Dolores 0:01

Every con, and every con artist, starts small. A shaved corner here, a broken promise there. Nobody sets out to defraud a court, or hide fifty million from their creditors. But sometimes, the small stuff is a mere preview of the big stuff to come a tip of the iceberg. And if you're the one paying attention, you can see it coming well before anyone else does. Today's episode is about an Irish property developer who built some of Dublin's most expensive houses and apartments during the boom years and who, more than a decade later, was found by a US jury to have hidden millions of dollars from the people he owed. But before any of that made the headlines, our host had a much smaller, much more personal brush with him. So Edward let's set the scene. This isn't a case you read in a file somewhere you were actually involved and had dealings with this property developer. Take me back. When does this start?

1:28

Well, it starts back before the financial crisis of 2008. I was working in property at that time, and a close family member of mine, uh, asked me to negotiate on their behalf for the purchase of an apartment. And this was in a high-end development in Ireland on the outskirts of Dublin in, a leafy, sought-after suburb called Foxrock. Uh, there was around forty-five apartments in the scheme. The development was going to have a twenty-four-hour concierge, a gym, a small pool, jacuzzi, underground parking, you know, the works. So this was during the Celtic Tiger years when that kind of luxury development was selling really fast and very much in demand. The developer behind it was a builder, uh, turned developer, and his name was Sean Dunne. At the time, he was one of the biggest names in Irish property. My relative was one of the very first people to buy and to move into that luxury development in Foxrock.

Dolores 2:34

And the deal to purchase the apartment did't go smoothly, did it?

2:38

No, I negotiated the purchase through the estate agent, uh, that was representing Sean Dunne, and, uh, we had agreed a, uh, a price, a done deal as far as I was concerned. Then a couple of days later, the agent rings me back. Dunne was apparently away on holiday in South Africa and had second thoughts. He wanted more money. Well, we didn't have a signed contract at that point, so he was within his rights legally. But having agreed a price and then coming back looking for more a few days later, with my relative already emotionally committed to the apartment, that's a pretty shabby way to do business. We ended up having to pay more than we'd agreed.

Dolores 3:23

So that's red flag number one. What came next?

3:26

Once my relative had moved in, the problems started showing up. This was a ground floor apartment, and there were persistent leaks running down to the underground car park below. Bad enough that the floor of the apartment had to be dug up twice in the first three years trying to trace the source of the leak and fix the pipework. And on top of that, the sound insulation between the units was poor, noticeably poor for what was meant to be a premium building. This was supposed to be one of the most expensive developments in Dublin at that time. And those sort of problems are not what you'd expect for the money. It became evident that the developer had taken a number of shortcuts with the construction works, p-probably to save some money here and there.

Dolores 4:14

And there was a service charge issue you encountered?

4:16

Yes, that's right. That's the part I found most telling. About a year into the scheme, while Dunne was still selling off unsold units, the management company loaded the entire service charge for the development. So that would have included all the common area costs, the concierge, the gym, the landscaping, all of it. All of that service charge was lumped onto the owners who had already bought. Meanwhile, any apartments he still owned, including ones he was renting out privately on short-term lets, weren't carrying any of that service charge at all. That's not how it's supposed to work under the management agreement. The cost is meant to be split across every unit sold or unsold I picked up on it because as an accountant, I was assisting my relative with all the financial aspects of their purchase. And when I noticed the issue, I raised it directly at an owner's meeting with the directors of the developer and their accountants in the room. And to their credit, once it was pointed out, they went back and reviewed it, and they admitted the allocation had been wrong. But it only had come to light because someone, me, happened to be checking the numbers. That's the pattern with this fellow, quietly cutting corners and only correcting course when he got caught.

Dolores 5:43

Now to be clear none of that, on its own, is criminal fraud. It's a personal account of some pretty shady conduct around one property deal.

5:52

Exactly. I'm not standing here calling the man a fraudster over an apartment purchase. What I'm saying is that this was somebody willing to n- renegotiate in bad faith, cut corners on construction, and quietly shift costs onto other people when he thought nobody was watching closely enough. That's the tip of the iceberg, and it turned out a few years later there was a great deal more beneath the surface.

Dolores 6:21

So let's fast forward. The 2008 financial crash happens, the property empire collapses for Sean Dunne, and many others and this is where the story goes from a bad apartment deal to a much bigger financial scandal.

6:35

Right. Like a lot of big Irish developers, Dunne's empire was built on huge bank debt, and when the crash hit, that debt, in this case hundreds of millions of euros, passed to Ireland's National Asset Management Agency, NAMA, N-A-M-A, which was set up to manage toxic property loans after the crisis.

Dolores 6:59

And instead of staying in Ireland to face the music and his creditors, he moved.

7:04

Yes, he and his then-wife relocated to Connecticut in the United States, and in two thousand and thirteen, he filed for bankruptcy there, reporting debts in the hundreds of millions. A trustee, Richard Cohen, was appointed to track down whatever assets remained and get creditors paid. And that's when things really unraveled because Cohen, working alongside NAMA, argued in court that Dunne had been quietly transferring tens of millions of euro in assets to his wife, including the proceeds from the sale of a residential property he owned, a mansion, which was at that time one of the most expensive houses ever sold in Ireland.

Dolores 7:51

And that went all the way to trial.

7:53

It did. After weeks of testimony in a Connecticut federal court, a jury found that Dunne had fraudulently transferred assets to his wife, specifically to keep them out of reach of his creditors. The jury ordered her to repay a substantial sum, reported at the time as somewhere in the region of eighteen million euro, with the two sides continuing to argue for years afterwards over the exact figure and how it should be divided amongst the creditors. Dunne and his then-wife have since divorced, and the legal wrangling over the money has dragged on for years since the verdict

Dolores 8:34

Let's talk numbers for a moment, because they really put this story in perspective. Where did all this debt actually come from?

8:42

It goes back to the boom years. Dunne borrowed enormous sums from Irish banks to fund his developments. And when the market crashed in two thousand and eight, a lot of that lending by the banks and financial institutions such as Ulster Bank, Bank of Ireland, Irish Nationwide, Allied Irish Banks, ended up being transferred to NAMA, the state agency set up to clean up toxic property loans after the crash. By the time Sean Dunne filed for bankruptcy in the US in two thousand and thirteen, his total reported debts ran to somewhere between five hundred million and closer to a billion dollars. NAMA alone was owed a figure reported at various points between roughly three hundred and thirty million and four hundred and thirty-eight million dollars. Ulster Bank separately was owed somewhere around four hundred million dollars. Between just those two creditors, that's the best part of a billion dollars outstanding.

Dolores 9:47

So how much of that did the lenders actually see again?

9:50

Almost none of it. When the bankruptcy trustee finally wound up the case, the biggest single asset recovered was around fourteen million euro from the sale of the mansion Dunne had bought for fifty-eight million euro at the height of the Celtic Tiger boom. After the matrimonial claims were paid out of that pot, that left around twelve and a half million euro to be split between all the remaining creditors. NAMA and Ulster Bank each ended up with roughly six million euro, six million against claims of hundreds of millions each.

Dolores 10:31

So put plainly, the vast majority of what Sean Dunne owed, several hundred million dollars, once you add NAMA and Ulster Bank together, without even counting his many other creditors, has never been repaid, and by every indication, never will be.

10:45

That's the reality of it. The man who once ran a billion-dollar property empire left his two biggest creditors with a few cents on the dollar, while a jury found he'd been quietly funneling money to his wife the whole time the debts were mounting

Dolores 11:05

So this is the part listeners should hear clearly a US jury, not a tabloid, not an accusation, an actual jury, concluded that he had moved a significant sum of money specifically to keep it from the people he owed. That's a completely different order of magnitude from a disputed service charge, which you had encountered years earlier.

11:26

Yes, completely different order of magnitude. But when I look back at my own dealings with him, the reneging on a price after a deal was agreed, the shoddy build quality on an expensive development, the sleight of hand on the service charges. In hindsight, none of that surprises me in the slightest given what came after. It's the same instinct just operating at different scales.

Dolores 11:54

So what do we take from this one? You saw the tip of the iceberg back before 2008 in your dealings with Sean Dunne, years before the rest of his creditors felt the brunt of what was hiding out of sight.

12:07

I think the moral is a simple one, and it's one that comes up again and again in this podcast series. Small-time self-deception is very often a rehearsal for bigger deception to come. Someone who's willing to cut corners, renegotiate in bad faith, or quietly shift costs onto other people when the stakes are modest has already shown you who they are. Scale it up, give that same person a bigger balance sheet, a bigger crisis, and more money to lose, and it's only a matter of time, opportunity, and necessity before that same instinct plays out on a much bigger stage. The apartment was the tip. The sizable fraudulent transfers were what was lying beneath

Dolores 13:02

Edward, there are a few additional threads in this story that I think our listeners will find very interesting. Because what we've covered so far may actually be just the visible part of something much bigger. You're right, Emily. When you lay it all out in sequence, you start to see a pattern that raises some very pointed questions. Questions I'll leave to our listeners to answer for themselves. Let's start with the property, the mansion on one of Dublin's most prestigious addresses that he bought at the height of the boom And here's the first curious detail. He and his wife never actually lived there. The property was placed in a trust in her name from the moment it was acquired. That's what the court records show, and when he subsequently filed a sworn statement of affairs with NAMA, the National Asset Management Agency, in two thousand and ten, as his financial world was collapsing around him, the house did not appear in the statement. A fifty-eight million euro property, the most expensive house ever bought in Ireland, simply wasn't there. The court heard that he failed to disclose it. Now, his position was that it belonged to his wife, not him, that it had been gifted to her, and therefore, he argued it wasn't his to declare. But the bankruptcy officials took a very different view. The official assignee, the person legally responsible for managing his bankruptcy estate, stated publicly that he believed Dunne was the beneficial owner of the house all along, that the trust arrangement was a structure, not a genuine transfer of ownership. And what eventually happened to the property? Well, it was eventually sold in two thousand and thirteen, the same year he declared bankruptcy, for fourteen and a quarter million euros, a fraction of what he had paid for it. The crash had destroyed its value, as it had destroyed so much else. But the proceeds of that sale became the subject of further legal battles because those proceeds were also transferred, routed through a Cypriot-registered company, in a manner that the bankruptcy trustee argued was specifically designed to keep the money out of the reach of the creditors. And that transfer was to an entity associated with his son, John, from his first marriage, which I understand was challanged by the trustee in the US bankrupcy proceedings. The jury in the Connecticut court agreed, finding that the transfer of the sales proceeds was among the fraudulent conveyances they upheld. Now the defence presented throughout all of these proceedings centred on an agreement a document that supposedly explained all of these transfers. Tell us about that. This is where it gets very interesting indeed. At the heart of his defense was a handwritten document, unwitnessed, with one exception I'll come to, that he claimed was drawn up during a holiday abroad in two thousand and five. The document allegedly recorded his agreement to transfer approximately one-fifth of his total fortune, at the time worth around one hundred million euros, to his wife in exchange, he said, for love and affection Love and affection! That's a legal basis for transferring one hundred million euros? That's what was presented in court, yes. And his lawyers argued it was legitimate that Ireland didn't permit prenuptial agreements and that this was effectively his way of providing financial security for his wife and children. A reasonable man providing for his family. But the trustees legal team described the document as bogus, concocted. They pointed to the fact that it was handwritten, that it was unwitnessed, except Dunn claimed by his own son, and critically, that the document didn't surface publicly until years after it was supposedly signed, long after his finances had collapsed and creditors were circling. So the document appeared just when it was needed most? When asked to produce the document for his own lawyers, Dunn said that there was only one copy and his wife had it. It had not been provided to his legal team as late as two thousand and eleven, six years after it was supposedly written. I'll let our listeners draw their own conclusions about that And there's more? Yes. In 2010, his wife initiates legal proceedings against him in Switzerland to enforce the original 2005 agreement. He had failed, she claimed, to honor his promise. A husband being sued by his own wife to hand over money, 100 million euros he had already promised her. And while that Swiss case was happening, what was he doing? Continuing to transfer assets in her direction. The proceeds from the sale of the mansion, a property in South Africa, cash transfers that hadn't appeared in the Nama statement, all routed to or through his wife But they are now divorced? Yes, that's right. But the Irish High Court notably ordered all family law documents in this case sealed, strictly confidential, no public dissemination. So we will never see what those documents contain Edward, standing back from all of this. What does the pattern suggest to you? What I will say is this. A document supposedly signed on a holiday abroad in two thousand and five, handwritten and effectively unwitnessed, promised one hundred million euros for love and affection. And this document only surfaces years later when creditors come calling. A house bought for fifty-eight million euros is placed in trust for a wife who never lives in it, and then omitted from a sworn statement to NAMA. A legal action by that wife to enforce the original promise is filed in Switzerland in two thousand and ten when his finances are in ruins. Now, was his wife a victim in all of this? A woman simply trying to enforce a legitimate promise made to her in better times? Or was there something more coordinated happening? A scheme in which both parties played a role? I'll leave those questions with our listeners. Dunne seems to have got himself into a right mess, gotten himself tangled in a spider's web moving on has not been so simple for Dunne. Ulster Bank continued its pursuit of Dunne and the debts that it owed to the bank through the Irish courts, and he was adjudicated a bankrupt by the High Court in Dublin This was in 2013. This left him in the unusual position of being simultaneously bankrupt on both sides of the Atlantic, dual bankruptcies. And since then, the dual bankruptcies have become a cat-and-mouse game of legal challenge and counter-challenge in subsequent proceedings in the High Court, the judge said that there had been willful and deliberate failure on behalf of Dunne to cooperate with the court-appointed official. And in a scathing judgment on Dunne's conduct in the bankruptcy, the judge said that the developer, Sean Dunne, was a deeply dishonest witness who told lies, engaged in wholesale non-compliance of his statutory obligations, and showed an incredible attitude. The judge went on to say, "I find it difficult to conceive of a bankrupt who could be more obstructive and less cooperative," she said. The judge also found that Dunne's actions in his Irish bankruptcy process to be a cynical, spurious attempt to preserve the illusion of cooperation in order to achieve a discharge from bankruptcy. Sean Dunne, the once buccaneering property developer who embodied the hubris of the Celtic Tiger boom and now the ravages of the bust, will be seventy-three years old when he finally exits bankruptcy. In the US, the representatives of the bankruptcy trustee remained resolute and uncovered Dunne's meticulous scheme to commit international financial fraud, and the representative successfully presented the evidence to the judge and jury by providing extensive evidence which included fabricated documents transferring assets amounting to millions of dollars. Now Edward. I Understand that while Dunne's empire was crashing down around him, there were tabloid claims of sex, lies and tapes! Yes, in a rather bizarre, situation that, was reported in the, i- in the tabloid, uh, newspapers back in, 2007 and 2008. Lurid reports were published alleging that Sean Dunn had been targeted in a honey trap blackmail plot designed to compromise him socially or financially. Allegations were made that a call girl, under the pretence of being a cleaner, went to Dunne's offices with a plan to compromise him, if you know what I mean! a, legal battle ensued, between Dunn and, a lady called Gina Farrell. Now, bizarrely, Gina Farrell, had been somebody who I had dealt with at the time of the apartment purchase because she was the lady who had been, uh, using her accountant to prepare the service charge bills. And so she was the person whom I had contact with regarding the, the manner of the allocations So in the first instance, I had approached her, about the manner in which service charges... So I had known Gina Farrell, and so she was somebody who had known Sean Dunn and was part of his team at that time. Now she then pops up again a few years later, and Dunn is suing her and the drama was basically about, in-intercepted mobile phone messages, text logs, and recordings. And it was alleged that personal communications involving Dunne had been secretly accessed, monitored, uh, a-and logged. And according to the tabloid reporting and subsequent court testimonies, the feud between Sean Dunne and Gina Farrell exploded during a tense face-to-face meeting in 2005. Dunne reportedly confronted Farrell after discovering she or people connected to her possessed these private phone records. The initial legal threats and media reports hinted at a bizarre extortion plot. Farrell, referred to as being self-styled as a cleaner to the stars because apparently she also took care of the cleaning services for a number of prominent people, including at Sean Dunn's, residential address. Anyway, she denied the salacious setup claims of a honey trap and, and instead she alleged that Dunn had begun a vicious ca- personal campaign against her. And she quoted him as telling her, "Power and money is what I have, and I will put you back on a bicycle." Anyway, core legal battle lasted 17 days, was referred to as a pantomime, and the case became a-an absolute media circus with expensive legal teams arguing over minutiae, regarding, logbooks that, apparently, Dunne was saying that, Farrell had, inflated the cleaning services invoices at the Foxrock apartment, where my relative was residing and, I presume therefore that the service charges were inflated, but that's another matter. And, there was claims and counterclaims and, allegations made and being thrown around. The whole thing, turned into a farce and, and some years later when it came to court, the judge delivered a scathing review of the entire circus. Now, the court did find that Farrell had engaged in dishonest conduct and falsified records, and, Dunne was awarded about a fifth of what he had claimed, uh, had been overpaid to her. But also, Farrell had to pick up the costs, because it was a costs award made against, Gina Farrell. A-a-and those costs turned out to be, uh, devastating and actually ruined Farrell financially. Those outstanding legal fees, caused, a lot of, difficulty for her and her own, situation, became more and more, bizarre in terms of the manner in which she tried to, gather up funds to pay those costs. So, ultimately, the honey trap scandal started as a tabloid thrill, but dissolved into a bitter multi-year obsession that, that financially devastated Farrell and served as a bizarre sideshow to Dunne's eventual, uh, bankruptcy proceedings i-in, in both the US and Ireland. You couldn't write this stuff Well Edward. That has certainly been some story. When you first had dealings with Sean Dunne, you could never have imagined what was still to come, what was lying in wait for him in the years that followed. The tip of the iceberg! That's right, That's right Please share Fraud Files with someone you think may benefit from hearing this episode, and our previous episodes. And if you have a story of your own fraud you've witnessed, experienced or want to shine a light on you can reach out to us through the usual channels and via email: info at fraud dash files dot com Next time on Fraud Files, in an episode entitled: Hide and seek with the taxman, Think you can hide a little from the taxman? In this episode we show how you can run but you can't hide from the taxman. Until next time then. Stay Alert, and stay vigilant!

Simon 27:39

Fraud Files is produced by Rock Solid Pods. Fraud Files is available on Spotify, Amazon, Apple, You Tube and wherever you get your podcasts.