4 Custom House Capital executives jailed over €61m conspiracy to defraud investors

political analyst

https://www.rte.ie/news/2023/0512/1383276-custom-house-capital/

What makes Customs House Capital (CHC) similar to Anglo Irish Bank is that senior personnel in both financial organisations committed serious offences to preserve the existence of those organisations.

If those people had not broken the law then, obviously, the organisations' predicament would have become obvious much earlier but at least those people would not have been imprisoned. Furthermore, they might have still received good pensions.

So what drove them to break the law? Was it just greed - or was it also macho pride? For example, according to Nicola Anderson in the Indo (Saturday 13 May), the judge said that CHC non-exec director John Mullholland, who was jailed for 12 months for being neglectful in the discharge of his duty, had told an accountant that she "wasn't experienced enough to realise that commercial reality often has to take precedence over integrity".

Overheal

Am I the only one having trouble following the writeup from RTE.

political analyst

https://www.boards.ie/discussion/comment/120604477#Comment_120604477

Generally, my question is about the mentality of people who committed fraud in the Anglo and CHC cases. Why do you find it difficult to follow the RTÉ article?

Allinall

Without exception, they all think they will get away with it.

Overheal

https://www.boards.ie/discussion/comment/120604492#Comment_120604492

Because it's all over the place, and offers scant details on what actually happened.

Compare to a writeup from say, the Washington Post, I'll gift the article link so you can see how I mean: https://wapo.st/3BwtgGT

For example the quote you have given in the OP, that's not there, none of the details about what actually happened, just what the outcome was and generalized terms from the judge:

The judge said he stayed and participated in the conspiracy in the full knowledge of what was going on.

She said Lavery, the company's former head of finance, carried out directions he knew were wrong.

Although he had described being dominated by Cassidy, he was an adult and could have left the judge said. She sentenced him to three years in jail.

Mulholland who pleaded guilty before the other defendants, was jailed for 12 months for the neglect of his duties.

But the judge said Mulholland was aware by late 2008 that matters were awry in the company and did nothing to stop these acts from occurring.

To have the conversation you want to have, about their mens rea etc., that's about as threadbare as you can get. I have no idea who did what, who pressured who, what X's role in the conspiracy was compared to Y's etc. Just vague 'ye were adults and should have had cop on'

I know a lot more about that german heist Wapo wrote up by comparison just from the first skim of it than I do reading this RTE piece twice for this criminal conspiracy. I don't possibly know what they were thinking because we barely know what they did, or what kind of property they bought, or what the majority of the victim impacts were. We don't even know the substance of the false statements they were given about where their money supposedly was at. And a criminal overuse of the phrases "he said" and "she said" vs. 'officials said' 'the judge said' etc. even while breaking lines into paragraphs, makes it a fright pain to read. NO LESS THAN 15X in the article do they type "s/he said", the article is broken into THIRTY NINE PARAGRAPHS (**** lunacy), TWELVE of them open with "s/he said"

Beasty

Thread title updated to reflect the crime committed

ArmaniJeanss

https://www.boards.ie/discussion/comment/120604477#Comment_120604477

I tend to agree - I read it on the phone the other day and was utterly confused and kept having to go back up to see who s/he was at any time, and at the end wasn't really sure of what they had been convicted of. It needed less paragraphs, and a couple of bolded paragraph headings like 'crime details', 'guilty pleas', 'sentencing', 'victim reaction'.

This is a better article. Four Custom House Capital executives jailed for roles in defrauding investors (breakingnews.ie)

Overheal

https://www.boards.ie/discussion/comment/120604658#Comment_120604658

much better writeup, thank you so much.

Judge Crowe noted the four defendants had all entered guilty pleas, had no previous convictions and had “until now unblemished characters”. She said the guilty pleas were of value as they avoided the need for a long and complex trial.

This is surely the root of why there's little in the reporting or information in the case publicly disclosed about prosecutorial evidence eg. emails, texts etc. of them conspiring and such, getting into the minds of the accused, etc. because they pleaded out in exchange for lighter sentencing. I doubt the public docs give more details eg. the indictment, or the press probably would have regurgitated it.

ArmaniJeanss

https://www.boards.ie/discussion/comment/120604729#Comment_120604729

"The court previously heard that CHC entered agreements to buy properties in mainland Europe at the time of financial crash. In 2008, CHC began to use client funds to meet these obligations, often without the knowledge or authorisation of clients. It was the prosecution's case that transactions on CHC's systems were backed out of property before valuations were issued to clients. These valuations were misleading and did not show clients the true location of their funds."

This part seems to be the actual crime. It reads like people were shown valuations (statements) which showed their money was safely and continuously in some moderate yield investment vehicle, whereas in reality it was used in high-risk property funds, so the statements were either falsified or the money was just being moved back on the day of the statement (I think its the latter).

ohnonotgmail

https://www.boards.ie/discussion/comment/120604771#Comment_120604771

I'd say the statements being falsified is more likely. I'm not sure it was property funds the money was invested in but property itself.

political analyst

https://www.boards.ie/discussion/comment/120604539#Comment_120604539

If you read the OP carefully, you'd know that I stated that I was quoting an article in the Indo.

ohnonotgmail

https://www.boards.ie/discussion/comment/120604969#Comment_120604969

Perhaps you should have linked to it rather than the useless article you did link to.

keeponhurling

https://www.boards.ie/discussion/comment/120604527#Comment_120604527

Definitely this.

Normally you get away with it and get rich.

This guy only gets a sentence of 12 months (?), not much of a deterrent.

political analyst

https://www.boards.ie/discussion/comment/120605426#Comment_120605426

The Indo article is behind a paywall. I simply linked the RTÉ article as a point of reference for basic info. You only had to google Custom House Capital to find-out the rest.

political analyst

https://www.boards.ie/discussion/comment/120606748#Comment_120606748

He was jailed for negligent discharge of duty as a director, not fraud.

aero2k

https://www.boards.ie/discussion/comment/120604823#Comment_120604823

If I understand it correctly (difficult as there were approx 3,000 accounts owned by approx 2000 investors), money was taken from accounts that were held in cash, bonds, stocks etc to meet obligations for payments on multi million euro property purchases, and false statements were issued. The computer system they used was adapted so affected accounts would have a pop-up flag indicating that Cassidy or a colleague must be notified before issuing a statement. This was so the situation could be made look good to prevent awkward questions. They would actually calculate what interest a client would have earned had their funds been where they should have been, and issue a statement to reflect that false reality.

There is another scandal in this that was only mentioned in passing at the sentencing hearing. The Financial Regulator was notified about the compliance issues (i.e. misappropriation of client funds) in 2008, but the appointment of an inspector and subsequent collapse of CHC didn't happen until 2011. I'm open to correction but I believe the due diligence exercise by a prospective purchaser, Appian, was more of a driver for exposing the problems than anything done by the authorities.

ohnonotgmail

https://www.boards.ie/discussion/comment/120622910#Comment_120622910

Appreciate the explanation. That makes more sense. The inaction of regulators is of no surprise.