Bank claims man is 'ringleader' of fraud allegations

ANGLO IRISH Bank has claimed businessman Gerard McCaughey is the “ringleader” behind serious claims of fraudulent representation and concealment against the bank and another company related to an investment fund to buy and renovate two hotels in Manhattan, New York.

Some 24 actions have been brought by investors in the fund and Declan McGrath, for the bank, yesterday asked Mr Justice Peter Kelly to reject an application by Mr McCaughey to withdraw, for family reasons, from having his case determined as a test case for the other claims.

Counsel said Mr McCaughey had put himself forward as the “self-appointed leader” of the investors but had last Friday, just days after his case was admitted as a test case, said he wanted to withdraw from being a test case.

This was not satisfactory as Mr McCaughey had “agitated for months” over the fund, briefed the media and delivered a statement of claim making serious allegations. Mr McCaughey was now seeking to “back pedal” without standing up these serious claims and the bank believed he should have to stand up his claims “if he could”.

Counsel said addresses had been given for Mr McCaughey at Sandymount, Dublin and at Manhattan Beach, California and his side had been told Mr McCaughey would be unable to leave California for some time.

Martin Hayden SC, for Mr McCaughey, said there was no “volte face” or “back pedalling” by his client but his application to cease being the test case could not have been predicted and was for family reasons.

Mr McCaughey would have to be based in the US for family reasons for a period and it was in those circumstances he wished not to have his case proceed as the test case. Counsel stressed Mr McCaughey was not withdrawing his action but just did not wish it to be the “pathfinder” action.

Mr Hayden said it was being proposed a claim by Seán Johnston, Old Tramore Road, Waterford, who is in Ireland full time and is available, should be treated as the test case.

Mr Justice Kelly said some 24 claims had been brought in almost identical terms and he had proposed, instead of “churning up fees”, one case should determine all claims and that had been agreed to by counsel for the various claimants.

He noted the bank alleged Mr McCaughey had “made the running” in the proceedings and should have to stand up his serious allegations. The action by Mr McCaughey had also been transferred to the Commercial Court list last week.

In those circumstances, the judge said he believed the McCaughey case should remain the test case.

The actions are against Anglo and Mainland Ventures Corporation (MVC), Delaware based and wholly owned by Anglo, over investments in the Anglo Irish New York Hotel Fund, a private equity investment in which some 50 high net worth Irish-based individuals invested an average $ 1 million (€667,000) each in 2006. Mr McCaughey invested $978,580 in September 2006.

Both defendants are being sued by 24 “high net worth” Irish-based private investors for $23 million over alleged fraudulent and/or reckless concealment and/or misrepresentation concerning the hotels fund.