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Wednesday 27 August 2014

Dearbhail McDonald: Landmark trial shows no one above law

Credit to the gardai whose painstaking efforts built case against rogue lawyer

Published 19/11/2013 | 02:00

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The former offices of Thomas Byrne Solicitors on Walkinstown Road in Dublin. Colin Keegan / collins

SIX years ago, High Court judge Mr Justice Peter Kelly sent documents relating to solicitor Thomas Byrne to the Garda Fraud Bureau.

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The documents were sent after EBS, the lender, sought to recover some €12.5m from Byrne in the Commercial Court, the big business division of the High Court.

Mr Justice Kelly, who ordered Byrne to pay back some €30m to three banks in one sitting, said that he was taking the decision to send the papers directly to gardai because of the "disturbing matters" in documents submitted to the court by the EBS.

The task of picking up the court papers fell to Detective Sergeant Paschal Walsh, who put together a 10-strong team at the bureau to investigate a mammoth, €52m fraud perpetrated by Byrne against banks and his clients, some of them lifelong friends.

What was striking, even back in the early days of the recession, was that the banks rushed to the civil courts rather than gardai despite being the apparent victims of a major financial crime.

For their part, Byrne's friends and lifelong clients had no clue their family homes had been transferred into his ownership until the Law Society shut his practice down.

Byrne transferred homes, including that belonging to his best friend's late mother, into his name and then used them as collateral for property loans.

The banks had good reason for their reluctance as a criminal investigation might expose the lax lending, bordering on recklessness, practised by many financial institutions during the boom years.

The reticence on the part of the banks and others was making it difficult to effectively investigate and prosecute white-collar crime in the wake of the collapse in all but name of the Irish banking sector.

This resulted in the introduction of new laws making it a criminal offence for people not to report to gardai information which they know or believe might be of "material assistance" to prevent the commission of certain crimes or to hinder the prosecution of those who have committed certain crimes.

Section 19 of the 2011 Criminal Justice Act was aimed at helping gardai investigate financial crimes including corporate offences, fraud and corruption.

It led to panic among Ireland's professional classes, including bankers, that they would face prosecution for failing to report suspicious activity.

The section, which many lawyers anticipate will be subject to constitutional challenge because it casts such a wide net – the section covers some 130 offences and applies to "any person" – proved pivotal in the long-running investigation into Thomas Byrne's legal and property practice.

Suddenly, the gardai had in their arsenal powers to arrest people without a warrant for up to 24 hours if they suspected someone of withholding information.

The penalties are severe: failure to report attracts, on indictment, an unlimited fine and up to five years in prison.

Armed with court orders requiring disclosure from various banks, Det Sgt Walsh and his team set about the task of unravelling Byrne's chaotic finances.

Ironically, the Law Society – the ruling body for solicitors – had been in situ in Byrne's legal practice when much of the chaos ensued.

Byrne, who admitted in a prior commercial court dispute that he had forged a colleague's signature on a document, ran an unusual defence.

He did not plead guilty, but used the opportunity presented by his trial to make effective admissions of guilt whilst mounting a defence, of sorts, of duress.

Byrne, who gave evidence in his own defence, also claimed that he was the victim of an abusive relationship with his former business partner, the developer John Kelly.

Sounding more like a vulnerable battered spouse than a savvy lawyer, Byrne claimed that he had been "groomed" by Kelly to draw down some €52m in bank loans.

Byrne mounted an emotional defence of duress, without formally declaring it as his defence as to do so would mean certain legal conditions must be met.

His claims, including that veiled threats were made by Kelly that his (Byrne's) daughter would be harmed and that he was brought into a cold store in a Centra and handed €10,000 before he fled the country, were dramatic.

It pained Byrne that Kelly, who had been investigated by gardai, was not before the courts.

There is much truth to Byrne's claims that he got caught up on a human level in the bank's reckless lending.

And, as Supreme Court Judge Frank Clarke pointed out recently in an extra judicial speech, there are consequences that flow from failing to treat gross negligence in the management of important institutions or major companies as criminal activity.

At heart, however, Byrne's frauds – while complex on one level – were simple deceit on another.

His conviction sends out a strong, much-needed message, that no one is above the law.

Not even those entrusted to uphold and protect it.

Irish Independent

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