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Updated, 22 May 8am
A TRIAL STARRING former Anglo Irish Bank CEO David Drumm got underway in Massachusetts yesterday
As the proceedings head into day two, TheJournal.ie has put together an explainer about what that means for the banker-turned-consultant.
Why is Drumm in America?
Drumm left Ireland after stepping down as chief executive of Anglo Irish Bank in December 2008. He headed for Boston in the US, where he has been since.
He has resisted all requests from gardaí to return for questioning as part of the investigation into practices at the financial institution and has continued to work as a consultant to a number of firms on the east coast.
He filed for bankruptcy in 2010.
What is Drumm in court for?
This is the bankruptcy case. It is not a criminal case about fraud.
The 47-year-old wants to walk away from €10.5 million in debts and America’s bankruptcy regime is much more friendly than Ireland’s – or the UK’s.
Out of that €10.5 million, about €8.5 million is owed to the Irish Bank Resolution Company (formerly Anglo Irish Bank and Irish Nationwide Building Society).
Who can stop the bankruptcy discharge?
Both the court-appointed trustee in the case and IBRC have challenged his entitlement to bankruptcy.
They both claim that Drumm has committed a number of allegedly fraudulent activities.
The trial will be heard to allow the judge to decide whether he agrees with the challenge.
What is this about fraud allegations?
IBRC and the trustee – Kathleen Dywer – handed a list to the judge on Monday, itemising the number of “acts of fraud, misrepresentations, concealments, transfers or other predicate acts” they say they can prove over the next five days.
The list includes a number of ‘secret’ transfers to Lorraine Drumm, the defendant’s wife, between 2008 and 2010.
The plaintiffs say the transfers amount to him trying to conceal assets, and thus defrauding his creditors.
They also accuse him of making false statements as these monies should have been declared under US bankruptcy rules.
In another pre-trial brief, they said:
Drumm has played fast and loose with the bankruptcy process, his dealings with IBRC and the trustee, his disclosure obligations and, most notably, the truth.
Did we know about this before?
Reporting in the Irish Times last week, Simon Carswell mentioned details of emails between Drumm and his Boston bankruptcy lawyer which described transfers to his wife Lorraine as ‘landmines’.
The lawyer, Stewart Grossman, said he had concerns over the payments, which were made in money, property and vehicles over two years.
According to Carswell’s report, more than €830,000 was transferred to Lorraine Drumm between September and December 2008 alone.
Will Drumm have to take the stand?
Yes. It is expected he will be the first witness called at 9.30am (Boston time) today.
What will he say?
Drumm argues that the errors made in his bankruptcy filing were unintentional, honest mistakes. He is expected to outline how the banking crisis put a strain on his health and his marriage.
Lorraine Drumm’s first ever bank accounts (since marrying in 1991) were opened during this period to ensure she was provided for, he will tell the court.
There were 15 accounts opened in her name across eight different banks. Each were created in her sole name because she insisted that she should be able to provide for herself and her children if anything happened to her husband.
When will we get a verdict?
Judge Frank Bailey will decide whether Drumm should be given a fresh financial start under the US Chapter 7 bankruptcy laws.
We will not have a verdict until later this summer. When the trial ends next week, boths sides have 30 days to make submissions to the court on what they feel has been the outcome of the proceedings.
What happens if he is successful in his bankruptcy case?
Chapter 7 does not involve the filing of a plan of repayment. According to the federal government:
One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a ‘fresh start’.
If Drumm is successful, his creditors cannot initiate or continue any legal or other action against him to collect a debt.
And what if the bankruptcy is not discharged?
He can still be pursued for the €10.5 million. He may also face penalties if he is found to have defrauded his creditors, as the IBRC as claimed.
Can he go to jail?
The case is a civil case but bankruptcy fraud is taken seriously in the US.
It can be punished with either civil or criminal penalties.
The trustee can ask the court to impose a civil penalty if the allegations of fraud are proven. These penalties do not involve potential jail sentences or other criminal penalties.
It could mean he forfeits certain exemptions of the bankruptcy discharge – or the bankruptcy discharge in its entirety.
In bankruptcy cases, some property will be exempt, meaning the defendant gets to keep it no matter how much is owed.
However, if bankruptcy fraud is committed the court may choose to deny those exemptions and let creditors take the property that would otherwise have been protected.
If the fraud is serious enough, the trustee might refer the case to federal prosecutors. They can then investigate the claim and may file a criminal case against the debtor. Criminal penalties are more serious, involving jail, fines, and other penalties.
Can he get extradited back to Ireland over the Anglo collapse?
Earlier this year, the Irish Independent reported that gardaí were ready to file extradition papers for Drumm but were waiting for the DPP to decide on what charges to bring against the man described as the ‘author’ of the Maple 10 loan scheme.
A file from the Garda Bureau of Fraud Investigation has been with the DPP since 2011.
There is a major snag though. The US will only agree to extradition if the charges brought in Ireland are also seen as offences under American law.
What has happened so far?
Yesterday saw Drumm give evidence that the “buck stopped with him” when it came to giving information about his financial affairs to a US bankruptcy court, RTÉ reported.
The 47-year-old described how while he was filling out initial bankruptcy application forms, he forgot to include a cash transfer to his wife.
The court was also told that his case was “not run of the mill”.
Lawyers for the court-appointed trustee and the IBRC said that if there was ever a debtor who had made a mockery of the bankruptcy process, it was Drumm.
He, himself, admitted to forgetfulness and to lying about some transactions.
What’s going to happen today?
Drumm will be questioned again by IBRC lawyer John Hutchinson – and then by his own lawyers.
They will then put forward why they believe he is entitled to bankruptcy.
A total of eight witnesses will be called in the next four days of the hearing. The list includes Drumm’s wife Lorraine.
This article was first published on 21 May, 10am
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OMG! I feel my marriage is strained ! Can my devoted loving husband lodge €1m into my account? Then I can spread it over numerous accounts in numerous banks ???!!! Do these people think they’re credible! Hope the American courts see through this rot.
If he didn’t pay his TV license he’d be in jail already .but owe the state e10.5 million ,you can flee to America and not come back .transfer said funds to numerous accounts in your wife’s name and forget you did.say this in a court of law and by the looks of it hel get away with it .i should have become a banker :(
Money! I don’t know what it is like to have money any anymore. I’m struggling to keep the €100 I’m trying to keep aside for the next emergency but with little success.
I hope he gets taken for everything. Absolutely everything.
Yes. If cosmic justice were to be served up by US courts, he would emerge from the court not only assetless, but metamorphosed into an edible bug, to be immediately preyed mercilessly upon by a passing bluebird. Don’t want to get my hopes up again though. In truth, it’d be quite the outcome.
A complex case, maybe but what is Irish DPP doing with a gardai file since 2011….????
The yanks are doing what we should of done..
He has beggared this country. But if he were to be extradited from the US and face the Irish courts he would walk…just like Seanie Fitzpatrick and his buddies…meanwhile medical cards are being taken from terminally ill children….need I say more?
Medical cards are being taken for very different reasons. 1.4 million of them is a joke. Yes sick children should not be loosing them. Remove them as an automatic social benefit. Or make a payment amd maybe truly deserving will be looked after.
Remove them? Did you see the threshold of income to qualify? Removing them form these people would drive them to absolute poverty.
I hate reading about this shameless dog, if there is such a thing as Karma this fcuker needs a truck load.
Is there anybody else who thinks we should skip these trials and concern ourselves more with justice?
By that, I mean skip the smokescreen stuff in the USA and return to Ireland where properly pressed fraud charges would result in Drumm actually being held to account for his behaviour. It seems incredible when you read the charges that they arise in the context of a bankruptcy case in USA and not a fraud one in Ireland?
U actually believe that man would be held to account in Ireland…….come off it!!!!!!!
Why can’t David Drumm be arrested and sent back to Ireland to face trial?
In order to extradite him, the crime needs to be illegal in both Ireland and the states. There’s slight difference between Irish law and American laws so there’s a bit of a grey area.
They need to get it right first time because you can’t sue a person for anything other than the crime for which they were extradited.
Strip him and his wife of their Irish citizenship and stop them entering Ireland forever!!!
he has no intention of comming back anytime soon
You can only take citizenship from people who have be naturalised
Yep hope the Yankee Courts are not duped by these goons…seeking to have the Irish tax payer pony up for their activities.
While they remain in the Golden circle.
The scenario is remarkably similiar all these cases …lies / transfer of funds /obfuscation / transfers to wife and children/ entitlement to family home / closing of family ranks / screwing the unfortunate taxpayer……(hats the one outside the perimeter of their gated mansions.)
Hmm ?
The yanks won’t touch him..in the land of opportunity..you practically get a pat on the back if you don’t owe too much…if you owe 10′s of billions…it’s a okay
Sorry I tried to say you’re fked …..shit site wouldn’t allow me to say it.second time around blanked out expletives..hopefully despite the presence of all the multinational companies operating in Ireland they haven’t banned the word sh&tehawk..oh god they did so I’m going to have to go back to my previous words and edit…please try to fill in the blanks ..but they’ve won because when you read this unless you worked on the enigma code…it’s broadsword killing dannyboy
he forgot he gave his Mrs 1.2 jail this cretin
If the Irish State can get Conrad Gallagher extradited from the US for a few paintings he actually owned then what’s going on here? I’d love to know who Conrad p***ed off to get that VIP treatment.
My house is going up in value.
Another 40% increase will see it worth what I Paid for it 10 years ago.
Can we brag him back to here by the scruff of the neck and a trial held by the public to pass judgment ???
Whats the point of bringing him back here? A jury would find him guilty of course but any Irish judge would let him walk no matter what a jury might decide. Its the system stupid. Its how things work in this corrupt country. Once you are one of the golden circle you walk. Others do time for picking their nose. Now of course if judges had to be elected then maybe justice might be done.
This article is posted EIGHT HOURS after the trial started in Boston!!! What about reporting on the actual trial?
Hi Ronan,
The article was published at 10am (Irish time) yesterday – well before the trial began.
It was updated last night – with information from the trial (you’ll need to read to the bottom).
And updated again this morning as a preview for Day 2.
Thanks
Sinead
If ireland cancel his passport can he remain in the states ?
I bet he didn’t bother paying for the vehicles either. That’s the kind of people they are
At least the us judge is not a supporter of FG, FF, etc ……… I hope he gets a fair trail. Rather I hope I hope it’s fair and he gets stung for lying
So he left Ireland in 2008 for the USA if he applied for a new passport around the time he left, That would mean he has about 4.5 years left on his passport simple thing for the government to do is not issue a new one.
This case kind of sums up the whole immorality of banks and bankers in our society. Because he has money and contacts, Drumm can afford to move to the US, employ the best lawyers, and (potentially) walk away from around €10 million in debts. However, an entirely different process awaits individuals who have much smaller debts and have to stay in Ireland. As BOI CEO Richie Boucher so elegantly put it, even if someone has handed back the keys of their house, the bank will hound them to the end of their days to extract whatever revenue they can. Not so of course with his colleague banker, Drumm. He will be free to start anew – well not entirely anew since he will have the assets he transferred to his wife to ensure that he was a wealth pile to relaunch his corrupt career – in the land of hope and glory.
have your say