Drumm to blame law firm in US bankruptcy appeal
DISGRACED banker David Drumm plans to blame mistakes allegedly made by his former US legal advisers as part of his bankruptcy ruling appeal.
The former Anglo Irish Bank boss has outlined his strategy for the appeal in court filings seen by the Irish Independent.
He will claim he fully informed his lawyers of more than €1m in cash and property transfers he made to his wife Lorraine.
These were not included in a statement of financial affairs, known as a SOFA, filed on Mr Drumm's behalf by the law firm as part of his application for bankruptcy in the US state of Massachusetts.
The omission was cited by a bankruptcy judge as one of the key reasons why Mr Drumm was being held fully liable for debts of €10.5m and was being denied a fresh financial start.
In a ruling last month, Judge Frank Bailey concluded Mr Drumm had knowingly and intentionally concealed the assets and transfers by failing to disclose them.
The judge found Mr Drumm had told "outright lies" to the court about his financial affairs and had "under oath, knowingly and fraudulently failed to disclose" asset transfers.
The SOFA is a crucial document in bankruptcy cases and it is an offence to file one that is untruthful.
But now Mr Drumm is planning to argue that the judge made an error by not taking into account the fact he had told Boston law firm Looney and Grossman about the transfers before it filed the financial affairs statement on his behalf.
In court last year, attorney Stewart Grossman admitted the firm had "goofed" by not including the information about the transfers.
He claims a colleague who made the filing had incorrectly believed the transfers did not have to be included.
The argument is one of 10 grounds Mr Drumm will rely on when his appeal is considered later this year.
He is also set to argue that he provided "a road map of every transfer" to the bankruptcy trustee handling his case shortly after the incomplete SOFA was filed.
Mr Drumm is set to claim this demonstrates he did not fraudulently conceal the transfers.
Most of the assets were passed to his wife's control in late 2008 as Anglo's share price plummeted.
Mr Drumm left the bank at the end of that year and moved his family to the US the following summer, where he set up a business advisory firm.
However, he ended up filing for bankruptcy after IBRC, the former Anglo, pursued him for borrowings of over €9m.
The money was used to buy shares in the bank, but these became worthless after it was nationalised.
In court papers, Mr Drumm indicated he would be lodging 128 exhibits in support of his appeal, the majority of which relate to emails and other communications with his former legal representatives.
If he fails to win his appeal, his creditors will be able to take legal action to recover debts. They will also be able to pursue him for future earnings.
The banker claims Judge Bailey made several errors in his ruling and did not take a number of mitigating factors into account.
The appeals court is not set to begin deliberating on the case until next month at the earliest.