Shock news that former Anglo CEO David Drumm has filed for bankruptcy in the state of Massachusetts. Mr Drumm had been locked in a bitter court battle with his former employer in Dublin’s High Court where Anglo was seeking the repayment of loans (which if successful was to be followed with an application to have certain transfers of property to his wife set aside). Mr Drumm was countersuing for unpaid remuneration and other damages.
RTE report that Mr Drumm made what seems like a last-ditch attempt to settle the claim last week where he is reported to have offered up half the value of his house in Malahide, his US $4m home in Cape Cod and his pension rights. The claim is that this would have discharged his debt and then some. The offer was refused and today Mr Drumm is reported to have filed for bankruptcy in Massachusetts
Lawyer for Anglo, Barry O’Donnell is said to have described the news as an extraordinary turn of events. Brian O’Moore SC for Mr Drumm is said to have described his client’s efforts to settle the matter as his bending over backwards. The two barristers seem to have had a clash of handbags moment when Anglo’s counsel described Mr Drumm’s seeking the moral high ground as a bit rich. Purely as an observer I have been puzzled by Anglo’s treatment of Sean Fitzpatrick and now David Drumm. Sean Fitzpatrick offered a settlement that was accepted by other creditors but not Anglo and the reckoning was that Anglo would have mitigated their losses if they accepted a settlement, but they didn’t and they pursued bankruptcy. And today apparently Mr Drumm’s offer would have yielded €2m more than was owed to Anglo. There is a hint of the F-you in Mr Drumm’s actions today which mean that Anglo won’t even be able to get his pension (previously offered in settlement by David Drumm). Strange behaviour and I wonder if it is motivated less by maximizing the discharge of debts by Mr Fitzpatrick and Mr Drumm and more about demonstrating vengeance to the public (personally I would have been more impressed by getting more money back from the pair).
The State of Massachusetts has fascinating bankruptcy laws, some of which were obviously drafted in simpler times when hay was needed for sustenance. Other “assets” that Mr Drumm is allowed keep from his creditors include
“First, The necessary wearing apparel, beds and bedding for himself and his family; one heating unit used for warming the dwelling house, and the amount each month, not exceeding seventy-five dollars, reasonably necessary to pay for fuel, heat, water, hot water and light for himself and his family.
Second, Other household furniture necessary for him and his family, not exceeding three thousand dollars in value.
Third, The bibles, school books and library, used by him or his family, not exceeding two hundred dollars in value.
Fourth, Two cows, twelve sheep, two swine and four tons of hay.
Fifth, Tools, implements and fixtures necessary for carrying on his trade or business, not exceeding five hundred dollars in value.
Sixth, Materials and stock designed and procured by him and necessary for carrying on his trade or business, and intended to be used or wrought therein, not exceeding five hundred dollars in value.
Seventh, Provisions necessary and procured and intended for the use of the family, or the money necessary therefor, not exceeding three hundred dollars in value.
Eighth, One pew occupied by him or his family in a house of public worship; but this provision shall not prevent the sale of a pew for the nonpayment of a tax legally laid thereon.
Ninth, Boats, fishing tackle and nets of fishermen actually used by them in the prosecution of their business, not exceeding five hundred dollars in value.
Tenth, The uniform of an officer or soldier in the militia and the arms and accoutrements required by law to be kept by him.
Eleventh, Rights of burial and tombs in use as repositories for the dead.
Twelfth, One sewing machine, in actual use by each debtor or by his family, not exceeding two hundred dollars in value.
Thirteenth, Share in co-operative associations subject to chapter one hundred and fifty-seven, not exceeding one hundred dollars in value in the aggregate.
Fourteenth, Estates of homestead as defined in chapter one hundred and eighty-eight or, in lieu thereof, the amount of money each rental period, not exceeding two hundred dollars per month, necessary to pay the rent for the dwelling unit occupied by him and his family.
Fifteenth, Cash, savings or other deposits in a banking institution, or money owed to him each pay period as wages for personal labor or services, or any combination of such cash, deposits or money owing, not exceeding one hundred and twenty-five dollars, or any sum of money which was received by or is owing to him as public assistance.
Sixteenth, An automobile necessary for personal transportation or to secure or maintain employment, not exceeding seven hundred dollars in value. ”
In addition to personal chattels, Massachusetts has a fairly tough homestead law. And it would seem that David’s offer to hand over the house in Massachusetts was reasonably generous.
(With thanks to commentor Mank the Merciless for providing much of the above information when commenting on an entry here back in April 2010)
UPDATE: 15th October, 2010. Laura Noonan at the Independent asks the questions on many lips today : is Anglo peopled by a bunch of morons that have just cut off their noses to spite their faces in their rejection of the last-ditch offer by Mr Drumm. Laura concludes that they mightn’t be as dumb as they seem – after all the €5.4m pension pot would be subject to tax (though presumably payable to the State , that is you and me) and it may not be worth €5.4m at all (possible). Laura aslo suggests that the claim that Mr Drumm offered €2m more than was claimed from him might also assume that Mr Drumm was entitled to lost benefits of €2.5m. Anglo hasn’t commented. But given we own Anglo 100%, shouldn’t we know how this deal was examined. After all on the face of it, if we believe Mr Drumm, we would have recovered the entire outstanding loan. Now it seems that we may have lost the best part of €8m.
UPDATE: 16th October, 2010. Thanks to commentor JT Morgan (see comments below) we can see that David K Drumm transferred his US $2.6m house at 173 Cross Street (that’s a different property to the one at 262 Stage Neck Road where Charlie Bird paid an unwelcome visit) from his name solely to him jointly with his wife Lorraine M. for the princely sum of US $99 in October 2008 (one month after he bought it). The property was transferred to the Porch Light Nominee Trustes Limited in September 2009 – it is unclear who the beneficiaries of the trust are. And that famous building on Stage Neck Road was of course bought in March 2008 for US $4.6m.
UPDATE: 19th October, 2010. It seems that this story will develop legs. In Ireland’s High Court today, the redoubtable Mr Judge Peter Kelly held what was probably one of the more bizarre hearings in his career where Anglo sought an injunction to prevent Mrs David Drumm (otherwise Lorraine) from transferring the former family home in Malahide, Dublin back from her solely to her and her husband. This was bizarre because Anglo had already applied to have the previous transfer of the property from Mr&Mrs Drumm to his wife solely undone. It seems that Anglo are all at sea suggesting there was “pre-conception” in David Drumm’s actions -“there appeared to be an element of pre-conception in what was happening”. Perhaps Anglo meant pre-meditation, regardless why would ,they be surprised that David Drumm who is by all accounts a fairly clever fellow would take whatever steps he saw fit to maximise his advantage? The hearing was also odd because there is an emerging battle it would seem, to determine the jurisdiction where the bankruptcy might be executed – Massachusetts or Ireland. Judge Kelly gave the US Trustee in Bankruptcy a week to assert primacy in the matter. The case will continue next week but I wouldn’t be surprised if there are more twists before then.
UPDATE: 22nd October, 2010. It seems that the Irish Independent is getting the inside track on the Anglo v Drumm case. Today it reveals the list of creditors allegedly owed by David Drumm (shown below). I must say I found the tone of the reporting to be distinctly pro-Anglo and anti-David Drumm. David Drumm is reported to have “fled” to the US, the preceding sentence (in the preceding paragraph) being about the concealment of director loans – Gardai are reported to be wanting to question David Drumm and the succeeding sentence (in the next paragraph) is about the arrest of two other Anglo senior executives – “It is already known that Mr Drumm owes Anglo almost €8.5m”, when I understand there is contention about whether the loans are repayable now – there doesn’t seem to be anything about the counterclaim by David Drumm relating to unpaid bonuses etc and distress caused by Anglo. It get’s better, in another article it is reported that David Drumm’s wife, Lorraine, has dropped her opposition to a previous transfer of a home in Malahide, Dublin being set aside – nowhere is it reported that she actually tried earlier this week to effectively set aside the transaction herself by transferring the property back to her and her husband, the status quo ante and that Anglo had successfully obtained a restraining order to prevent her from making the transfer (you couldn’t make this stuff up – Anglo seems to have inherited the Keystone Cops DNA). Yet another article tells us about David’s surreptitious machinations in 2009 : “Drumm quietly applied for a US visa and on May 13, 2009, unknown to Anglo, his luxury family home in Malahide was transferred to his wife, Lorraine.”, “As the net closed in [on David Drumm]” and possibly the best display of partiality the editorial in the paper headlines “Drumm shamed by legal farce” when I would have said as a casual observer that Anglo has been exposed as an incompetent entity, whose motives are unclear but wouldn’t appear to be financial and who seem to be outclassed at every juncture by a former employee. The editorial seems to blame David Drumm’s relocation to the USA for the failure to prosecute anyone here for Anglo’s implosion – yet the former CEO and Chairman, Sean Fitzpatrick, and the former CFO, Willie McAteer, were arrested and released without charge six months ago. The editorial concludes with “the disgraced banker “cannot afford” to pay his credit card bills, or car loan, while continuing to rent an expensive mansion, looks like one more twist of plot in a disgraceful farce” And remember these are articles coming from a newspaper called the INDEPENDENT!
UPDATE: 26th October, 2010. The High Court in Dublin has today adjourned the case for three weeks as the drama added a new cast member – Kathleen P Dwyer is the US Trustee in Bankruptcy and her representative today, barrister Bernard Dunleavy, told the court that no disrespect was intended by Kathleen in not engaging with the Dublin judiciary previously – she’s just getting up to speed apparently. Anglo meanwhile is considering its next chess move and whether any mileage can be gained through taking action through its US subsidiary. Kathleen told the court that they were looking at the potential of the David Drumm case against Anglo for unpaid remuneration and other damagaes – the possibility of US taxpayers’ money being spent on legal fees on David Drumm’s behalf in pursuing his claim raises itself. I’d be willing to bet that the judge, Mr Justice Peter Kelly, is laughing up his sleeve at the shenanigans being played out in front of him though he is no doubt aware of the potentially serious precedents being set in how this case is conducted that may affect a great many cases in months and years to come. Oh, and to conclude : the redoubtable Judge Kelly continued the order restraining Lorraine Drumm from transferring the Malahide residence back into the names of her and her husband jointly.
UPDATE: 28th October, 2010. Just picked up the following from an exchange in the Dail on 20th October, 2010 where the Minister for Finance Brian Lenihan responded to some angry questioning by Labour deputy and finance spokesperson Joan Burton “Regarding Mr. Drumm, the former CEO of Anglo Irish Bank who was mentioned specifically by the Deputy in terms of recovering outstanding debts, his outstanding liabilities to the bank are €8.5 million. The process has been ongoing for some months, with Anglo Irish Bank having instituted proceedings against him. The bank has sought to maximise the return for it and the taxpayer. The tactics adopted by it and its legal team are a matter for them in the day-to-day operation of the bank. I have been clear that the bank should pursue all debts owing to it and Anglo Irish Bank has instigated proceedings to achieve this.
While Mr. Drumm made settlement proposals, what was offered to the bank would have left a severe shortfall in the region of €4 million to be borne by the taxpayer, which was not acceptable to the bank. Its priority throughout has been to ensure that Mr. Drumm discharges the full amount due, even if that was spread over a number of years.
It is important to note that, beside the settlement of the bank debts, the bank was also seeking to ensure Mr. Drumm’s full co-operation with the various investigations ongoing into the previous regime at the bank and was also seeking to ensure that, where there was a shortfall between the value of his assets and the debts outstanding, future earnings could be used to repay those debts. The bank sent its latest offer on 8 October. Mr. Drumm’s representatives had not responded to this counter offer when he decided to file for bankruptcy in the US. It is now a matter for the bank and its legal team to assess this latest development and take whatever action is necessary to protect the bank and taxpayers’ interests. The bank remains in contact with the National Treasury Management Agency on the issue as it progresses it and is keeping the latter briefed on the various proposals.”
UPDATE: 30th October, 2010. Documents filed by David Drumm last night in a US bankruptcy court are the subject of a report in the Irish Times today. The documents show the value of assets and liabilities. Overall he claims to have USD $13.9m of assets and USD $14.2m of liabilities and the documents apparently show that he surrendered USD $100,000 of cars last week which must have hurt. The Irish Times appear particularly tickled by the valuation of US $1 on David Drumm’s dog.
UPDATE: 8th November 2010. RTE report that there will be a hearing in Dublin’s High Court on Monday next 15th November, 2010 when the US Trustee in Bankruptcy will attempt to have the US bankruptcy proceedings recognised in Ireland. RTE reported last week that David Drumm has been earning an average of USD $9,000 per month in 2010 providing a range of advice to clients which include former clients of Anglo. Meanwhile Irish police say that they expect to reach a decision by the end of 2010 on some aspects of their investigation of matters at Anglo, where David Drumm of course was the CEO – I don’t think anyone is holding their breath for a prosecution.
UPATE: 13th November, 2010. David Drumm has a key face-to-face hearing in Boston on Tuesday next 16th November, 2010 where creditors are set to discuss their position on his bankruptcy. Meantime it is reported in the Irish Times that Anglo is fishing about to see if it can challenge David Drumm’s residency, presumably so that it can argue that the proper jurisdiction to deal with the bankruptcy is Ireland. Anglo is reported to be seeking the right to question David Drumm about his application to live and work in the US. Anglo which is 100% owned by the Irish State may also be manoeuvring so that David is returned to Ireland to face police questioning about a share support scheme, loan carouselling at year end and director loans. Meanwhile the Independent continue their partial reporting claiming David “fled” to the US (if the man is a fugitive then why not extradite him?) and “Mr Drumm filed for bankruptcy in Massachusetts last month before a deal could be finalised.” (bad David for foiling any possibility of a deal but this plays down several months of negotiations previously and what appeared, on the face of it at least, to have been a reasonable final offer by David). The Independent claims that David’s pension (which it values at €3.7m compared with some previous reporting which alluded to a €5.7m valuation) is beyond the reach of creditors as a term of the pension states that in the event of bankruptcy it be vested in his wife and family.
UPDATE: 15th November, 2010. US trustee in bankruptcy, Kathleen P Dwyer (seated far left) is reported to be seeking to have the US bankruptcy recognised in Ireland and Ms Justice Elizabeth Dunne, sitting in for the redoubtable Mr Justice Peter Kelly, has said she will give her decision “her decision as soon as she could”.
UPDATE:17th November, 2010. Well the drama in this case is set to run and run. The US Trustee in Bankruptcy, Kathleen Dwyer is now effectively claiming that Anglo’s €8.5m loan to David is worthless because it was intended originally to be non-recourse beyond the Anglo shares it was used to purchase under “mandate” of Sean Fitzpatrick. The Independent today seems to provide a more impartial report than usual today (though they still insist on characterising David’s move to the US as fleeing). David had a 15-minute creditors’ meeting under the auspices of the court yesterday in Boston. He wasn’t making any comment to waiting reporters, including RTE, the Irish Times and the Independent. The Independent report that Anglo is trying to (a) replace Kathleen with another lawyer, Michael Epstein of CRG Partners and (b) obtain an order from the court that David be questioned by Anglo’s lawyers (understood to be particularly probing David’s residency in the US). The Independent also report that David is seeking to keep his Irish properties and one of his US properties – 73 Old Colony Road in Wellesley, Massachusetts. The Irish Times goes further and says that the Trustee in Bankruptcy is suing Anglo over their loans and also breach of confidentiality which saw details of the claim printed in the Irish Times in October 2009 for example – no wonder Anglo want her replaced, it seems David might be far from bankrupt and could emerge from this process worth €5-10m! The Irish Times report that Anglo has retained two US bankruptcy lawyers, Kenneth Leonetti of Boston law firm Foley Hoag and Larry Nyhan of Sidley Austin in Chicago. Meanwhile on this side of the pond, the Irish bankruptcy case against David Drumm continued in the High Court yesterday where the redoubtable Mr Justice Peter Kelly was back in the chair. The Irish Times reports that the case has been adjourned “pending the outcome of developments in the US” though an order banning any further dealings in the couple’s former home by Mrs Drumm has been continued. Elsewhere the Irish Times has reported that David Drumm has excluded from his list of assets presented to the creditors yesterday his pension pot valued at €5.4m in the Irish Times.
UPDATE: 26th November, 2010. It seems that a distinct rift is growing between the independent US Trustee in Bankruptcy Kathleen P Dwyer and Anglo. Not only has Anglo sought to have Kathleen replaced with their own preferred attorney, not only has Kathleen claimed that Anglo’s loans to David Drumm may have been fraudulent, not only is Kathleen viewing as viable David Drumm’s legal case against Anglo but now it seems that Kathleen is opposing Anglo’s application to quiz David Drumm under oath about his assets and residency. According to the Independent (which seems anything but independent in its reporting of this affair) a judge is set to rule on the Anglo’s applications next month. The newspaper also provides us with the titbit that David invested in a 2009 film starring Johnny Ronan lookalike (seriously, look at the film’s poster) Colin Farrell called “Triage”. Meanwhile the Irish Times is reporting that David is resisting Anglo’s application to question him under oath by Anglo’s attorneys and David is claiming that the present action is politically motivated by an Irish government which 100% owns Anglo. David reiterates the final offer made which included property and crucially his pension, which would not appear to be outside Anglo’s grasp. The drama is set to resume in December. The tussle to get David Drumm’s bankruptcy transferred from the US to Ireland continues in limbo as the Irish judge dealing with the case, the redoubtable Mr Justice Peter Kelly has adjourned the case here pending developments in the US.
UPDATE: 3rd December, 2010. In return for Anglo abandoning its attempt to replace the existing US Trustee in Bankruptcy, Kathleen Dwyer, David Drumm has agreed to be subjected to two questionning sessions (1) With Kathleen Dwyer with respect to his assets and (2) With Anglo’s lawyers, who were led by Ken Leonetti yesterday, with respect to a range of subjects but likely to include residency, assets and events at Anglo. Since Kathleen is pursuing Anglo for damages and disputing the legality of its loans to David, this is probably a good mover by David whose form would suggest he will be very well prepared for Anglo’s interrogation, his lawyer yesterday was Stewart Grossman. The Irish Independent reports on the matter today and again uses loaded language – David “fleed” to the US two years ago “after the first in a series of scandals surrounding Anglo began to emerge”; Gardai and corporate regulatory body here want David to return to Ireland to question him though there appears not to be enough or, possibly any, evidence to seek extradition.
UPDATE: 6th December, 2010. The Irish Times reports that David Drumm’s inquisition will start tomorrow when the US Trustee in Bankruptcy, Kathleen Dwyer, will question David about his assets, income, family and US residency status. It’s not going to be easy as Kathleen has engaged Anglo’s preferred restructuring specialist Michael Epstein and CRG Partners plus Lavelle Coleman in Dublin. So David is going to have to rely on more than plamas. After Kathleen’s session(s), Anglo will then get to quiz David probably in the new year though Kathleen may be in attendance. David is reportedly alleging that Anglo’s behaviour and decisions are motivated by political objectives and that Minister for Finance, Brian Lenihan is behind Anglo’s strategy. The judge in the case , Judge Frank Bailey has not accepted David’s objections to the extent of the questioning to which he will now be subject. The prize for David will be the retention of his pension and some US protected assets and potentially his US residency and freedom from questioning or worse from Irish authorities/Gardai. But that prize will come at a high price and with not an inconsiderable amount of concern over the next few months.
UPDATE: 8th December, 2010. David’s first ordeal is over following his submission to questioning under oath yesterday by the US Trustee in Bankruptcy, Kathleen Dwyer. RTE report that David was quizzed on a wide range of details including his wife’s (Lorraine’s) jewellry and his childrens’ Christmas presents. In an “oh how the mighty have fallen” snippet, RTE report that David now drives a USD $1,000 Ford. Of more significance is that Lorraine, his wife, is reported to have invested USD $210,000 in David’s new debt restructuring business so David is probably going to demonstrate himself to be an expert in the course of his own bankruptcy proceedings as well as having a great story to tell afterwards and a gold-plated device for selling his company’s services! David’s next ordeal is likely to be particularly thorny as he is to be questioned under oath by Anglo’s lawyers. It was previously reported that this session would take place in the new year. Anglo of course is undergoing major restructuring in Ireland – the Anglo name will disappear within weeks and the rump of Anglo’s non-NAMA loans, €38bn, are expected to merge with INBS’s rump non-NAMA loans, €2bn, in a new run-off vehicle. The deposits from both companies will likely be transferred to AIB or Permanent TSB.
UPDATE: 10th December, 2010. Further reporting from the Independent which claims “the records filed by the bank [Capital One] provide further evidence that Drumm sought out lines of easy credit at a time when he should have known he might not be able to pay the money back.” The article goes on to claim that David’s two daughters are still being sent “to a prestigious, private fee-paying school, despite his financial predicament”. And what report from the Independent would be complete without the claim that David “fled” to the US two years ago and that “gardai wish to question over major irregularities at Anglo”. It seems the next milestone in this case will be in the new year when David is to be quizzed by Anglo’s lawyers about his finances, assets and residency.
UPDATE: 14th December, 2010. In what seems like a favourable move from the point of view of David, the Irish High Court seems to be recognising the legitimacy and primacy of the US bankruptcy proceedings whereas it appeared to be the case that David’s main creditor, Anglo Irish Bank, wanted the bankruptcy dealt with in Ireland’s courts. The US courts offer better protection for family homes and pensions than the Irish courts and bankruptcy is less draconian in the US – Ireland for example continues bankruptcy for 12 years. The immediate consequence of yesterday’s decision by Ms Justice Elizabeth Dunne in Ireland’s High Court is that a property in Ireland owned by David (though in recent times transferred into the names of David and his wife Lorraine) can be sold. It is unclear if the proceeds will be applied exclusively to David’s debts or if his wife will be entitled to a share of the proceeds. Indeed it is unclear whether there will be net proceeds as Ireland’s property bubble collapse has anecdotally seen values tumble by 60% (though the official index for Dublin indicates 45%). The property at 20 Abington, Malahide, Dublin may be subject to a mortgage which might mean there is little if any equity.
UPDATE: 15th December, 2010. The Irish Examiner reports that the US Trustee in Bankruptcy, Kathleen Dwyer, is to decide “shortly” (elsewhere indicated as within one week) whether she will defend David against Anglo’s claim on its loans (€8m – remember there is the suggestion that Anglo has behaved fraudulently in relation to the loans and that nil is due) and if she will pursue the action on David’s behalf against Anglo for an estimated €2.6m in unpaid remuneration and distress. The matter came before the redoubtable Mr Justice Peter Kelly yesterday at the High Court and it seems to me that in a messy manner this matter is slipping from this jurisdiction to the US. It is becoming increasingly clear that David outflanked Anglo with his bankruptcy application in Massachusetts and absent a successful attack on David’s US residency status, it will really be a matter of time before David emerges from this process with his pension and family home intact.
UPDATE: 22nd December, 2010. Although presented in the Independent as a victory for David’s creditors, the news that Mr justice Peter Kelly yesterday set aside a transfer of a property owned formerly by both David & Lorraine Drumm to Lorraine solely merely approves what was sought by the Drumms in October/Novermber – it was they that sought the transfer of the property back to their names jointly and that was opposed by Anglo’s lawyers. The house No 20 Abington is reportedly valued at €1.2m which looks on the low side compared with what seems like a similar detached property currently available from DAFT.ie at €3.8m. It is not known if the property is subject to a mortgage or how much equity Lorraine will end up having in the property – she is not the subject of the US bankruptcy proceedings. Separately, bad news for David with the Chartered Accountants Regulatory Body (CARB, which has reportedly spent €1.6m to date investigating Anglo) deciding to open diciplinary proceedings against David who is one of their members. He is to be subject to the an investigation by body “about the transfer of Mr FitzPatrick’s loans and their non-appearance in the Anglo books” and “about transactions with Irish Life, the amendment of the terms of loans to the Golden Circle, loans to four key management personnel and the loan to Mr McAteer in 2008” . Should CARB find evidence of malfesance, David might find himself at the receiving end of sanctions which include fines of up to €30,ooo and expulsion from the body.
UPDATE: 4th January, 2011. New year, same old story as David continues his voyage through US bankruptcy. Ireland’s Independent reports that just after Christmas, David secured his certificate from the Institute of Financial Literacy, one of the requirements of his passage through the bankruptcy process. Also reported is the famous mansion in Chatham – the one where Charlie Bird doorstepped David asking “why are you ducking down there” – has been put on the market at USD $5.5m (bought for USD $4.6m in 2008) though David’s wife is entitled to half the net proceeds and of course David is still entitled to his share of the other property in which the family are now reportedly living. In the coming weeks, David is to be questioned under oath by Anglo’s lawyers about his assets and residency. The Independent say “the ex-banker could face a fine of up to $500,000 (€367,000) and/or up to five years in prison if it is proven he gave misleading information”
UPDATE: 6th January, 2011. David had another 90-minute session Wednesday in Boston where the US Trustee in Bankruptcy Kathleen P Dwyer continued to question him about transfers between him and his wife, Lorraine. Sarah Shemkus at the Cape Cod Times is keeping good track of David’s affairs in Massachusetts and reports today that David confirmed the transfer of over €500,000 in cash to his wife in 2008 plus she kept all the proceeds of the sale of a house in Skerries – €250,000. The Trustee was apparently interested if Lorraine had any sources of income other than her husband and apparently she hadn’t. She is a creditor of David’s in that she apparently lent him funds to help start and run David’s new business, Delta Corporate Finance (offers consulting services to business clients in the areas of mergers and acquisitions, financing and debt restructuring, with an address at 28 Damrell Street in South Boston). In addition to a previously reported loan of USD $210,000 she is also reported as advancing him three other loans, one of which was for USD $8,000. David faces a new theatre of questioning from Anglo lawyers which will reportedly take place after 14th February, 2011 when the next scheduled grilling by the Trustee will take place (the fourth by Ms Dwyer). Elsewhere there is some misleading reporting (eg here) that the sale of the famous mansion in Chatham will yield Lorraine Drumm one half of the sale price (asking USD $5.5m) but previous reporting has suggested that there is a substantial mortgage on that property (US $2m in 2008 from Cape Cod Five Cents Savings Bank ) which would presumably reduce Lorraine’s entitlement. A snippet that cropped up in yesterday’s hearing was that David apparently didn’t reconcile his current accounts or even keep a register of them!
UPDATE: 11th January, 2011. David has come out of his protective shell to publicly react to the publication of a controversial book in Ireland, “The Fitzpatrick Tapes” which examines the role of David’s predecessor Anglo CEO, Sean Fitzpatrick who became chairman of the bank after David’s elevation to the CEO slot. The impression given in the book is that Sean took a back seat in the running of the bank from 2005 onwards and wasn’t aware of the funding difficulties faced by the bank in 2008 or the share purchase arrangement that became known internally as the Maple 10 (10 Anglo clients were approached by the bank to fund the purchase of a 28% shareholding in the bank that was being disposed of by prominent Irish businessman, Sean Quinn). Whilst it seems to be accepted that Sean spent less time with the bank after his retirement as CEO, his office was just down the corridor from David’s and according to the detailed interview given by David yesterday to the Irish Times’ Simon Carswell, Sean was aware of the funding issues and that “FitzPatrick was told the names at the time in advance of the [Maple 10] transaction.” Other conflicting accounts centre on Sean’s actions in David’s appointment and Sean’s intrusion into day-to-day management of the bank after his retirement as CEO in January 2005.
UPDATE: 14th January, 2011. If you needed further evidence of the pivotal role played by Anglo in the affairs of Ireland in the mid to late 2000s, David Drumm has now placed himself at the heart of the seemingly emerging scandal of the Taoiseach’s links with the failed bank. In today’s Irish Daily Mail, David seems to be at odds with the account given by the Taoiseach, Brian Cowen regarding their dealings together. David asserts that Brian Cowen was asked to intervene with Ireland’s state-owned National Treasury Management Agency (NTMA) to get the agency to deposit much-needed funds with Anglo. Brian Cowen denies that either a request was made to him or that he acted on the request. However David claims that when asked in follow-up if Brian Cowen had intervened with the NTMA on Anglo’s behalf, he got the reply “I told those fuckers”. Well that sounds like Brian Cowen who is known for his colourful language though as David concedes, he can’t offer up evidence of the conversation.
UPDATE: 18th January, 2011. A couple of new twists in the bankruptcy saga – one a report in Ireland’s Independent newspaper today about credit card provider, Chase Bank, is reportedly claiming that €10k-odd of purchases run up on the card in the weeks preceeding the application for bankruptcy were fraudulent because this period was a presumption period in which David was aware of the “strong possibility” that he might file for bankruptcy. On the other hand David might say that he was engaging in good faith with Anglo and expected to emerge from negotiations with substantial assets. The Independent details the gory detail of the purchases which included the perennial darling of Irish media’s castigation of developers, “the fine wine” – this time from Marty’s in Newton, Massachusetts. Possibly of more significance is the report in the Irish Times today that David has applied to the bankruptcy judge, Frank Bailey, to keep aspects of the forthcoming hearings secret. US law may apparently allow for such secrecy if the court considers itself to have cause “to protect a party or person from annoyance, embarrassment, oppression or undue burden or expense”. The concern on this side of the pond would be that matters relevant to the downfall of Anglo which may cost the country up to €34bn according to the government’s “worst case scenario” will be kept secret. On the other hand David may simply wish to prevent the type of reporting in today’s Independent which claims that he spent USD $3.80 at Dunkin Donuts. The case is due to be dealt with again by the US Trustee in Bankruptcy, Kathleen P Dwyer in mid-February 2011.
UPDATE: 21st January, 2011. News from Massachusetts that David’s alleged main creditor, his former employer Anglo Irish Bank, is seeking additional sums on top of the €8.5m of loans made for the purposes of buying Anglo shares. Apparently the bank yesterday sought an extension to the time it is allowed to detail these additional sums allegedly due. Anglo, it seems, will be able to quiz David directly at a date, presently not set, between 14-28th February, 2011.
UPDATE: 25th January, 2011. It seems that David has successfully sought a confidentiality order from the US bankruptcy court which might prevent further juicy details emerging from the case though given the level of press interest this side of the pond, no doubt some details will emerge regardless.
UPDATE: 28th January, 2011. David’s wife, Lorraine may be set to join the drama as today’s Irish Times suggests that her lawyers have recently engaged in talks (presumably with US Trustee in Bankruptcy, Kathleen P Dwyer) about her giving evidence including documentary evidence in the case involving David. Any appearance or information provided is likely to be accompanied by an application for confidentiality to avoid pretty awful intrusion that has characterised the reporting of her husband’s finances.
UPDATE: 1st February, 2011. Well this is getting messy and the reporting of the case is becoming patchy –the Irish Times today reports that yesterday (Monday 31st January, 2011) Anglo which is David’s principal reported creditor sought an order compelling David’s attendance before Anglo’s lawyers tomorrow, 1st February, 2011. The Irish Times reports that Anglo may seek to bring an action in respect of David’s actions whilst CEO of the Anglo between Jan 2005 and Jan 2009. The Irish Times goes on to claim that the deadline for Anglo bringing such a claim is 14th, February 2011. The messiness appears to be Anglo’s understanding that the session between David and its lawyers would take place tomorrow whereas David has given them two later dates 11th and 14th February, 2011 and apparently Anglo has already flown its Irish lawyers to Boston. Messy. And the patchy reporting relates to the fact that previous reporting suggested that Anglo would only get to quiz David with its own lawyers after the US Trustee in Bankruptcy Kathleen P Dwyer had finished and a date was to be set by her between 14-28th February, 2011.
UPDATE: 2nd February, 2011. Well if they come to make David Drumm: the Musical, it will surely be themed to a Gilbert and Sullivan production style. Why? Because that was the style used by one of David’s lawyers Heather Zelevinsky in reply to Anglo’s lawyer Ken Leonetti informing him that David would not be available for a questioning- under-oath session with Anglo’s lawyers today. The Irish Independent reports the claim that on 25th January, 2011 a date was set for the questioning on 2nd February, 2011 but “within hours” David’s lawyers were reportedly claiming unavailability. Anglo it seems was not very happy and sought a declaration that David was in contempt of court. The court has apparently disagreed but a date of 7th February, 2011 has now been imposed/agreed by the parties under the auspices of the court. There is a suggestion that Anglo must file claims against David for any alleged wrongdoing at Anglo by 14th February, 2011 and the implication is that the questioning session is critical to the Anglo case. As far as I can make out David is running rings around Anglo so perhaps his character might get to sing “In short, in matters vegetable, animal, and mineral, I am the very model of a modern Major-General” in any musical production of this bankruptcy farce. In a separate article again by Shane Phelan in the Irish Independent, the farce continues with State-owned Anglo trying its damnedest to get hold of a report prepared by Ireland’s Chartered Accountants Regulatory Body (CARB) , specifically written by former Irish Comptroller and Auditor General, John Purcell. David of course is being subjected a disciplinary review by the CARB (see above) and apparently doesn’t want to disclose this report by one regulatory body operating in Ireland to the State-owned bank. Isn’t there some law in America about not being compelled to incriminate yourself? The farce continues.
UPDATE: 14th February, 2011. There seems to have been radio silence for the past two weeks, during which presumably David was quizzed by Anglo’s lawyers about events during his tenure at the helm of Anglo. Regardless David was back today before the independent trustee in bankruptcy and is reported to have disclosed his operating 20-25 banks accounts and his financial affairs being in a chaotic state whilst at Anglo. RTE is reporting that Anglo are now claiming €11m, up from €8.5m previously reported. Mind you, RTE are confusing creditors and debtors when they say “other debtors are also seeking their money”
UPDATE: 15th February, 2011. A major new development today with the news that Anglo has filed action against David in respect of alleged actions during his tenure at the helm of the bank. Though the details of the claims have not apparently been made public, it is believed that they relate to the alteration of loan documentation and the so-called “warehousing” (more properly bed-and-breakfasting) of then Anglo chairman Sean Fitzpatrick’s loans at year end. The alteration of loan documentation appears serious and this is what RTE had to say on the subject ““So it looks as though David Drumm will be dealing with this and the aftermath of all of this for quite a while to come. It won’t be linked to just the bankruptcy case that he’s going through at the moment. Absolutely that’s what they’re trying to do here, I believe, they’re trying to extend the terms of reference of the cases against him. In the papers that they have filed what they say is that not only was the documentation on these loans changed after the effect for a number of key investors, we believe they may be the Maple 10 investors who bought shares in Anglo and then got money from Anglo to buy those shares and then didn’t have to pay back the money because the loans were secured on the shares themselves, it was a kind of circular thing. Not only did he do that for other investors and for other people involved in the bank but he actually did it for jhimeself so that they are clearly pointing the finger at him for probably probably won’t be just a civil action, could well turn into something else and something more serious”. According to previous reports Anglo had until 14th February, 2011 to file these claims (not sure why that was the deadline, perhaps 2 years from his official termination date?). Also it is unclear what remedy is being sought by Anglo, financial presumably.
UPDATE: 16th February, 2011. It seems the time has arrived for Anglo to fling all it can at this case. The bank is apparently trying to get David’s pension pot (worth a reported €3.8m) included in any pool from which creditors can be paid. This would seem to be contrary to US law which generally allows the retention of pension and family home by a bankrupt. Further details of Anglo’s claim for alleged malfeasance by David are also reported by the Irish Independent, particularly the approval of a non-recourse loan to former Anglo Finance and Risk Director, Willie McAteer so that he could pay off a loan to rival bank, Bank of Ireland. Elsewhere the Irish Times reports that David’s fifth bankruptcy hearing which is likely to be the final one will be held on either 7th or 14th March, 20111.
UPDATE: 22nd February, 2o11. The Irish tax authorities, the Revenue Commissioners are reported to be pursuing David for the princely sum of €837 (USD $1,100). The debt reportedly relates to a penalty for not filing tax returns for 2009. An “official” from the Revenue Commissioners is quoted in the article. You would have to question the motives of this pursuit in light of the obvious relocation of David, though it is the case in Ireland that Revenue Commissioners periodically publish a name-and-shame list of tax defaulters.
UPDATE: 23rd February, 2011. The Irish Independent state that David Drumm has not filed any defence against the action by credit card company, Chase Bank, to recover some €10,500. It is unclear from the report what judgment David might face.
UPDATE: 24th February, 2011. RTE is reporting that there will be an unscheduled court hearing next week where Anglo is seeking to force the disclosure of details of the Irish Chartered Accountants Regulatory Body (CARB) investigation and disciplinary proceedings initiated against David and others in respect of activity at Anglo. David might accuse Anglo of fishing but it seems that Anglo may be preparing to oppose any discharge from bankruptcy. How will David respond to this intensification of activity against him by his former employer?
UPDATE: 25th February, 2011. The Irish Times claims that documents filed as part of the bankruptcy proceedings in Boston show David’s tax payments from 2002 onwards and of particular note is that he seems to have paid some €30k tax on €10.7m earnings whilst at the helm of Anglo. Here’s the detail extracted from the IT article. EDIT: 25th February, 2011.The Irish Times has issued a correction as the figures reported by the newspaper this morning were “based on a misinterpretation of a Revenue document filed in a Boston court.” UPDATE: 4th March, 2011. The Irish Times has today issued an apology to David for both getting his tax payments wrong and also implying there was a change in treatment of his income for tax purposes when he became the Anglo CEO ” We accept that the conclusion in the article was not a valid interpretation of Revenue documentation from which the figures were gleaned and that Mr Drumm’s appointment to the board of the bank did not change his approach to paying tax nor was he involved in aggressive tax planning. The Irish Times apologises to Mr. Drumm for having published this information which was due to an erroneous interpretation of Revenue documentation.”
Elsewhere in the Irish Times, Colm Keena reports that Anglo is to object to David being discharged from bankruptcy and is pressing its demand for David to reveal the contents of the CARB investigation. There is speculation that any monetary claim by Anglo for David’s alleged breach of fiduciary duty would dwarf the €8.5m loan the bank is pursuing. UPDATE (2): 25th February, 2011. The Irish Times has printed a correction to its article this morning which it says was “based on a misinterpretation of a Revenue document filed in a Boston court”. The following is the table of income and tax paid which the IT excludes the effect of certain share options.
UPDATE: 3rd March, 2011. David Drumm’s slightly younder brother Ken Drumm (42) is dealing with his own debt problems in Ireland and in today’s Irish Independent, it is reported that Ken Drumm has filed court papers in a case where he is being pursued for €60,000 reportedly. It is not clear from the article is this represents money originally lended by Anglo, but the case took an odd turn with Ken claiming that an Anglo insider was feeding information to his brother, David even after David had resigned from Anglo. Full details of the leaking have not been given by Ken yet but the newspaper says “He did not name the officials who contacted him and his brother, but stated he intended to refer to their claims in defence of the CID [debt agency chasing the debt] lawsuit” I’m sure he’s not tacitly threatening Anglo that if they don’t call off the debt collectors he will name names! Ken does claim that his brother David was made aware of an alleged approach by a private detective agency to Anglo offering its debt collection services, some months after David had resigned from the bank. The detective agency Bluemoon Investigations is associated with the CID (Celtic Invoice Discounting) debt collector now chasing Ken. Elsewhere the Independent profiles Ken who is one of eight siblings and has a career in construction (the construction company mentioned, Okohaus Superstructures Limited, is reported to have gone into receivership after encountering trouble in 2008) and hospitality (it is claimed Ken was the franchise holder for the Judge Roy Bean pub on Nassau Street in Dublin.
UPDATE: 5th March, 2011. There was a significant court hearing yesterday at the Bankruptcy Court in Boston where the ongoing judge in David’s bankruptcy proceedings, Judge Frank Bailey, was called upon to rule on two matters. The first, reported in today’s Irish Independent, was the disclosure of documentation from the Irish Chartered Accountants Regulatory Body (CARB) investigation into alleged malfeasance by David during his time at Anglo – Anglo wants the documetation, David opposed the disclosure. The judge upheld Anglo’s request and ordered that the documentation be handed over. The second, covered by the Boston Herald, was the request by David to be reimbursed for his time giving “burdensome” depositions. “It’s a little much, your honor” the Boston Herald reports David’s lawyer, Heather Zelevinsky saying. The judge rejected the claim reportedly saying “He’s going to submit himself to examination under his own expense,”
UPDATE: 7th March, 2011. The local newspaper covering Chatham, MA where David used live in the famous house where he was doorstepped by RTE’s Charlie Bird, the Cape Cod Times carries an article on David’s case in the US Bankruptcy Court in Boston on Friday last. The journalist Sara Schmenkus has become an expert on our David and indeed it was she that was interviewed by Charlie Bird this time last year for background to David’s activities in Massachusetts. There’s nothing really new in the article compared to reporting in last Saturday’s Irish Independent referred to above but there is a recent picture of the famous house in Chatham which is on the market at USD $5.5m. When last seen in papers last year, there was a chain and “entrance sign” across the driveway. Now there’s a 10 ft high wooden fence obscuring parts of the house from public view.
UPDATE: 10th March, 2011. Well this is getting messy as Anglo is understood to about to be granted a further six weeks to consider whether or not to object to David’s bankruptcy. The bank is understood to be examining whether or not it has grounds to sue David for misconduct during his time at the helm of Anglo (Jan 2005-Dec 2008). The Independent reports that if Anglo is granted the extension, it will have until May 3rd to lodge any grounds for objecting to the bankruptcy. Elsewhere the Independent is running a competition which holds out a prize of a trip to Massachusetts to visit David’s former family home in Chatham (the one where Charlie Bird from RTE doorstepped him last year).
UPDATE: 23rd March, 2011. The Irish Independent is reporting some good news for David. Apparently a credit card company has reached an agreement with David whereby it will settle the amount owing on the credit card and drop an action which claimed that the card had been used fraudulently knowing that bankruptcy was imminent. Chase Bank had sued him for USD $14,300 but have agreed to settle the debt for USD $3,000. The Independent speculates this was because pursuing the debt and the accompany allegation of fraud through the courts would not have been economical.
UPDATE: 31st March, 2011. The Irish Times reports that David is to undergo an estimated four hour grilling today by Anglo’s lawyers with the prospect of the same tomorrow. The hearings will be held in private at the Boston offices of Kenneth Leonetti, an attorney for Anglo, and will be attended by Karyn Harty of the Dublin firm McCann FitzGerald, according to the Irish Times. It is understood that David will be questioned about alleged malfeasance on his part during his time at the helm of Anglo in 2005-2008. There is also reported to be a public hearing tomorrow at the offices of the Trustee in Bankruptcy. It seems that we are now nearing the crunch point at which creditors will need object to the bankruptcy or the bankruptcy proceeds as normal.
UPDATE: 2nd April, 2011. A big day in Boston yesterday as Anglo’s lawyers concluded their grilling of David. The Irish Times reports that David was asked about the transfer of money to his wife, Lorraine in September 2008, arrangements at Anglo regarding Sean Fitzpatrick’s loans and David’s current income from his consultancy Harborlight (formerly Delta) and its relationship with what appears to be its sole client, John McGrail owner of JM Realty Management and the Mayo group, reportedly a former client of Anglo’s. The two named Anglo attorneys giving David a difficult time yesterday were Kenneth Leonetti and John Hotchinson. In a second feature piece today, the Irish Times reports on what it claims was lavish spending by David, particularly in 2010 in the run-up to declaring bankruptcy; the Irish Independent carries the same story with similar detail. David seemed to have a “let them eat cake” moment yesterday when he explained why he sold a Range Rover in 2010, just one year after buying it and bought another “I wanted to get rid of it. It wasn’t a good car. There were issues with it. I just didn’t like it.” Elsewhere there is a legal piece on precedent being established in the David Drumm bankruptcy case, that US trustees in bankruptcy can seek jurisdiction over Irish assets. There will be more than a few watching the outcome of David’s case to see if US bankruptcy is a better personal option.
UPDATE: April 6th, 2011. The Irish media (here and here for examples) is reporting that the original application by David’s former Irish employer, Anglo has been adjourned generally in the Irish court system, firmly indicating that the US process is accepted to take precedence. No word from the final “341” hearing on Monday last but the Irish Examiner reports that the date by which any objections to the US bankruptcy must be filed has been moved back from March 18th, 2011 to May 3rd, 2011.
UPDATE: 12th May, 2011. The claims last year that there was an element of political interference in David’s affairs is confirmed with the report that Irish opposition party TD, Mattie McGrath of Fianna Fail has called for the extradition of David from the US to Ireland to face questions about Anglo. “”Mr Drumm has fled to the US, and seems determined to evade his responsibility to answer key questions about some of the practices he presided over at Anglo Irish Bank. The Government needs to use every legal means possible to ensure Mr Drumm is held accountable for his actions” the TD reportedly said. And in the Dail today, there was a commitment by one senior governing politician, Richard Bruton to raise the issue of seeking the cancellation of David’s visa with Ireland’s Tanaiste and Minister for Foreign Affairs, Eamon Gilmore. At issue is the fact that David holds an E-2 visa which is intended for people who will invest in US business which is curious considering David’s filing for bankruptcy. What seems to be exercising politicians now is the claim last week that David was amongst three former Anglo executives who are reportedly refusing to co-operate with ongoing investigations by the Gardai and Office of the Director of Corporate Enforcement. It also emerged last week for the first time that there was an investigation, presumably by the ODCE “whether the other four matters [effectively concealing various loans and an alleged share support scheme] involve breaches of the EC Transparency Regulations and the European Communities (Admission to Listing and Miscellaneous Provisions) Regulations 2007”. Indeed one of Ireland’s great institutions, the broadcaster Gay Bryne said today that he felt he had relied on statements by people like David Drumm to influence his own investment in Anglo shares and has suggested that these statements might be investigated under the EU’s transparency regulations. Elsewhere David’s celebrity (or notoriety) is demonstrated by the competition held in the Irish Independent where first prize included an all-expenses trip to see David’s former home in Chatham, the one where RTE’s Charlie Bird shouted through the letterbox (pictured here)
UPDATE: 18th May, 2011. RTE’s Prime Time current affairs programme last night carried reporting on David and fellow Wild Goose, Sean Dunne. It carried the breaking news that David has “just” received nearly €12,000 from the Irish tax authorities, the Revenue Commissioners which raised some eyebrows. However the only run-in with the Revenue that I can find is the €837 penalty reported above in February. There was also the breaking news that several Anglo shareholders (named as Jayne Mollard, Brian Doyle, Belinda Ennis, Michael J Curley and Anne Marie Kidney by the Irish Times) were litigating against David to recover monies lost when Anglo’s share price collapsed. And lastly the programme reported that David yesterday produced a “slew” of documents in his bankruptcy case in Massachusetts which detail transactions between him and his wife, Lorraine. And there were shots of David’s and Lorraine’s current homes, the first at 73 Old Colony Road in Wellesley Masachussets and the other in Abington, Dublin.
UPDATE: 21at May, 2011. The Irish Independent today reports that the US bankruptcy trustee, Kathleen P Dwyer has launched legal proceedings to force David’s wife, Lorraine to sell their home at 20 Abington, Malahide, north Dublin (pictured above). The house, thought to be worth about €2m, is currently registered jointly in the names of Lorraine and the bankruptcy trustee and the yesterday’s legal move comes after claims that Lorraine is not acceding to the bankruptcy trustee’s wish to dispose of the home.
UPDATE: 26th May, 2011. The Irish Independent reports that the sum at issue in the shareholder action (see above on ) is €500,000 and apparently comprises ” the value of the shares, and for interest that would have been paid if the money was kept in a savings account, and for costs”. The basis for the claim is the allegation that David fraudulently signed off on the accounts which gave a misleading view of the company’s financial standing. Though not claiming to be a legal expert in this area, I would have said the five shareholders have their shite as regards this action. There is sixth un-named shareholder apparently associated with the action and the Independent claims that if these shareholders are successful, it could open the floodgates of claims against the soon-to-be-bankrupt David.
UPDATE: 10th August, 2011. The Irish Independent reports that the normal bankruptcy proceedings are coming to an end with a so-called 341 hearing yesterday in Boston. There appear to be issues around David disclosing documents and it is possible the trustee in bankruptcy might seek documents which David reportedly has not handed over, and if that happens, there may be a continuation of the process with a trial in 2012 to get at the documents. Alternately the trustee may decide that all matters have been aired and impose a settlement. A decision is expected in the next 30 days.
UPDATE: 1st September, 2011. There’s been a flurry of activity in the last 24 hours with Anglo reportedly filing an application for a full bankruptcy trial claiming all sorts of malfeasance on David’s part. Nothing surprising about that except the timing which looks very much last minute. Of more substantial interest is the news report in the Cape Cod Times by Sarah Schemkus which claims that the US bankruptcy trustee has filed an application to force David to surrender his normally-protected USD $500k interest in the Chatham family home. Also of interest in the Cape Cod Times report is the claim that David’s visa runs out in November 2011. The Irish press is unsurprisingly well-primed on Anglo’s latest foray and details quotes from the application. The Irish Times says that Anglo has claimed David lied under oath to the bankruptcy court and accuses David of all sorts of wrong-doing during his tenure at the helm of Anglo. A second article in the Irish Times today details Anglo’s allegations of shenanigans though it should be stressed that there is no counterpoint with David’s position in any of this. A third article in the Irish Times details the challenge to David’s bankruptcy by the US bankrutcy trustee, Kathleen P Dwyer and there are allegations of David not being”fully candid” with the court and also “knowingly and fraudulently made numerous false oaths and accounts” In a fourth article in the Irish Times filed last night by journalist Anne Driscoll in Boston, there is detail of yesterday’s bankruptcy hearing and some detail of the exchanges and responses from David in particular. The Irish Independent has more derivative reporting on yesterday’s proceedings as well as extensive quotes from the Anglo application. There is also further reporting on the transfers of money from David to his wife Lorraine. All in all, yesterday doesn’t seem to have been a good day for David. Whilst the Anglo application might have been expected, even if it was left to the last minute, the reported submissions by the bankruptcy trustee might be significant and indeed some of the reported statements from Kathleen Dwyer might mean David ends up in hot water facing criminal charges. Meanwhile back home in Ireland, an Oireachtas committee hearing this morning was told that representations might have been made by Irish politicians in respect of David’s visa. Ireland’s finance minister said that the appropriate route to forcibly have David return to Ireland would be via Ireland’s Director of Public Prosecutions commencing extradition proceedings, though to be clear the finance minister did not say this was in prospect. RTE has some reporting on the Oireachtas hearing and the general dissatisfaction expressed by a number of politicians that David continues to live in the US and avoid questions here in Ireland.
UPDATE: 7th September, 2011. It is reported in the Irish Independent that the Irish police (Gardai) are shortly to present the results of their investigation into potential offences committed by David. The results will be presented to the Director of Public Prosecutions who will then decide if there is to be any criminal charge laid against David. If there is any criminal charge that will give rise to the possibility that an extradition request will be made to the US for the return of David to Ireland to face the charges in court. The tenor of the reporting in the Irish Independent is critical of David for not co-operating with the Garda inquiry and it is claimed that this lack of cooperation may frustrate the Garda inquiry and the laying of charges against Davod. That would all seem to be disingenuous; after all if David is concerned that he may face charges and he is innocent, why would he volunteer information which might considerably impose on his life for months if not years. In a separate article, the Irish Independent sets out three of the possible criminal charges that might be levelled against David and points out that none of these laws has been tested before in Irish courts.
UPDATE: 10th September, 2011. Not that David needed confirmation but in Dublin, current Anglo CEO Mike Aynsley is reported to have said that Anglo will pursue David even if the legal costs outweigh the legal gain. According to the Irish Times “Anglo will continue to pursue former chief executive David Drumm in the US bankruptcy courts over loans of €8.6 million, even if the legal costs outweigh the commercial gain, he said.” Mike’s position will raise a few eyebrows particularly after the comments reported on Thursday in the Irish Times again where it is reported “the bank will actively pursue its former chief executive David Drumm to get as much money as possible back for the taxpayer.” The Irish Independent reports a speech delivered by Mike on Thursday when he called on David to “to get a bit of back-bone and come back” to Ireland.
UPDATE: 13th September, 2011. Reporting in today’s Irish Independent suggests that matters have taken a distinct turn for the worst for David with news that the US bankruptcy trustee has applied to the bankruptcy court to have several transfers from David to his wife Lorraine reversed. There are apparently claims that the transfers were fraudulent. The Independent reports that the trustee wants (1) transfers to Lorraine reversed (2) properties owned by the Drumms sold including their homes in Wellesley, pictured above (3) the proceeds to be paid to Anglo (4) the trust established by the Drumms to be dismantled (5) to stop the proceeds from any sale of the properties – the infamous “Charlie Bird” propertyon Stage Neck Road has been on the market for some time – being distributed.
UPDATE: 14th September, 2011. Further reporting by the Irish Times on the fresh applications by the US bankruptcy trustee seem to confirm that matters are looking anything but rosy for David. It seems that the trustee is seeking transactions after the “Autumn of 2007” a full year before September 2008, when Anglo’s funding model was undermined after Lehmans and Anglo faced obliteration, are to be reversed – the “transactions” being transfers of cash and title in property from David to his wife Lorraine. For the first time that I have seen, the bankruptcy trustee is broadening her reach and has included the manager of what is being claimed to be a sham trust – Epiphany Nominee Trust – set up in the US, Anne Marie Greenberg, in the action – in another article in the Irish Times today Anne Marie is described as a “friend” of Lorraine’s and “an employee at the property broker Coldwell Banker in Sudbury, Massachusetts” . The famous USD $210,000 lent by Lorraine to David’s business is also claimed to be a sham transaction in that the money originally was earned by David. According to Simon Carswell’s article “in her complaint, Ms Dwyer claims that sums of €832,000 and $869,000 was transferred from Mr Drumm to joint accounts or Mrs Drumm’s sole accounts in 13 transactions between March 19th, 2008 and September 28th, 2009.” The upshot of all of this is that both Anglo and the independent bankruptcy trustee are objecting to the bankruptcy and a judge in Boston is now set to decide whether or not to approve David’s bankruptcy (as sought by David) or reject it (as sought by Anglo and the bankruptcy trustee). The Irish Times suggests a “lengthy trial” might be needed before the judge reaches his decision. It looks like this is not going to be a 12-month vanilla bankruptcy case!
UPDATE: 16th September, 2011. The application by the US bankruptcy trustee Kathleen P Dwyer is available at thestory.ie and looks pretty bad for David in that it alleges all sorts of shenanigans, fraudulent transfers, a sham trust, a fictitious loan. Of course court proceedings can be a lottery in any country and it will now fall to Judge Bailey to determine the applications but from this perspective it is not looking good for David whose visa is reportedly coming up for renewal in November; one of the allegations by the bankruptcy trustee is that the funds used to set up the business which earned David his visa came from his wife but in reality came from David’s wealth and earnings, so the allegation is of shenanigans which could have serious repercussions if pursued by the US immigration service. Yesterday the Anglo chairman Alan Dukes told a parliamentary committee in Dublin that he expected the judge to rule in the case in the “relatively near future”. It is speculated that if the US court denies David his bankruptcy, then proceedings in the Irish courts can be reactivated. Even if David’s bankruptcy fails or his visa is withdrawn, he still won’t have to return to Ireland – as a EU citizen he can travel elsewhere in the EU or apply for visas to other countries.
UPDATE: 17th October, 2011. According to a report in the Irish Times, David has been given an extension of time to respond to claims that he should not be discharged from his bankruptcy. He now has until 11th November, 2011 to respond, and also the newspaper reports that David has hired new lawyers, namely Francis Morrissey of Morrissey Wilson and Zafiropoulos, and David Mack of O’Connor Carnathan and Mack.
UPDATE: 18th October, 2011. The one question not answered in today’s reporting of the sale (finally!) of the Drumm property at 262 Stage Neck Road in Chatham, Massachusetts is who will benefit from the proceeds. The sale price for the house was USD 3.88m and the chattels were sold for an additional USD 150,000. David apparently claimed USD 500,000 from the proceeds on the basis that the property was his family home. Kathleen, the bankruptcy trustee, apparently disagreed and David didn’t reportedly challenge her position. The question that remains is whether or not Lorraine, David’s wife, will receive anything from the sale as the previously reported position was that she had a 50% claim on the property. The property has been on the market for over a year. The Drumms bought it for USD 4.6m in March 2008. The story is reported in Ireland by the Irish Times and Irish Independent. The buyer of the property is said to be a trust based in Boston by the name of Three Sisters Trust.
UPDATE: 5th November, 2011. According to the Irish Independent, David has apparently withdrawn any claim to the proceeds from the sale of the Stage Neck Road property which was recently sold for USD $3.88m. The Irish Independent reports that David formalised his withdrawal shortly before the matter was to be dealt with by Judge Bailey. It is not clear if Lorraine has any claim on the sale.
UPDATE: 3rd December 2011. It is reported by RTE that the US bankruptcy trustee Kathleen Dwyer has agreed “with all the parties” that the Drumm’s former house , 20 Abington, in Malahide, north Dublin (pictured above) is to be put on the market. It was originally bought by David in 2003 and is said to have been valued at the peak at €2m, which might mean it is worth €1m-odd today if it has followed the Dublin general decline in house prices. It is not known if Lorraine will benefit in any way from the sale. It is understood the house is owned jointly by Lorraine and David.
UPDATE: 5th January, 2012. Emmet Oliver in the Irish Independent reports that the 12th January 2012 has been set for the hearing of the Kathleen Dwyer application to stop David being discharged from bankruptcy. It is also reported that David is seeking disclosure of information from Anglo (or IBRC as it is now known, now that Anglo has merged with Irish Nationwide Building Society) so as to defend himself against Anglo’s attempts to prevent him being discharged.
UPDATE: 12th January, 2012. Although there was a hearing in Boston today, it is reported to have focussed on David’s application to stop the bankruptcy trustee, Kathleen P Dwyer from opposing his bankruptcy on the basis that she filed her objection 51 minutes after David’s lawyers claim was the deadline for such filings, way back in August 2011. The judge dismissed David’s objections and ruled that Kathleen was entitled to lodge her objections at any time on the relevant day.
UPDATE: 13th January, 2012. The Irish media has extensive reporting on the hearing in Boston yesterday where David failed in his bid to stop the bankruptcy trustee in proceeding in her bid to have David’s bankruptcy overturned. However it the Cape Cod Times which has perhaps the most amusing story of the day when it reports how David’s lawyer, Francis Morrissey tried to advanced his client’s case. It was claimed that allowing Dwyer’s allegedly late filing of submissions would mean David’s position was prejudiced in having to defend himself against two actions – one by Anglo (or IBRC as it is now known) and another by Dwyer. When Anglo’s lawyer sought to address the court, David’s lawyer piped in – “”Here’s an example of prejudice,” he said, gesturing at Leonetti. “Two lawyers against one. Exhibit A.””
UPDATE: 14th February, 2012. Well this can’t be going the way David expected – a judge in Boston has ordered a hearing in January 2013 – one year hence – to decide whether or not to discharge David from bankruptcy. Both Anglo and the US bankruptcy trustee oppose the discharge and level all sorts of allegations at David. Simon Carswell in today’s Irish Times has a good schedule of actions between now and next January which includes a requirement to attempt a settlement in November 2012.
UPDATE: 7th May, 2012. The Cape Cod Times on 20th April, 2012 reported that Lorraine Drumm has reached an agreement with the US bankruptcy trustee Kathleen Dwyer whereby she, Lorraine, will hand over USD 1.2m (€0.9m) from the proceeds of the sale of the former family home on Stage Neck Road in Chatham, which means that she will be unrestricted in her claim on her share of proceeds from the sale of the two remaining Drumm properties in Abington, Malahide – on the market for €1.6m – and the former family home in Wellesley – worth about USD 2m. It is unclear if there is any mortgage extant on either property.