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The interesting bits you need to read from the David Drumm ruling

Harsh words.

LAST NIGHT, A judge in America disallowed David Drumm’s bankruptcy bid.

Throughout his ruling, Judge Frank Bailey explained why he upheld 30 of the 52 objections to the application by IBRC and Drumm’s court-appointed trustee.

The judge said he found Drumm “not remotely credible” and other such damning statements were speckled through the 122 page document.

Drumm had filed the application in an attempt to walk away from €10.5 million debt he owes to IBRC (formerly Anglo Irish Bank and Irish Nationwide) and others. Those creditors can now pursue him.

Here are some of the most interesting things the judge had to say:

The key findings:

Finding Drumm not remotely credible and his conduct both knowing and fraudulent, I conclude that the plaintiffs [IBRC and the court-appointed trustee] have established cause to deny him a discharge many times over.
Drumm’s statements to this Court were replete with knowingly false statements, failures to disclose, efforts to misdirect, and outright lies.

A succinct description of the Irish banking collapse:

The fall of 2008 was a very difficult time in Anglo Irish Bank’s history and led in just months to the bank’s demise. During September 2008, in Drumm’s own words, the world was “falling apart”, and the second half of September was “Armageddon”. Lehman Brothers had recently gone bankrupt. AIB [Anglo] under Drumm’s stewardship, faced enormous pressures, a plummeting share price, the prospect of government intervention, and potential loss of its independence. As Drumm testified, it was an “economically bad time in Ireland”; “the markets were in turmoil”; “the share price of Anglo Irish Bank had collapsed”. On 19 December 2008, Drumm resigned his position at Anglo. On 21 January 2009, Anglo was nationalised under the Anglo Irish Bank Corporation Act 2009; the Act vested all shares of Anglo’s stock – which had in any event become all but worthless – in Ireland’s Minister for Finance and re-registered Anglo as a private limited company. Anglo Irish Bank was defunct.

And the effect it had on the Drumm family home:

Anglo’s collapse dramatically affected the Drumms in several ways. Until his resignation, Drumm was under great stress at work. Mrs Drumm said “he was working all the hours god sent him” and was never at home. She feared he might drop dead of a heart attack “because that’s what he looked like most days”. The stress and long hours put a strain on their marriage; she conceded, however that his long hours, and the strain they placed on their marriage, were not new but were constant over the two preceding years. For his role at Anglo, Drumm became the focus of considerable and inescapable media attention, not favourable.
Anglo’s collapse also affected the family financially. Drumm’s resignation terminated his substantial salary. His prospects for future employment in Ireland had considerably dimmed. The Drumms had real estate holdings but the recession had undermined real estate values. Much of the Drumms’ net worth had been in Anglo stock, which had secured Drumm’s debts to Anglo and now was worthless and, in any event, had been nationalised. He owed a ruinous sum – in excess of $11 million – to Anglo, which surely would demand payment and likely commence legal proceedings against him.

The five ways the Drumms responded:

According to the judge’s summary….

  1. From September 2008, Drumm began to transfer assets to his wife, Lorraine.
  2. They moved to the US in June 2009.
  3. In January 2010, they purchased a home in Boston using a “substantial portion of their now-liquidated holdings”.
  4. In August 2010, Drumm tried but failed to negotiate a deal with the IBRC to avoid litigation.
  5. On 14 October 2010, Drumm filed for bankruptcy.

Did the judge believe Lorraine Drumm when she appeared as a witness?

The backstory from the judge: “Drumm maintains that he made these [the 2008] transfers, and others in 2009, because Mrs Drumm implored him to do so. And she insists that she did so not out of concern about his creditors but because she could envision a future without him – their marriage was severely strained, and the stress on him made her fear for his health – in which she would need to provide for herself and her children. She therefore asked him to transfer some money – “like a million euro,” she told him – into her name, so that she could control it herself.

I do not doubt that Mrs Drumm asked her husband to transfer money to her sole name, or that she was motivated by the concerns she mentioned. I do not believe she was motivated by a need for protection from possible alienation from Drumm any more than she was motivated by a fear of Drumm’s creditors. Indeed, I do believe that each of them was motivated first and foremost by desire to shelter their assets from seizure by Drumm’s creditors, especially Anglo.

“Their salutary concern to protect Mrs Drumm and their children gave rise to action because creditors would soon be seizing family assets; concerns about creditors and solvency certainly account for the timing of these transfers. Concern for family does not negate concern about creditors and desire to thwart them. Amongst the insolvent, these often go hand in hand.”

Did the judge believe the transfers were loans between Lorraine and Drumm?

I have found the plaintiffs have carried their burden of proving that the “loan” of $250,000 is a fiction, an accounting treatment after the fact. There was never an inter-spousal loan or payment on any such loan, just outright transfers between the spouses. And even if the Drumms did in fact agree to a $250,000 loan before these funds were transferred to Drumm, the nature of their agreement – with no obligation to repay at any time and no accounting for advances and payments – shows it not to have been a true loan at all, just a transfer with a false label.

On Drumm’s reasons for ‘forgetting things’ on his bankruptcy forms:

The overall sense is a man casting about for any plausible answer but the truth. The variety and inconsistency of his diverse answers, and the lack of conviction with which he delivered each, undercut whatever credibility any one might have enjoyed had it stood alone.
I conclude that Drumm was not surprised on 1 April to learn that his omissions from SOFA 10 had been in error. The expressions of surprise that he memorialised in an email and a phone call were not genuine but affected, for show, when Drumm realised that he would have to explain his omissions.
Drumm is intelligent, very sophisticated in the kinds of accounting and financial issues he was addressing…, meticulous, involved in the details of his bankruptcy filing, controlling, not one who would simply turn these matters over to counsel to handle for him. Over a period of two years, while insolvent and facing legal action on $11 million debt owed to IBRC, he had carefully transferred considerable value in case and real estate to Mrs Drumm, to keep it from IBRC.
He is not credible or truthful and has made misrepresentations at every stage of these proceedings.

And the car sales?

At a 7 December meeting with creditors, Drumm was asked whether he had vehicles in Ireland.

He said he had two and that “we” sold both. He referred to the BMW, of which he had been the sole owner, as his wife’s car. He disclosed that he had received €20,000 for it but not to whom it had been transferred or when. He’d disclosed that he’d sold the Range Rover for €35,000 in or around June 2009 but didn’t identify the transferee or mention that she was his sister.
Given Drumm’s general lack of credibility, his failure to disclose numerous other transfers to his wife, and the fact that one of the purchasers was an insider, the preponderance of the evidence does not support Drumm’s position. I find that he acted knowingly and fraudulently  in omitting the automobile sales and the disposition of their proceeds.
The omission of the BMW served, and was intended, to keep a transfer to this sister from disclosure to other creditors, the court and the public. I find that Drumm omitted the transfer of the BMW with intent to conceal and mislead.

Drumm said he cooperated with his trustee. Did the judge agree?

Drumm’s cooperation… was limited, delayed and shaped to his purposes. I find that Drumm’s record of cooperation, such as it is, only reinforces the conclusion that his omissions were knowing, deliberate, and intended to hinder, delay, and defraud the trustee and IBRC.

Has Drumm now disclosed everything about his finances?

The judge said he could make no such finding.

On what basis can the court believe that the full extent of Drumm’s assets and transfers has now been disclosed? Certainly not on his word for it, which is all I have, and therefore I can make no such finding. In short, Drumm has not earned the benefit of the doubt.

IBRC argued that Drumm used a ‘so stupid’ defense. What did the judge make of that?

I need not attribute Drumm’s conduct to stupidity; indeed it may well have been the product of cleverness. Perhaps Drumm was emboldened by a sense that he could invoke the “so stupid” defense against the consequence of his actions, the plausibility of the defense being directly proportional to the scope and brazenness of the offence.
Drumm is a quick thinker, adept in testimony intended to deflect, misdirect, avoid, fabricate. His accounting and knowledge of his financial affairs is detailed, precise, almost obsessive. He is confident in his strategising; and by the time he filed his bankruptcy petition, he had been planning and strategising for two years. No bumbler, and clearly a controlling type, he knew what he was doing. He was highly motivated to protect the Wellesley property. He withheld information and controlled its release for some perceived strategic advantage. That he misunderstood SOFA 10 as to some transfers and simply forget others – the very matters which he was most concerned in this case – this is exceedingly implausible. I have no trouble finding him capable of the kind of stupidity of which he stands accused.

Read the judge’s 122-page document, in full, on TheStory.ie>

EARLIER: US court calls David Drumm on his “outright lies” as he fails in bankruptcy bid

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69 Comments
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    Mute Ken Collins
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    Apr 15th 2015, 7:38 AM

    Their defence of this slaughter is actually a joke in this day and age… We have to kill them to see what they eat and how old they are. Laughable from one of the most technologically advanced nations in the world.

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    Mute OneTrueVoice
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    Apr 15th 2015, 8:02 PM

    Hindus are still upset that we’re still experimenting on cattle to figure out how tasty the perfect steak is.

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    Mute Mursh
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    Apr 15th 2015, 7:51 AM

    They’ve established that the leading cause of death is a harpoon to the head.

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    Mute Ben Redline
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    Apr 15th 2015, 7:58 AM

    Japan have been whale hunting since the early 1900′s how much research do these fcukers need? and don’t get me started on the Dolphin hunts absolutely disgusting.

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    Mute Sean Barry
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    Apr 15th 2015, 10:33 AM

    you should just mind your own business. Let other countries manage their own affairs and traditions

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    Mute cholly appleseed
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    Apr 15th 2015, 12:33 PM

    Except Sean, Japan has no claim to the whales of the Antarctic.

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    Mute james r
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    Apr 15th 2015, 7:36 AM

    horrific .. should be banned

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    Mute Jason Culligan
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    Apr 15th 2015, 9:28 AM

    It is banned, at least for commercial purposes. The Japanese claiming that this is for “research” is obviously an attempt to circumvent the ban on whale hunting.

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    Mute John Ryan
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    Apr 15th 2015, 6:01 PM

    The odd thing is that few in Japan actually eat it anymore. Its a bit like French people not really eating frogs legs and snails. In Japan whale meat is not very popular .

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    Mute Deborah Behan
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    Apr 15th 2015, 7:39 AM

    Who are these idiots trying to convince? Certainly not the world! Murderers all.

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    Mute john mccarthy
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    Apr 15th 2015, 7:55 AM

    The sea shepherd and captain Paul Watson will be back in action soon. I am always very humbled to know that these people are so dedicated to the conservation of Whales and the lengths they will selflessly go to, to protect them.

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    Mute Justin Credible
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    Apr 15th 2015, 8:37 AM

    Whale Wars is one of the worst tv shows ever made, the whole logic behind the show is flawed. Its all about TV ratings, and not too much about saving whales. They have put peoples lives at risk, and spent a lot of money to save tens of whales, when that money could be spent on a legal team to change the laws on “research killings”, which would save thousands of whales over the decades. The Faroe Island episode was the worst one, as their whaling is actually sustainable, yet it made for good TV for people that believe everything they are fed.

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    Mute brian boru
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    Apr 15th 2015, 8:39 AM

    Faroe Islands whaling is an aberration and the fact that the eu allows it continue is a shocking reality.

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    Mute Live Long
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    Apr 15th 2015, 8:41 AM

    Just because its sustainable doesn’t make it right, fox hunting is sustainable but that’s not an excuse for this savagery. Have you ever seen the whale hunts on the Faroe Islands? Stuff of nightmares.

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    Mute Justin Credible
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    Apr 15th 2015, 8:56 AM

    Why is it an aberration, when its sustainable, and its one of their main sources of food? In the grand scale of things, its very small scale whaling, and is sustainable. The episode of whale wars in the Faroe Island made me agree with the Faroese people over Paul Watson. Yes I have seen the whale hunts on the Faroe Islands, I honestly wouldn’t comment on them unless I had. It not for someone with a weak stomach, however the same can be said about any meat factory. have a look at how chickens are killed!
    You can’t even begin to compare fox hunting to whaling. In modern hunts, its more about a day out with the horses and dogs, its actually rare that any foxes are killed, as they are nocturnal.

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    Mute Live Long
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    Apr 15th 2015, 9:07 AM

    Are you comparing the killing of mindless chickens to the killing of sentient beings like whales. Chickens get it easy compared to the whales who usually drown in their own blood. The islanders don’t need whale meat, they eat it as a delicacy, its just an out dated tradition that fulfils a bloodlust, that has no place in the modern world.

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    Mute Shane Carroll
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    Apr 15th 2015, 9:30 AM

    Hi Justin.
    You say “its actually rare that any foxes are killed, as they are nocturnal.” I regularly see foxes during the day on my walks in the countryside. Why would they be chasing them during the day if they thought there were none about?!!
    “its more about a day out with the horses and dogs,” Yes but with the intention of catching a fox and ripping it to shreds with packs of dogs. A questionable day out pursuit in our modern times.
    Are you not aware of the studies which link animal abuse and manic behavior??
    This is not hunting for food, it is killing for pleasure and i believe it should be banned along with any other activity which involves killing animals for pleasure.

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    Mute Justin Credible
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    Apr 15th 2015, 9:44 AM

    Chickens are also sentient. As are pigs, of which there are over 1.5 million in Ireland, their sole purpose is to be slaughtered and eaten. My points about Paul Watson, and National Geographic are valid though, the Faroese people kill a small number of non endangered whales every year. However, as they are slaughtered in a way that looks horrific to most people, it shocks people into supporting the Sea Shepherd, and males them look like heroes. However, while National Geographic and Paul Watson are spending money making a show against sustainable whaling, the Japanese are still killing endangered whales. If they really cared about saving those whales that need the most help, then that money would be spend on changing the laws, or banning meat from endangered whales in Japan. However, that wouldn’t make for an exciting tv show. Its not just whales that need help, the Japanese are killing thousands of sharks every year too for shark fin soup. Sharks are taken on board a boat, fins cut off, then thrown back alive with no fins to die. But as sharks are seen as “killers”, and not friendly like whales, most people don’t care, so it would be hard to fund a “shark wars” tv show. Whale wars in a nut shell, is and incredibly scripted piece of American garbage, giving the “facts” they want to give, while putting peoples lives at risk.

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    Mute Justin Credible
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    Apr 15th 2015, 9:58 AM

    Shane Carroll, for the record, I don’t go on hunts, I have never even been on a horse! I do come from a farming background though. Yes, you will see foxes during the day time in the summer, but not that many, as they are nocturnal. To see them in the middle of the day is very rare, its usually early in the morning, or late in the evening when the nights are short in the summer. I don’t agree with fox hunting with dogs, but in most hunts, they its rare for them to even see a fox. As I mentioned, the modern hunt is a social event, people don’t go out with the idea of trying to kill as many foxes as they can. If you have ever seen a hunt, take note of the condition of the horses and hounds, they don’t really look like they have been abused. Also, how many people that have pets, will set rat/mouse traps, or poison? Foxes are not killed for pleasure either, its the same as killing mice/rats. If a fox gets into a chicken coop, thats the end of the chickens, also, in spring a new born lamb is a very easy target

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    Mute Shane Carroll
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    Apr 15th 2015, 10:17 AM

    Fair enough that is a good point in relation to farmers and i understand foxes can pose a threat to their livelyhoods.
    However their are other preventative measures and i don’t think that hunting a fox with hounds is a solution to this issue.
    A loose pack of hounds has the potential to do much more damage than a fox ever could!
    Also from the people i know involved in fox hunts, the majority of them have nothing to do with chicken or sheep farming.

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    Mute Justin Credible
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    Apr 15th 2015, 10:40 AM

    I agree, and the horses can do a lot of damage to land in too! A lot of farmers don’t want hunts on their land, for the reasons you mentioned. There is also the issue of liability if somebody gets injured on your land. You are right, most people on the hunts are mainly into horses, a lot wont have chickens or sheep. to be honest, I cant remember the last time I heard of a local hunt actually killing a fox. 30-40 years ago, it would have been different, as it was the main form of keeping the foxes numbers down. Lamping at night with a riffle accounts for the vast majority of foxes being killed now.

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    Mute Lamb
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    Apr 15th 2015, 11:11 AM

    I thought they rammed Sea Shepherd and broke it in 2? Was there another one?

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    Mute Jon Burkin
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    Apr 15th 2015, 7:51 AM

    What’s wrong with us humans!

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    Mute Michael Sands
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    Apr 15th 2015, 12:29 PM

    Selfish with the thinking and acting of a virus or cancer, greed, greed and more greed?

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    Mute justanothertaxpayer
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    Apr 15th 2015, 8:34 AM

    1. Exactly how often do whales change their diet that 300+ of them need to be gutted every year for inspection?

    2. Just ban the sale of the whale meat from research. Just force the destruction of the carcass. They will stop spending money chasin, killing and processing them if there is no money in it

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    Mute mcos
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    Apr 15th 2015, 7:59 AM

    Scientific research me arse!!!

    This is a worthwhile, but tough watch -

    https://m.youtube.com/watch?v=P08ay4y-gE0

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    Mute Sean J. Troy
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    Apr 15th 2015, 8:15 AM

    Japan has bought a lot of IWC votes with foreign aid packages. It’s very difficult to eradicate this problem by using official channels. But it needs to stop.

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    Mute Live Long
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    Apr 15th 2015, 8:43 AM

    Its a total shambles, the Japanese cant even give the whale meat away in their own country, they make schools serve it for lunch just to keep a few whalers in a job.

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    Mute Siju Jose
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    Apr 15th 2015, 7:39 AM

    Hum

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    Mute r keane
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    Apr 15th 2015, 9:13 AM

    Good people, bad tastes – only way to really stop it is to embarrass them publicly

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    Mute Duchess d'Punk
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    Apr 15th 2015, 8:25 AM

    awful!

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    Mute Michael Sands
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    Apr 15th 2015, 12:28 PM

    I thought it was because whale meat was a delicacy and the fat cats there love eating it, they eat it until all the whales became extinct?

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    Mute John Cross
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    Apr 15th 2015, 5:40 PM

    Easiest way to stop whaling is to run a campaign to stop buying Japanese products if they start whaling again

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