Monday 23 October 2017

Developer sues Nama and Anglo over €8m fees

Flynn leads claims bank 'swelled profits' by changing interest rates

BANK CHIEF: Brendan McDonagh, head of Nama, which is being sued
BANK CHIEF: Brendan McDonagh, head of Nama, which is being sued

ROISIN BURKE

Developer John Flynn has launched court proceedings against the IBRC and Nama.

Flynn and others allege serious fraud and overcharging related to €150m worth of Anglo loans used to buy or develop property in Ireland, Britain and the US, in a writ lodged in New York last week.

It claims that Anglo deliberately altered interest rates on loans, resulting in overcharges of at least €8m.

Other plaintiffs are Flynn family members, Joseph Sheehan, a brother of Blackrock Clinic founder Jimmy, and companies associated with both Flynn and developer Paddy Kelly.

Court documents seen by the Sunday Independent claim that Anglo overcharged interest on loans, misrepresented the incorrect charging of arrangement fees and the risk involved in acquiring loans, and misrepresented the suitability of the loans for the plaintiffs' investment purposes.

Anglo successor IBRC continued this overcharging scheme, as did Nama on loans it acquired, it is alleged.

Both Nama and IBRC's special liquidator said they would fully defend any proceedings.

It's alleged that "negligent misrepresentations and omissions" led Flynn and the other parties to purchase over 83 loans and that Anglo "swelled its profits by the incorrect and fraudulent charging of arrangement fees and arbitrarily increasing margins on the borrowers' loans".

"But for the misrepresentations and omissions of the defendant, the plaintiffs would not have purchased said loan portfolio.

"It is the plaintiffs' information and belief that this overcharging was done with aforethought, and malicious intent for the purpose of defrauding plaintiffs and unjustly enriching the bank and its successor organisations," the court document read.

Flynn, a prolific developer in the boom, best known for building large parts of Dublin's Smithfield, is now a permanent resident in Florida, according to the court filing, with an address at Palm Beach.

The case claims that Anglo used fraudulent inducements, coercion and threats to prevent plaintiffs entering into competitive loan agreements with other banks and to coerce plaintiffs into entering into further loan transactions with the bank as part of the bank's "ongoing scheme to defraud plaintiffs".

Flynn and the other plaintiffs want the loans involved voided and the personal guarantees that are attached to most of the loans rescinded and to recover monies allegedly due to them.

A portfolio of loans related to Flynn and Paddy Kelly, including the Harcourt Street Children's Hospital and a stake in the Burlington Plaza and Belfield Office Park, had been suggested as being prepped for market some months back.

Irish Independent

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