By Eimear Dodd
High Court inspectors investigating Custom House Capital found that €56 million in investor assets were improperly transferred, a jury has heard.
On day 13 of the Dublin Circuit Criminal Court trial, Garda Aidan Deveney agreed with Michael Bowman SC, defending, that a report into Custom House Capital (CHC) by High Court inspectors from 2011 was available to gardai during their investigation.
Defence counsel told the jury that the inspectors concluded that €56 million in investor assets were improperly transferred and used to “plug holes” in European property deals.
Lorcan Staines SC, prosecuting, told the jury yesterday that the High Court appointed inspectors following a complaint from the Central Bank.
CHC was later liquidated.
He told the jury that the High Court inspectors found that €56 million in investor assets were misappropriated, including cash and liquid equity holdings, which were improperly transferred to syndicate property interests or used to finance other aspects of CHC’s business.
Several internal CHC emails were shown to the jury.
These included a chain of emails from 2009 between the firm’s CEO Harry Cassidy and John Mulholland, non-executive director, and others in relation to the funding of property deals.
In one of these emails, Mr Cassidy suggested that discussions of these issues should be limited and not include the company’s then senior portfolio relationship manager Ciara Kelleher.
Ms Kelleher (51) of Blackhorse Ave, Dublin 7 has pleaded not guilty to one count of conspiring with others to defraud investors, clients, and customers of Custom House Capital (CHC) Ltd. by intentionally misleading them as to where or how their assets had been placed in the investment firm on dates between October 2008 and July 2011.
Anne Troy, head of investment service providers supervision at the Financial Regulator in 2009, told defence counsel that the regulator engaged with CHC after concerns were outlined to them by Angela Mahon, former head of operations at the company.
Ms Troy said the regulator was concerned in relation to Mr Cassidy’s dominance within the company, and inadequate risk management and corporate structures.
She agreed with Mr Bowman that John Whyte, head of private clients, and Mr Mulholland didn’t dispute Mr Cassidy’s dominance within the company.
These issues were raised at a meeting with CHC executives on May 29, 2009.
Ms Troy agreed with defence counsel that the regulator was also concerned by the lack of documents associated with the mezzanine bond, and CHC had to regularise this by seeking retroactive client authorisation in relation to the bond.
She agreed with counsel that the regulator faced ongoing difficulties getting information about the structure, status, and dissolution of the mezzanine bond.
Ms Troy told Mr Staines that a direction to CHC not to take on new clients without approval was not made public due to concerns it might cause a run on the company.
The witness confirmed that regulated entities must make annual returns to the regulator and demonstrate they have adequate capital to cover their liabilities.
She agreed with defence counsel that CHC was directed to increase the amount of capital it held to meet its liabilities from €3.5 million to €5 million.
Mr Staines told the jury that a European Arrest Warrant was issued for Mr Cassidy.
Gda Deveney confirmed to defence counsel that Ms Kelleher followed all relevant bail and sign-on conditions.
The witness agreed with Mr Staines that gardai were dealing with an enormous amount of material at the start of the investigation and had limited tools to analyse this information.
An excerpt from the recording of Ms Kelleher’s fifth interview with gardai on January 29, 2020, was also played to the jury.
The trial continues before Judge Orla Crowe and the jury.