance in place.

Judge Nolan told King that the defence were suggesting to him that, if someone in the Bank of Ireland knew Lynn ”wasn’t going to buy these properties”, they took “comfort” from the letters of undertaking, since, if the loan wasn’t repaid, they could sue the solicitors.

King replied: “Never heard of it.”

Checks on letters of undertaking

The witness said he couldn’t remember if the bank carried out an internal investigation, but noted that the bank had checked letters of undertaking from other solicitors, and followed up any that were outstanding.

Lynam then showed him an email from the financial regulator to the Bank of Ireland, dated 16 October 2007. The email asked questions about the bank’s procedures and its exposure to Lynn.

King said that this was an email between the regulator and the bank’s compliance department. He recalled having the branch and mortgage files, but he said he wouldn’t have had this internal file.

The trial continues before Judge Martin Nolan and a jury.