Bank drops fraud action as Drumm agrees to pay $3,000
Published 22/03/2011 | 07:39
AN American bank has dropped a fraud lawsuit it was pursuing against disgraced former Anglo Irish Bank chief executive David Drumm after settling the case.
Chase Bank sued him after he went on a $14,300 (€10,500) credit card spending spree in the weeks before he filed for bankruptcy.
It claimed Mr Drumm (44) had "obtained credit by false representations and/or actual fraud" as he spent the cash at a time when he knew he would be unable to repay it.
The cash was spent on concert and sporting tickets, in restaurants, off-licences and on consumer goods.
Papers filed with a court in Boston reveal Chase has reached a settlement with Mr Drumm which will see the lawsuit dropped. The bank says it will accept just $3,000 (€2,100) of the money it is owed.
Chase is understood to have agreed to the settlement as the legal costs of a full action would have wiped out what they could have recouped from Mr Drumm.
Subject to the approval of the court, he will be given 10 days to pay the $3,000 to Chase.
In return, Chase said it would drop its lawsuit against the former Anglo chief executive.
Mr Drumm used the credit card to spend just under $14,300 between July 31 and October 14 last year, the day he filed for bankruptcy.
Credit card receipts revealed he made a number of questionable purchases at a time when he was under severe financial strain.
These included $557 (€392) spent in a fine wine store, $1,120 (€788) in a home furnishings store, and $1,299 (€915) in a mattress retailers.
A further $551 (€388) was spent on purchases through the Amazon website. Some $556 (€391) went to Stubhub, a concert and sports tickets vendor, while a further $389 (€274) was paid to a garden landscaping company. Restaurants, hair salons and health spas also figured in the spending.
The settlement with Chase is one less headache for the former Anglo boss, who is fighting battles on a number of fronts.
Mr Drumm has been living in the eastern US state of Massachusetts since December 2008 when he quit the bank.
He is seeking to be declared bankrupt with debts of more than €10m. But Anglo, which is owed €8.5m, is set to oppose his discharge as a bankrupt.
If Mr Drumm fails to be declared a bankrupt he will have no legal protection from his creditors, who would be able to pursue him through the courts for his debts.
His former employers say they plan to sue him over his role in a number of key incidents which preceded the bank's downfall.
Anglo's new management team alleges Mr Drumm failed to meet certain legal or ethical obligations while running the bank. He also faces disciplinary charges from the Chartered Accountants Regulatory Board, which can fine him and ban him from working as an accountant.
Gardai and officials from the Office of the Director of Corporate Enforcement want to interview him but Mr Drumm has refused to return home for questioning.