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Saturday 1 October 2016

Drumm's pursuit of the American dream turned into a nightmare

David Drumm will almost certainly be spending Christmas with a lot less luxury than he's used to, writes Maeve Sheehan

Published 29/11/2015 | 02:30

SUPPORT: David Drumm, the former chief executive of Anglo Irish Bank, and his wife Lorraine. “Their marriage has flourished despite the incredible stress”
SUPPORT: David Drumm, the former chief executive of Anglo Irish Bank, and his wife Lorraine. “Their marriage has flourished despite the incredible stress”

Last week, David Drumm was handcuffed and put into the back of a prison van and escorted under armed guard to another new home. It's still a prison, another detention facility within visiting distance from his wife Lorraine and two daughters, who live in Massachusetts.

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He was arrested on a Saturday afternoon, October 10, in the genteel suburb of Wellesley, Boston, by US Marshals acting on a warrant seeking his extradition to Ireland to be prosecuted on 33 fraud- related charges. Apart from his first three days in a police holding cell in Boston, he has spent most of his incarceration at Donald W Wyatt Detention Facility in Rhode Island.

The regime there is tough. Detainees are not allowed contact visits with their families, wear prison issue uniforms, get an hour a day in the recreation yard and a hotline number to call if they feel intimidated. The hand book lists a terrifying array of street gangs included in the prison's "zero tolerance" policy - Hells Angels, Bloods, Crips, Latin Kings and Aryan Brotherhood.

Mail is censored, phone calls are restricted to 20 minutes and jobs such as cleaning or kitchen worker for between fifty cent and $4 a day are sometimes fought over. He has to get by on an allocation of two shirts, two pants, four pairs of underwear, four socks and one pair of "institution sneakers".

Detainees are counted in their "units" seven times a day and must stand except at night time, when they can remain lying down "but the officer MUST see your living breathing flesh." Rules stipulate no gambling, "horseplay" and lights go out at midnight. Watching television is a privilege while keeping food in your cell is considered as having contraband. Wyatt is a "pork free" prison. Mealtimes are restricted to 20 minutes three times a day.

The prison operates to maximum security and accommodates more than 700 men. The Wyatt states its mission is to "protect the public from people who pose a threat to society" which suggests that the people David Drumm has been sharing accommodation with up till now have not been of the first water. But one source close to the Drumm case hinted last week that his prisdon surroundings have been far from a hel-hole: "Well where would you rather be? Mountjoy or the Holiday Inn in Rhode Island?"

He emerged from the Wyatt in leg shackles, handcuffs and in trackpants for his bail hearing before Judge Donald Cabell in Massachusetts District Court two weeks ago.

On the eve of the hearing, Drumm's wife, Lorraine, his mother, Mary, his brothers and sisters, friends and colleagues, filed emotional and heartfelt letters, begging the judge to grant him bail. Some offered their homes as collateral if he was released. His employer, the owner of an asset management firm, even kept his job open for him. Judgment has been reserved, leaving Drumm in jail. The only concession is that he has since been moved. The US Marshals office has declined to comment on where he is now, but he is thought to be in a slightly kinder environment.

He will almost certainly be spending his first Christmas behind bars where his interactions with his wife and daughters will be scrutinised by prison wardens. If they are allowed to bring him gifts, he won't even get to rip off the wrapping paper - they will already have been opened and screened by security officials.

It is a world away from the American dream the Drumm family have been trying to recapture for the last six years, albeit under the shadow of massive debts, financial ruin, a criminal investigation in Ireland and, as Drumm put it at his bail hearing two weeks ago, "political figures screaming from the rafters" to get him home.

Drumm could remain in jail until his extradition hearing takes place on March 1 and, if he loses, there'll be another long wait, possibly in prison, should he decide to appeal. Meanwhile, his attempt to go bankrupt in the US to shake off the €10.4m he owes to the former Anglo Irish Bank is not only dead in the water, but a judgment issued by an appeal court on Monday exposed his ugly desperation. It upheld an earlier finding that Drumm had told "outright lies", accusing him of, amongst other things, "misdirection and dishonesty" for failing to disclose asset transfers to his wife.

Drumm is not only personally liable for €10.4m, but the damning judgment from the US appeal court could play heavily against him when his extradition hearing comes around because it questions his honesty.

This finding stands in cold contrast to Drumm's portrayal in the many letters sent by family, friends and colleagues asking Judge Donald Cabell to grant him bail, all attesting to his "honesty" and family values.

To their American friends, he was hard working, professional and a devoted father. He and Lorraine, a loving homemaker, have two smart beautiful daughters, aged 20 and 17, who remain incredibly close to their father. They occupied a world of family dinners, of making friends with the neighbours, of regular church going, of holidays in Cape Cod.

As his mother, Mary, wrote to Judge Cabell: "I know you would probably say that of course I would say great things about my son, David." To her, he was her rock, the youngest person in Ireland to qualify as a chartered accountant at the age of 21, and one of eight children she raised alone after their father died of cancer.

Lorraine Farrell married David Drumm 24 years ago when he was a chartered accountant and up-and- coming banker. In 1997, they moved to the US for David's "job" - she doesn't mention the notorious former Anglo Irish Bank by name - and so began their love affair with the United States.

They lived first in Boston and then moved to Sudbury in 1998. In her letter, she writes how they made many friends, enrolled their eldest daughter at the local school, went to church and David coached a children's soccer team.

One of her closest friends from this time - a widow whose name is redacted - wrote to Judge Cabell that she and her late husband spent many hours with the Drumms at this time and celebrated holidays together.

"Over the years, I have watched the Drumm family grow incredibly close. Family dinners, holidays and trips were how they spent their time. David and Lorraine have always done everything with their girls. Not the type of parents to hire a babysitter and go to dinner as a couple, they went with their girls," she wrote.

In fact, Drumm was so successful that Anglo Irish Bank opened an office in New York. He returned to the bank's head office in Dublin in 2003 and succeeded Sean FitzPatrick as chief executive two years later.

Lorraine was "saddened" to leave the American life they had built for themselves. "The girls were absolutely inconsolable as they were taken away from their schools, friends and home." Her letter skips on to how David Drumm resigned his position in 2008 and the family returned to Boston in June 2009. "The girls were thrilled and we were very happy to be returning home."

Although they had "maintained" the house they owned in Chatham, Cape Cod, "it wasn't the same". They enrolled the girls in schools in Wellesley and eventually "purchased a home in Wellesley, where we still live".

When she later testified at her husband's bankruptcy hearings, Lorraine Drumm said she bought the family home in Wellesley with her own money. It cost $2m.

In September 2008, with Anglo Irish Bank's share price plunging towards oblivion, Lorraine Drumm, for the first time in her 16-year marriage, opened a bank account in her own name.

According to court papers, money was transferred into it from their joint bank accounts, from her husband's account, and from other sources too; sums of €80,000 and €50,000, and a €250,000 mortgage taken out with KBC Bank on a house they owned in Skerries - all totalling €1m.

"Our marriage was going through a really tough time," she said. "The bank was going through a tough time. My husband was stressed out . . . he was working all the hours God sent him. I was raising the girls on my own - it just took its toll . . . A lot of things collided."

"I didn't know if the marriage would survive . . . I didn't know if he would drop dead of a heart attack . . . I was imagining life without him." She wanted a "nest egg" - money she could control herself. "I wasn't thinking about (Mr Drumm's) creditors, I was thinking about me and my two children and about my marriage that was falling apart."

Lorraine's close friend from Sudbury alluded to these difficult times in her letter to Judge Cabell.

"Lorraine and I have sat for hours and shared our struggles and she has confided much to me. We have shared our mutual heartache as our lives changed from the idyllic days when we were neighbours," she wrote.

"I have listened as Lorraine has discussed her marriage and her relationship with David. They have survived and their marriage has flourished despite the incredible stress it has been under." David will "never leave them, never put them in danger and never abandon his family."

Drumm got a job as a chief investment officer at an asset management firm in New York. His employer - whose name was also redacted - wrote to Judge Cabell that Drumm occupied a "critical position in the business" which requires a high level of respect, confidence and trust". He worked on numerous "complex and time consuming" deals.

He commuted from Wellesley to New York. Lorraine told her Sudbury friend "how sad and lonely he was without his family". She and Lorraine spoke "for hours" before the couple decided they would all move to New York to be with him. The move didn't work out. The girls were "unhappy" at their new school, according to Lorraine. In 2013 the family moved back to Wellesley. "David reverted to working remotely and commuting where necessary."

A builder told Judge Cabell how he was project manager on a construction job at the Drumms' Wellesley home five years ago.

"On many nights when we worked late, David and Lorraine would invite me and the other workers to enjoy a family meal with them," he said. After that, he sometimes contacted David for advice about his business - they would meet up to eat and watch Irish rugby and football games.

The Drumms were well aware that David might be extradited. When they first read about it in the media, according to Lorraine, David's lawyer called the US attorney's office to say that he would be "available for voluntary surrender". They were "in shock", however, that he was held in custody.

Lorraine has pleaded with the judge that he is not a "flight risk" because he loves his family so much. "Through his salary, we pay the mortgage, utilities, school tuition, food and clothing. I honestly don't know what we will do if David is unable to work to support us," she wrote. If he left, "there would be devastating consequences, we would be homeless, penniless and unable to travel. He would absolutely never do that to us."

She is not entirely penniless though. Three years ago she reached a settlement of close to €1m with the bankruptcy trustee, selling the house in Cape Cod to do so. That left her entitled to her share of their former home in Malahide, which has been sold, and the family home in Wellesley.

She has offered to hand the house over as collateral, and that she and her two daughters would relinquish their passports - their eldest daughter was willing to forego a study year abroad for her father.

The US assistant attorney Amy Burkart has argued that Drumm has the means to flee. She cited their $2m house, the $44,000-a-year tuition fees for their daughters' school, and observed that the Canadian border is just three hours away.

In a separate court filing, she quoted the original bankruptcy ruling last January which accused Drumm of making "knowingly false statements, failures to disclose, efforts to misdirect and outright lies...While Drumm goes to lengths to portray the move in 2009 as a homecoming to the United States, the competing vision of that move is that the Drumms essentially fled Ireland under difficult circumstances to start a new life in the United States."

What two US judges thought of David Drumm

Two US judges have made critical findings against David Drumm that could now go against him in his bid to get bail and fight his extradition.

Drumm had tried to go bankrupt in Boston so he could walk away from his debts to the former Anglo Irish Bank. The District Court judge Frank Bailey heard evidence from the bank and his bankruptcy trustee about his failure to disclose all his assets in a hearing in Boston last year. Drumm had blamed his advisors.

But in his highly critical 122-page judgment, Judge Bailey found that Drumm was "not remotely credible" and "his conduct both knowing and fraudulent." His statements to the court "were replete with knowingly false statements, failures to disclose, efforts to misdirect, and outright lies."

The judge found that after the collapse of Anglo Irish Bank, Drumm started transferring assets to his wife, and the following year they moved to the US. He believed that both David and Lorraine Drumm were "motivated first and foremost by desire to shelter their assets from seizure by Drumm's creditors, especially Anglo."

Drumm had "knowingly and fraudulently" sought to put assets beyond the reach of his creditors by transferring cash and other assets, totalling around €1m, to his wife.

Judge Bailey found that Drumm "is not credible or truthful and has made misrepresentations at every stage of these proceedings."

The former Anglo banker appealed this finding. He blamed the advice he had received from lawyers and accountants and had claimed that the original bankruptcy court had erred in its findings.

Last week, the US District Court Judge Leo T Sorokin found against him too. Judge Sorokin ruled that "no mistake" had been made by the original Bankruptcy Court in refusing to discharge Mr Drumm from his debts of around €10.4m.

He found that there was neither an "error of law" nor any "clearly erroneous finding of fact". He said the original bankruptcy court finding that Mr Drumm had "adopted a strategy with respect to truth-telling and full disclosure" to suit his purposes was a "well reasoned" finding, "amply supported" by the evidence.

He found that Mr Drumm had employed a "tug-of-war" strategy in relation to disclosing his finances, and said that he could not now blame his advisors for that strategy.

Judge Sorokin said that there was no evidence that "even comes close" to suggesting that Mr Drumm did not understand he had to make full disclosure of all asset transfers.

Sunday Independent

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