Bank didn’t approve €2.7m loan to Michael Lynn, court hears

Loan over €2.7m would not have been approved by Bank of Ireland if it had knowledge of false or misleading documents submitted when applying, multimillion-euro theft trial heard of former attorney Michael Lynn.

Mr Lynn (53) faces 21 charges relating to the alleged theft of around €27 million from seven financial institutions, the trial heard. He denies all the charges against him.

The financial institutions concerned are Bank of Ireland Mortgages Bank Ltd, Danske Bank, Irish Life and Permanent, Ulster Bank, ACC Bank PLC, Bank of Scotland Ireland Ltd and Irish Nationwide Building Society.

Mr Lynn of Millbrook Court, Red Cross, Co Wicklow, pleaded not guilty to 21 counts of theft 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.

Testifying on Tuesday, Arthur King told Patrick McGrath SC, prosecuting, that before his retirement he worked for a subsidiary of Bank of Ireland and that in 2010 he produced copies of Bank of Ireland Mortgages records to gardaí.

Mr King said court documents showed Mr Lynn wrote to the bank in September 2006 asking for mortgages for the purchase of eight properties in Co Dublin with a demand for 85% of their value, i.e. €2,742,000.

He identified a document as a loan offer sent by the bank to Mr. Lynn to sign and return, thereby accepting the terms contained in the loan offer.

Mortgage payments

Mr King said that in December 2006 a check for €2,742,000 was issued to Mr Lynn. He said mortgage payments were made monthly to the bank throughout 2007, but payments stopped after a final payment in September 2007.

He said following the non-payments inquiries were made which established that a number of other mortgages had been taken out on the properties by Mr Lynn from other financial institutions. He said Mr Lynn was never registered as the owner of the properties.

Mr King said two conditions in the loan offer which had not been met were that firstly there was no legal charge on any of the eight properties, and secondly that Mr Lynn was not registered as owner of the properties as he had undertaken.

He said this was a direct breach of the covenant to the bank that Mr Lynn had signed in that document and therefore he was unable to meet the terms of the loan. He said that as a result of this failure, the bank was exposed to a loss of a significant portion of the outstanding amount.

Mr King said that if the bank had been aware of false or misleading documents submitted during the application and that a covenant was not going to be honoured, the loan would not have been approved and the check would not have been issued.

Testifying earlier in the trial, John Kinsella told Mr McGrath that he was a partner at accounting firm Kinsella Mitchell & Associates, a firm that became an independent auditor for a company owned by Mr Lynn and became an accountant for his legal practice.

State of play

It is alleged by the prosecution that Mr Lynn provided inventory documents purporting to be from an accounting firm, but which also did not and did not present a complete picture of his financial situation.

Mr. Kinsella testified at trial that two documents, purporting to be business statements for Mr. Lynn and signed by his company, did not in fact bear the company’s signature and were not documents produced by his company.

Giving evidence earlier on Tuesday, Mr Kinsella said a document purporting to be an inventory, which was submitted when applying for a mortgage at ACC Bank for the purchase of a property in Howth, Co Dublin , was not a document prepared by its solidifier.

Mr. Kinsella said the signature and stamp that appeared on the document was not his company’s signature and stamp. He said the last condition report his company provided to Mr. Lynn was from July 2006 and that document was dated September 2006.

“very different portfolios of documents”.

Mr. Kinsella agreed that he had already confirmed that the other alleged condition report was not a document produced by his company.

The trial continues Wednesday, before Judge Martin Nolan and a jury.

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