Remember Ireland's infamous stamp act?
In the gloom of the 1950s, this state endured its own version of a pyramid scheme. But was Paul Singer a con man or just an unlucky businessman? Pat Boyle traces his rise and fall
THE financial scandal which erupted around Shanahans Stamp Auctions in 1959 had all the hallmarks of a classic pyramid operation.
The scam was orchestrated by a sophisticated con man who played on the greed of unsophisticated investors desperate to make a few pounds amid the gloom of 1950s Ireland.
A couple of years ago, we were treated to harrowing scenes from Albania as the poverty-stricken victims of pyramid schemes queued in vain to get their money back. The fact that an almost identical scam was played out here just a few decades previously has largely been forgotten.
There was one difference between the pyramid operations of Albania and the Irish scam organised by Dr Paul Singer: gullible Albanians were simply parted with their cash, which was to be invested on their behalf and eventually returned with handsome interest.
There was no mention of how that interest would be earned, but as long as the payments were forthcoming over the key early days of the scam there was no need to.
Dr Singer had a real business which actually generated an income. The problem was that this income had no hope of ever matching the expectations of investors.
Shanahans Stamp Auctions was based on the premise that if you control a dominant share in the market, you can make exorbitant profits by controlling the supply. It's a high-risk strategy well practised by commodity traders down the centuries until 20th century regulators caught up with them.
In the case of Shanahans, the commodity was collectable stamps. Dr Singer would trawl the auction houses of Europe and further afield, bringing back collections to be sold at regular auctions conducted by Shanahans.
It was crucial that these auctions were well attended events, and Dr Singer proved himself a master of self-promotion. His jocular figure cut a dash amid the gloom of 1950s Ireland, where he was feted by Dublin society.
Born in what is now the Czech Republic in 1911, he grew up in Austria and London, where his father ran a brokerage. His father's business collapsed in 1953, leaving a trail of desolation running to thousands of pounds.
Shortly after this Dr Singer moved to Ireland, was introduced to the Shanahan family and convinced them to join him in his stamp venture.
The marketing ploy was simple. Promising anyone with a ``small sum'' to invest absolute security and handsome returns of up to 25pc, Dr Singer advertised his investment business directly to the public.
The people of Ireland responded in droves. Money flowed in £5.25m, by one estimate. That's £87.5m in today's money. The business grew, employing almost 100 people at one stage.
Dr Singer trotted the globe in search of valuable stamp collections. The weekly auctions were major public events. To ensure their success, he had the room peppered with his own bidders, though few seem to have noticed that it was the same faces who appeared to be doing all the bidding.
There are many who to this day believe Dr Singer did no wrong. And indeed, investors who got in early enough made some money out of the venture. It was mainly those who joined the bandwagon in its late years who were caught to the tune of almost £2m. Some £3m was paid out in dividends, but this still left a huge shortfall unaccounted for.
Dr Singer's undoing was a long time coming, and but for a robbery at Shanahan's in Dun Laoghaire in 1959, it's anyone's guess how long he may have gone on successfully duping the public.
According to reports, the break-in and robbery resulted in the disappearance of an uninsured collection worth a staggering half-a-million pounds, or about £8.5m in today's terms.
This caused a panic among investors. The edifice cracked and investors besieged the auction house looking for their money.
Like all pyramid schemes, Singer had been using incoming investments to pay outgoing dividends. The success of the venture depended on maintaining investor confidence; as soon as they started demanding their original investment back, the game was up.
Gerard O'Brien of accountants Craig Gardner was appointed liquidator. He spent almost a decade sorting out the mess. There were some worthy assets in the company at the time of its demise, notably a one-sixth share in the Burrus Collection, one of the world's finest. Dr Singer also had an option to acquire the remaining shareholding.
The doctor's supporters claim that if circumstances had not intervened, he would have exercised this option and Ireland would have become the stamp capital of the world. They also believe that jealous rivals organised the robbery which was to lead to the collapse.
Singer himself was tried for fraud and sentenced to 14 years in prison. He was later acquitted, but only after serving two years in custody.
Desmond Shanahan was sentenced to 15 months. He later became a barrister, practising in London.