Potential €55m opportunity from Lynn’s Portuguese properties

There was potential opportunity from former solicitor Michael Lynn’s property developments abroad, a former Ulster Bank worker has told his multi-million euro theft trial.

But that was not the reason Mr Lynn was given a €3.65 million loan in 2007, former Ulster Bank relationship manager Stephen McCarthy told Dublin Circuit Criminal Court yesterday (8 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, ACCBank, Bank of Scotland Ireland and Irish Nationwide Building Society.

Giving evidence on Tuesday during day eight of the trial, McCarthy told Karl Finnegan SC, prosecuting, that he was involved in a €3.65 million loan application from Mr Lynn relating to the purchase of 11 residential investment properties in Dublin.

Undertaking query

McCarthy told the court that he met Lynn on one occasion in his office in Blanchardstown, around September 2006.

He said that the meeting “sticks out in his mind” because they met for a considerable length of time and, at the end, he said Mr Lynn said: “One final thing…” before asking if his solicitor’s firm could provide the undertaking to the bank.

This was “a very unusual request”, McCarthy commented. He said that he raised the request in the application to the bank and they “acquiesced on the basis that a different partner to (Michael Lynn) would provide the undertaking”.

Finnegan brought McCarthy through evidence Lynn previously gave about him – including that, around September or October 2007, after Lynn had got into difficulties, he said he had met McCarthy, who told him: “I’m not going to agree we allowed this flexible lending, so you’re on your own.”

“It was clear to me, I’d be left holding the baby,” the court heard Lynn previously say.

First legal charge follow-up

In response, McCarthy said that he had a telephone call around this time with Lynn after the bank had asked him to follow up on getting the first legal charge registered.

He said that Lynn had told him this would be “actioned”, and that he took this to mean “that the legal charge would be secured and registered”.

McCarthy told the court: “I don’t know what he means about flexible lending.”

In relation to comments by Lynn that there was a “dual approach” to lending, McCarthy said he took that to mean that there was underhand or side arrangements with the bank. “Absolutely not,” he said in response to this suggestion.

Under cross-examination from defence counsel, Paul Comiskey O’Keeffe BL, McCarthy said that he was not aware of any information being withheld by the bank from gardaí, and was not aware of enquiries from the financial regulator in relation to the loans.

Background statement

McCarthy was brought through a background statement he prepared on Lynn after their meeting, which included information on his property developments in Portugal and the profit per unit.

Comiskey O’Keeffe said that these details were “completely excessive”.

McCarthy said that it was necessary to include information on Lynn’s other investments as the bank would want to know where his other income was coming from. “That’s the reason it’s included,” he said.

The court was shown documentation which referred to Lynn’s plans to build around 5,000 units around Europe with a sales value of €55 million. The witness said that he had never seen the document before, and prosecution counsel said that it was dated eight months later.

Bank’s interest in €55m

Comiskey O’Keeffe put it to McCarthy that he and his bank were interested in the €55 million “that would come from your relationship with Michael Lynn”.

“Obviously, potentially, there would be opportunity from it, but that was not the focus of this application,” McCarthy replied. He later added it was not the reason the bank gave Lynn money for the 11 apartments.

Judge Martin Nolan intervened at one point to point out to Comiskey O’Keeffe: “Your client told him all about that”, and that McCarthy was “not the developer”.

“He seems to be the quantity surveyor,” Comiskey O’Keeffe replied.

Solicitor firm’s undertaking

Earlier, Michael O’Malley, former senior legal adviser for National Irish Bank gave evidence. He told the trial that, in February 2007, he was made aware that the bank was making certain lending to Lynn, but that the undertaking would be furnished by Michael Lynn & Co solicitors.

O’Malley agreed with prosecuting counsel that he had some concerns about this, as it was a “conflict of interest”. He said that as a result, he rang Lynn to discuss the matter.

O’Malley said that Lynn had told him that he had ceased to practise in Michael Lynn & Co, and the practice had been taken over by solicitor Fiona McAleenan. “He named Fiona McAleenan and I knew from the Law Directory that she was a solicitor in the practice,” O’Malley said.

The court heard that Lynn told O’Malley he would get McAleenan to talk to him, and that he later received a phone call from a woman who introduced herself as Fiona McAleenan from Michael Lynn & Co.

Lynn had ‘stopped practising’

O’Malley said that he had a fairly long conversation, and the woman told him that Lynn had stopped practising in the company, was no longer practising as a solicitor, and was fully involved in his property company.

O’Malley told the court he was later “stunned” to hear that McAleenan had asserted that she was not a partner in the firm. “The person I spoke to seemed to me to be a solicitor who understood what they were talking about,” he told the court.

Under cross-examination from defence counsel, O’Malley said that he was not aware at any stage of National Irish Bank doing a deal with Lynn where there was “some kind of loose undertaking situation”.

“Some other bank may have done this. We didn’t,” he said.

The trial continues before Judge Martin Nolan and a jury.