Former solicitor Michael Lynn was approved two loans totalling €4.9 million and €3.7 million within seven days by the same financial institution, his multi-million euro theft trial has heard.
Mr 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 October 23rd 2006 and April 20th, 2007.
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.
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 (INBS).
On Friday, former Permanent TSB commercial lending manager, John O'Brien, gave evidence in relation to an allegation that Mr Lynn stole €3.7 million from the institution in 2007.
He told Karl Finnegan SC, prosecuting, that 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.
Outstanding balance
The court heard there was a delay in Mr Lynn clearing an earlier outstanding balance of a loan he had with the bank. Mr Lynn had a history of borrowings with the bank dating back to 1999, the court heard.
In an email to Mr O'Brien which was shown to the court, the then Blanchardstown branch manager Ciaran Farrell said, “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 a 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.”
The court was shown internal emails in which PTSB head of underwriting, Martin Huggard, wrote to Mr O'Brien about the €4.9 million loan saying: “John, I think there's a deal here”.
In the email, Mr Huggard also told Mr O'Brien that he thought a different firm of solicitors should act in the loan, given the “total exposure”.
Mr Farrell sent an email to Mr O'Brien in May 2007 saying there was “no issue with legal” and that Fiona McAleenan “who operates independently of Michael and is responsible for her own undertakings etc” would act.
New practice
Ms McAleenan operated a new practice called Capel Law, Mr Farrell said, and she was also a partner in Michael Lynn & Co solicitors. Mr Farrell said this had been checked out by the legal department.
The €4.9 million loan was approved in May 2007, the court heard.
Around the same time the bank approved this loan, Mr O'Brien and Mr Farrell met with Mr Lynn to discuss a €3.7 million loan involving 12 rental investment properties, the court heard. This loan is the subject of the theft charge involving PTSB.
It was approved within seven days of the €4.9 million loan being approved, the court heard. “A short period of time,” Mr Finnegan said.
Along with this €3.7 million loan, there was a €5.5 million refinancing proposal relating to a commercial property. PTSB also approved this loan, which would have taken Mr Lynn's borrowings with the bank to just over €14 million, the court heard.
The court heard the €3.7 million loan was drawn down, but that Mr Lynn did not ultimately proceed with the €5.5 million loan offer.
Mr O'Brien agreed with Mr Finnegan that he took the documents provided to him “at face value”.
He said he would not have recommended approving the loan if they were for investment properties abroad or on a solicitor undertaking-only basis.
“Did you ever have a conversation other than doing it by the book?” Mr Finnegan asked. “No”, the witness replied.
Paul Comiskey O'Keeffe BL, defending, said Mr Lynn's position in relation to clearing the earlier loan was that it was something he discussed with Mr Farrell, in which Mr Lynn asked: “Do I absolutely have to comply?”
The answer he received was, “If you can carry it, so be it”, Mr Comiskey O'Keeffe told the court.
Ultimately, Mr Lynn was sued by PTSB for the sums of €1.9 million, €4.9 million and €3.7 million, the court heard.
Mr O'Brien denied that the bank or his colleagues were negligent in relation to the loans. The trial resumes on Monday before Judge Martin Nolan and the jury.
