A number of bankers told former lawyer Michael Lynn’s multimillion-dollar theft trial that he had no permission to use the loan money for alternative purposes, with one witness calling the suggestion of “ridiculous”.
Mr Lynn, of Millbrook Court, Red Cross, Co Wicklow, is on trial in the Dublin Circuit Criminal Court charged with the theft of around £27million from seven financial institutions.
He pleaded not guilty to 21 counts of robbery in Dublin between October 23, 2006 and April 20, 2007.
According to the prosecution, Mr Lynn obtained several mortgages on the same properties in a situation where the banks were unaware that other institutions were also providing financing.
Mr Lynn told his trial that the banks were aware he had multiple loans on the same properties and that it was “custom and practice” among Celtic Tiger Ireland bankers.
He said he had “secret deals” with a number of bankers, which gave him permission to use the loan money for his overseas property developments.
Mr. Lynn named a number of witnesses who he said were involved in these secret deals. On Monday, the prosecution told the jury they would hear rebuttal evidence.
Patrick McGrath SC, prosecuting, presented Stephen McCarthy, formerly of Ulster Bank, with some of Mr Lynn’s evidence in court earlier this month.
In his evidence to the jury, Mr Lynn said Mr McCarthy had met him and told him that Ulster Bank would never agree to them allowing these flexible loans and that it had become clear to Mr Lynn that he would remain “holding the baby”.
Mr McCarthy said that conversation “never happened”. He told the court he only met Mr Lynn once in connection with a loan for 11 residential investment properties and that was early in the loan process.
Mr. McCarthy said he remembered the meeting, which took place in Mr. Lynn’s office, because at the end of the meeting, Mr. Lynn asked if his law firm could provide the undertaking for the properties in question under the warranty.
Mr McCarthy said the suggestion that Ulster Bank allowed the loan money to be used for overseas developments was ‘wholly inaccurate’ and that the money had been loaned to Mr Lynn’ for the purposes of these 11 residential investment properties and only these 11 residential properties”.
“To suggest that the bank and I were fully aware of the alternative use of financing other than the 11 residential investment properties is ridiculous and would make no sense from a lending perspective,” Mr McCarthy told the court.
“ . . . Mr. Lynn knew the system. He knew the banks were counting on the attorney’s engagement. The banks acted in good faith with the attorney’s undertaking.
Mr McCarthy said he had never received any money or benefits from Mr Lynn during his dealings with him and had never heard of a business-only mortgage . He told the court that when he discovered the bank had been defrauded by Mr Lynn, he “nearly fell [his] seat in shock”.
Cross-examined by Paul Comiskey-O’Keeffe BL, defending, Mr McCarthy agreed that he first made a statement to the Garda in 2016, almost 10 years after the allegations came to light. “I was asked to make a statement at that time,” he said.
Mr McCarthy said there was an internal investigation within Ulster Bank afterwards, but he was not sure what investigative documents the bank produced. “They would have been turned over to the legal department,” he said.
Going through Mr Lynn’s loan documents from the Ulster Bank, the defense lawyer explained to Mr McCarthy that there were many details relating to Mr Lynn’s overseas property developments. Mr McCarthy said it was normal to look at all of a borrower’s activity.
Ciaran Farrell, former Blanchardstown branch manager at Irish Life and Permanent (now Permanent TSB), also gave evidence on Monday. He told the court that an allegation by Mr Lynn that he had received money from her was “categorically false”.
‘I have not received any money from Mr Lynn in connection with my dealings with Irish Life and Permanent,’ Mr Farrell said.
Mr Farrell said he had never heard of ‘special deals’ over the loans until the investigating guard told him last week. He said any inference that the loan money was to be used for other purposes was not correct. “I refute that,” he said.
Mr Farrell said if he had been aware that there were several mortgages already taken out in relation to the loans, “the demand would not have gone beyond ‘go'”.
“That wouldn’t have happened. I wouldn’t have amused him,” he told the court.
Defense counsel explained to Mr. Farrell that he knew these were business-only mortgages and was aware of them from his relationship with Mr. Lynn and his conversations with Mr. Lynn. Mr Farrell said he does not accept this at all.
Mr. Comiskey-O’Keeffe also explained to Mr. Farrell that he had had discussions with Mr. Lynn about buying an investment property in Portugal at a 30% discount with the aim of turn into profit. “That would be an advantage then,” Comiskey-O’Keeffe said.
“Okay, that’s totally wrong,” Mr. Farrell replied. He told the court he had no interest in investing in overseas properties and had only ever owned his family home.
Retired National Irish Bank employee Nicholas Robert Hamilton also gave evidence. He said he had never met Mr. Lynn or spoken to him. Mr Lynn told the court he had met Nicholas Patrick Hamilton, a member of the NIB credit committee who was aware of the secret loan deal.
Mr Hamilton told the court he had never been a member of the credit committee. When asked by a defense lawyer if Mr Lynn was lying, Mr Hamilton replied: ‘I just think he’s wrong.’
Former Bank of Ireland employee Sean Dooley told the court he left the bank in October 2005. He said at no time had he been involved in arranging loans for Mr. Lynn or any other person who were to be used for purposes other than those stated in the agreement.
He agreed with the prosecution lawyer that he left the bank almost a year before the Bank of Ireland loan the jury must consider was taken out.
The trial continues before Judge Martin Nolan and a jury.