A family's shame as proud empire brought to ruin
Ruairi O Ceallaigh's gambling addiction destroyed the law firm his father had built up, writes Maeve Sheehan
DURING the heady days of the Celtic Tiger, gambling was never more in vogue; stocks, shares, property and a proliferation of bookies shops and on-line betting. It wasn't difficult for Ruairi O Ceallaigh to conceal his gambling problem in a society where splashing out thousands to lay claim to a hind leg of a race horse was all the rage.
The thirty-something solicitor, who ran an established family practice with his younger brother in Phibsboro in north Dublin, never raised suspicions in his own syndicate. They called themselves T-Shock, an 'in' joke because the members included Sean Nolan, a civil servant who ran Bertie Ahern's constituency office for several years. Jerry Beades, a pal of the former Taoiseach who sits on Fianna Fail's national executive, was another. Their racehorse was called Gagnant, French for winner, but it failed to live up to its name, mostly trailing home down the field.
But the optimistic syndicate continued to throw money at the horse until the recession bit and they decided to fold. O Ceallaigh, as the solicitor in the group, took charge of winding up the syndicate, chasing up other members for money owed in stable and training fees and eventually arranging to sell the horse to Prunella Dobbs, the trainer, earlier this year. Gagnant's luck changed; the horse went on to win €4,900 in Roscommon, €1,615 in Naas and most recently €880 when it came third at the Galway Races. Ruairi O Ceallaigh was all lucked out.
Unknown to his friends and his family, gambling was not just a casual pastime but an addiction. He gambled on property, shares and stocks. As long as the property bubble swelled and the share index ascended, so did O Ceallaigh's fortunes. When he could conceal his losses no longer, he stole from the family law firm to hide his debts. By the time he was found out three months ago, he had gambled €2.4m of clients' money.
Last week, the High Court ordered that Sean O Ceallaigh & Co, the law firm so proudly founded by Ruairi's father 52 years ago, be wound up despite pleas from his devastated family who have been left to pick up the pieces. Ruairi has been suspended from practice and the papers sent to the DPP.
The extent of Ruairi O Ceallaigh's gambling remains unknown: the Law Society is still investigating how exactly he blew €2.4m of clients' money and what became of another €1.5m that he "double-borrowed" from different banks on four properties.
Meanwhile, the O Ceallaigh family -- some of whom were employed in the family firm -- are reeling. It took Sean O Ceallaigh, the son of a garda sergeant, half a century to build his practice and a decade for his son to destroy it. Such a shocking end to the family business was unthinkable to the elder Mr O Ceallaigh, when he gave an interview to the Irish Times four years ago, flanked by the son who would cause its demise.
Raised in Mallow in Co Cork, Sean O Ceallaigh was apprenticed to his uncle before setting up his own company at Doyle's Corner in Phibsboro in 1958. He reminisced about going across the road to take calls because he had no telephone in his office.
He handed over a burgeoning office with 14 staff to his two sons, Ruairi, 39, and Cormac, 37, seven years ago. He told the newspaper with pride: "These lads, I would consider myself far less qualified than they are -- they've studied far more subjects: employment law; family law; trust law; European law. And they can specialise".
Unknown to Mr O Ceallaigh, his elder son was already caught in a financial quagmire, compounded by the collapse of the property bubble. Within a year of the interview in 2006, Ruairi had drawn down mortgages worth €1.5m on four properties that were already in hock to the banks. He used the money to invest in stocks and shares and contracts for difference -- high risk investment products with which the investor bets on the future price of the shares. Ruairi gambled and lost massively, nobody knows yet quite how much.
He kept up the appearances of a successful solicitor, borrowing more money from Ulster Bank to buy a house on Upper Grand Canal Street. But according to affidavits submitted to the Law Society, not a penny of it seems to have been spent on the house.
Instead, he borrowed money from a longstanding client, Eamon Looby, a retired garda who lived in Glasnevin. Mr Looby, 74, had built a house in his substantial back garden, which he moved into after selling the family home. Mr Looby regarded the proceeds of some €500,000 as "security" in his old age. Ruairi persuaded the elderly client to loan him the money, promising to repay it with 10 per cent interest 12 months later. Mr Looby agreed.
He put down €300,000 of the loan as a deposit on the house in Upper Grand Canal Street. When he needed more
money to finish the sale, he looked to the company client accounts. One of his clients, Donal O Suilleabhain, had left a €1.5m bequest to the Archbishop of Dublin, Diarmuid Martin. Ruairi dipped into the account and took out €872,186 to complete the sale of the period home and €52,436 to refurbish the period property, according to affidavits submitted by his brother.
Ruairi O Ceallaigh wasn't the only solicitor double mortgaging properties: the rogue solicitors Michael Lynn and Thomas Byrne had raised millions of euro in fraudulently obtained mortgages, highlighting the lax lending practices in financial institutions.
When financial institutions began belatedly auditing their mortgages in the aftermath of the public scandal, the writing was on the wall for Ruairi. When one bank started asking questions, he took €500,000 from the Archbishop's bequest to pay off the loan. He could keep the banks at bay no longer. On July 29, when Cormac was preparing to leave the firm at the end of the busy law term, Ruairi took him aside and confessed that there was a problem. He admitted to "double mortgaging" four properties and the banks were asking questions. He blamed a gambling problem that fuelled insatiable betting on contracts for difference.
Cormac later described in a statement to the Law Society howafter he "broke down and went into shock", he persuaded Ruairi to resign and got legal advice.
The worst was yet to come, as Cormac discovered three weeks later when Ruairi and his wife gathered at his house to discuss the crisis.
"I asked him was there anything else I should know about. He then broke down and proceeded to tell me that he had taken money from the client account. I was in such a state of shock; I had to leave the house and go outside where I wept and shook. When I returned to the house, Ruairi had written out a total of eight client names with a total of €2.4m that had been misappropriated," he said.
"I never once would have imagined that Ruairi would do this. After my wife, he is the closest person to me, my brother, partner and best friend. We went to the same primary school, secondary school, delivering letters as a law clerk, studying hard and eventually qualifying. I trusted him implicitly. I believed him to be a person of the utmost integrity and completely honourable."
Days later, the family informed the Law Society, which launched an investigation into the matter.
The impact on the O Ceallaigh family, in particular, Sean O Ceallaigh, was noted by the High Court, as one of the most tragic aspects of the case. Some family members were employed in the business. Mr O Ceallaigh, at 79, has no private pension, drawing an income instead from working three mornings a week reading legal titles in the family firm.
The elderly man was filled with shame at his son's conduct but was determined to fix it. When he appeared before the Law Society, Mr O Ceallaigh offered to sell the €2m family home he shared with his wife in Castleknock, and move into a rented accommodation, if it meant the practice could be saved. They offered to give the Archbishop of Dublin the deeds to the house on Grand Canal Street. But the High Court agreed that this would not be enough to repay the substantial debts, the scale of which are still emerging.
Cormac also faces questions. The brothers worked side by side as equal partners in the firm, drawing salaries of €180,000. They trusted each other implicitly, according to Cormac. When it came to clients' money, the cheques required just one signatory, which is why Cormac never knew his brother was siphoning off cash and which leaves him facing questions over his supervision of the firm.
Ruairi wasn't alone in investing in property either. He borrowed €18m in personal loans on properties now worth €9m, while Cormac also invested heavily, taking out loans of €10m on properties now worth €4.5m.
The ethos that Sean O Ceallaigh instilled in the business and his children is reflected in how the family has dealt with the crisis. Ruairi is getting treatment for his addiction. Cormac, who was this weekend embroiled in the grim task of winding down the firm, has forgiven him.
"I bear Ruairi no ill will and forgive him for what he has done. It could be worse. No one is dead. I have gone through all the stages of anger, pity and now I am at peace. My entire world has been turned upside down. We face a very uncertain future, my business is gone and the knock-on effect . . . goodness it's frightening how one action can have such a ripple effect," he said.
"I worked tirelessly for the past two months to try and rescue the firm and put everything on the line. It has been like a death in the family, clients calling to the office to collect their files and papers, clients who first dealt with my father 35 to 40 years ago, it's very sad," he said.
"Ultimately it's all about the clients and for me it has been a privilege to serve them and do the best I can. I love being a solicitor . . . in the absence of a strong faith, I would have found if very difficult to get through this storm. My faith has been the 'plank in the shipwreck' and I have clung on to it.
"My wife, Niamh, has been a rock of support. We had our first child, Ciara, on September 25. That puts things in perspective. She is the true treasure, everything else fades into insignificance. We are overjoyed, the innocence and security of her, not a care in the world. Goodness, sometimes I wish I could swap places with her!"