BACKGROUND:When buying his €5.5m home, Lynn borrowed €11.7m from three financial institutions
THE PURCHASE by disgraced solicitor Michael Lynn of a house in Howth, Co Dublin which he planned to use as a family residence, featured in the hearing before the Solicitors Disciplinary Tribunal yesterday.
Lynn and his wife Bríd Murphy bought Glenlion House, Thormanby Road, for €5.5 million last year. It was sold in January of this year for €4.9 million on the order of the High Court. When buying the house, Lynn took out loans totalling €11.7 million from three financial institutions, giving each institution an undertaking that he would register a first legal charge on the property.
The institutions were ACC Bank, Irish Nationwide, and Bank of Scotland (Ireland).
Not only that but he also used €550,000 he took from accounts in his firm's practice when paying the deposit. The convoluted and dishonest manoeuvres left him with a surplus of €6.325 million after he had purchased the house and paid the associated stamp duty and fees.
The Law Society engaged KPMG to examine his affairs and details were given yesterday by forensic accountant Laura Burge about the Glenlion purchase. The tribunal also heard from the society's investigative accountant, Mary Devereux.
A deposit on the house was put down by Lynn in December 2006. A sum of €225,000 paid to the vendor's solicitor came from funds in Lynn's practice recorded as belonging to John Gallagher, who had nothing to do with the property. Later that same month, a further €250,000 was paid, again coming from the same client account.
Another €50,000 relating to the house came from a client account in the name of Darragh Tolan, who again had nothing to do with the property. However, who exactly the €550,000 came from is not entirely clear.
The Law Society believes Lynn falsified documents and forged letters which he placed in his client files, and that money the files indicate was lent to clients of Lynn's by the Irish Nationwide Building Society, may have in fact been issued to Lynn, for the making of property investments unrelated to the Howth purchase.
Irish Nationwide did issue a loan - for €4.125 million - to Lynn in early April 2007, which it believed was to be used to purchase the Howth property. Lynn gave the society a solicitor's undertaking to register a charge against the property, and failed to do so.
Not only did he fail to register the charge, he diverted the money to purposes other than the purchase of the house.
Some of the money was used by Lynn on the day it was issued to purchase drafts with a total value of €2.45 million.
These drafts included one draft for €2 million. What happened to these drafts and to the rest of the Irish Nationwide loan, is not clear, though it seems some of it was used to make property investments including some in Shanghai, China. The money was all dispersed by the end of April 2007.
Meanwhile, Lynn was taking out other loans. On April 18th, 2007 he took out a loan from ACC Bank for €3.78 million. Two days later, he took out a loan from Bank of Scotland (Ireland) for €3.85 million. In both cases, undertakings were provided to register a first charge for the banks on the Howth property.
The ACC money and €1.666 million from the Bank of Scotland money was used to make the balancing payment on the purchase of the house. The remaining €2.2 million from the Bank of Scotland loan was then used to make payments for purposes unconnected to Glenlion. The findings against Lynn yesterday included charges associated with Glenlion.
These included the charge that he dishonestly obtained loans of €11.755 million in connection with the house, that he dishonestly applied €4.125 million of these funds, secured from Irish Nationwide, for a purpose other than the purchase of the house, and that he dishonestly applied funds advanced by Bank of Scotland (Ireland) for purposes other than the purchase of the house.