Michael Lynn’s second life
What attracted solicitor to Recife, Brazil? Maybe it was its property boom
‘The World Awaits.’ For Michael Lynn the slogan draped across the facade of the Britanic language school must have sounded more like a taunt than a promise. Lynn, the man who amassed millions selling the dream of fortunes in foreign lands, found himself in northeastern Brazil because his own world was contracting, his options narrowing. “I would say he was already in a sort of open prison,” says Mark Astle, the director of the school.
The archetypal prince of the Irish boom, a small-time solicitor who refashioned himself as a global property tycoon, found himself 8,000km from home, in a country where he didn’t speak the language, applying for a €640-a-month job as a part-time tutor.
What Recife did offer, however, thanks to the lack of an extradition treaty between Ireland and Brazil, was sanctuary from the pursuit of the Irish authorities. But even that may now turn out to have been illusory. Last week, six years after Lynn fled Ireland with debts of €80 million and a trail of furious investors in his wake, police in Recife were ordered to act on a “code red” Interpol alert and arrest the 44-year-old Irishman. Within a few hours they had tracked him down.
As Recife awoke from the Brazilian winter this week, blue skies bringing joggers and families to its glorious white-sand beaches, the city looked every bit the rising South American metropolis. Expensive hotels and restaurants stretch along the seafront, a fine new stadium has been built for next year’s World Cup, and car dealerships have begun to diversify into the yacht business.
The economy in Recife, the capital of Pernambuco state and Brazil’s fifth-largest city, has been outpacing the national juggernaut for years, and unemployment is now running at just 6 per cent. Foreign firms such as Fiat and Microsoft have huge facilities here, and the city has been making a hefty return from regionally produced commodities such as ethanol. The bonanza has been affected only slightly by the global economic downturn.
“For Pernambuco, this is the best moment for 50 years,” says Paulo César Maia Porto, one of Lynn’s lawyers.
Yet the spectacular coastline and roaring economy can’t mask some of the city’s problems, in particular its high rates of poverty and serious crime. Although Rio de Janeiro’s drug wars make international headlines, the murder rate in Recife is 58 per 100,000, more than twice that of Rio. In 2009 there was an average of 12 murders a day, and a screen was mounted in the city centre to keep track of the death toll.
In so many areas of daily life the city’s infrastructure has struggled to keep up. Roads can become impassible after a downpour, and traffic is so bad that it can take three hours to travel 40km across the city’s outer belt in rush hour. Even the azure sea is notoriously menacing: swimming is prohibited because of frequent shark attacks.
The life that Lynn and his wife, Bríd Murphy, built reflects some of the city’s paradoxes. The couple, who have a two-year-old son, rent a house in Candeias, a suburb where middle-class families are buying luxury apartments built alongside favelas and open sewers.
Living in a house is an unusual – and, for most, prohibitively expensive – choice in Recife, where the most sought-after home is an upper-floor apartment facing the sea.
But acquaintances say Lynn was determined to find a house. The family have three dogs, two cats and some birds. They wanted more space. What they found was a large house with a swimming pool and a garden in a walled compound surrounded by barbed wire. The road outside is unpaved and has no street lamps. “If you want to live in a house there are very few opportunities,” Astle says. “And if you have one you have to surround yourself with barbed wire, security systems and dogs . . . I wouldn’t want it myself.”
Presumably, Lynn accepted these trade-offs because he had a reason to be in Recife. To some of those who know him that reason is obvious: Recife is in the midst of a residential property boom, and, as one colleague puts it, “That’s what he knows.”
All along the seafront, family homes have made way for soaring apartment blocks that offer uninterrupted ocean views. Every street in certain parts of Candeias seems to have a glass-fronted Portakabin selling apartments off the plans. In one of these, for a half-built development called Helena Borges, a salesman named Eduardo hands out brochures with pictures of immaculate white living rooms and private gyms. A two-bedroom apartment on the 11th floor costs the equivalent of €103,000. “It’s quiet, it’s calm, it’s near the beach,” he says. One of his apartments has already been snapped up by an Irishman named Peter, he adds.
Few saw Lynn’s arrest coming. He certainly didn’t. According to a federal police spokesman, Giovani Santoro, Lynn was calm when he was brought to the station but taken aback by what was happening. “He said he knew this could happen to him some day, but he didn’t think it would happen in Brazil,” Santoro says. “He was surprised.”
This tallies with other accounts of Lynn’s time in Recife, where he lived openly and made little attempt to hide his problems back home. He was also planning for the future: The Irish Times has learned that he was building a house for the family on the outskirts of the city.
His confidence was understandable. For six years Lynn had evaded the Irish authorities, a host of financial institutions and the many investors who lost large sums when his property empire collapsed. In Brazil, he believed, the fact that there was no extradition treaty put him beyond Dublin’s reach. And if that didn’t offer enough protection, then the permanent residence status secured through the birth of his son in Brazil surely would.
His arrest is a dramatic turn in an already remarkable story. The man from Crossmolina, Co Mayo, became a solicitor in the mid-1990s and built a practice specialising in litigation and property conveyancing, giving him a close-up view as Irish property developers’ overseas interests began to take off. Lynn wanted a piece of the action.
Working from his law practice in the Capel Building, near the Four Courts, he founded Kendar Holdings, which built apartments in Leitrim and offices in Cavan but soon expanded overseas, starting with a 272-apartment development in the Portuguese Algarve in late 2003.
Specialising in overseas investment property, Kendar grew quickly, earning a reputation for savvy marketing by recruiting celebrities such as the Portuguese footballer Rui Costa. At one point he gave away an apartment in a Bulgarian ski resort on The Late Late Show; it was one of the programme’s biggest prizes.
By the time Kendar collapsed, in 2007, Lynn had 148 properties, 154 bank accounts and assets worth more than €50 million. All the time he had continued to run his legal practice.
Concerns about Lynn’s activities came to light in October 2007, when the Law Society, the body that regulates solicitors in Ireland, shut down Lynn’s legal practice amid concerns about his property dealings and borrowings. An investigation by the Law Society found he had used his practice’s client account for personal dealings and there had been a flow of money between his practice and property business.
In December 2007 the Law Society was due to cross-examine Lynn in the High Court. It intended to press him on his property dealings, particularly his drawing down of multiple mortgages using solicitors’ undertakings, a trust mechanism lawyers use in residential-property transactions. It has been alleged that Lynn used these undertakings to draw down multiple loans and build up enormous debts. But Lynn never showed up. A bench warrant was issued for his arrest, but by then he had already fled. He left with bank claims of €80 million against him and owing many millions to investors who paid deposits for his properties in Portugal, Bulgaria, Hungary and Slovakia.
Lynn was struck off the roll of solicitors and looked into by the Garda Bureau of Fraud Investigation. That long-running inquiry culminated, in February last year, with the Director of Public Prosecutions recommending that he be charged, paving the way for the issuing of an international arrest warrant. According to Brazilian sources, the extradition request from the Irish authorities states that they intend to bring 33 charges against Lynn.
In a rare interview in 2009 Lynn said that although his extensive borrowings were misguided he does not believe he acted fraudulently. “The one thing I want to make clear is that I am not going to be a scapegoat for others,” he said. “I am not going to be used as an example of what was recognised as an acceptable form and practice of business by bankers, lawyers, accountants and auctioneers. I am not going to be the poster boy who ends up in prison to my cost alone.”
Little is known about the solicitor’s movements after he left Ireland. He spent some time in Portugal, and sightings were reported in Bulgaria, New York and London. In August 2009 he was interviewed by police in Budapest, but he could not be extradited to Ireland because there were no criminal charges against him at the time.
The Brazilian connection had been established well before Lynn’s property empire collapsed. Company records for Kendar Holdings showed that, in early 2007, Lynn was planning to buy four plots of land in Brazil worth €686,000. He also planned to set up a “property speculation arm” in Brazil, according to a draft business plan for the company written in late 2006. The same plan said one of the company’s strengths was that it had a “visionary owner” in Lynn, who was “prepared to take bold decisions”.
Inquiries by the Brazilian police show Lynn entered the country for the first time in 2007, and then three more times up to 2011. Since settling in the country Lynn has established ties to three cities. He and Murphy were listed as the owners of Golina, a property firm whose papers were first lodged in November 2007 in Fortaleza, a coastal city in the north. Separate files show that in 2011 and 2012 the couple declared their home address in Jardins, a wealthy suburb of São Paulo, the country’s commercial capital.
By the summer of 2012 Lynn was working at Britanic language school in Recife, and in October that year he and his wife registered a property company, Quantum Assessoria E Empreendimentos (Quantum Consulting and Ventures) Ltd, which remains active. Lynn is believed to be involved in a venture in Cabo de Santo Agostina, 35km south of Recife, where demand for housing has surged as a result of the expansion of nearby Suape, one of the biggest ports in Brazil. Lynn, it appears, was back in business.
By the time of his arrest in Recife, Lynn had settled into a routine that centred on his home, the school and occasional trips to a golf and country club where he would bring his son to see the horses. “He had a very regular pattern,” says Santoro, the police spokesman. “He would go to the school where he taught, go out with his wife, go to the shops.”
In order to get to Lynn, Dublin knew it had to strike a deal with the Brazilians. According to Minister for Justice Alan Shatter, the two states recently decided to begin talks on an extradition treaty; they also agreed that, pending the conclusion of the treaty, they would treat extradition requests from each other on the basis of reciprocity. Once that was agreed, Dublin duly issued a request through Interpol for Lynn to be sent home.
Since his arrest nine days ago, the Irishman has been held in a unit reserved for university graduates and ex-policemen at Cotel prison, on the outskirts of Recife. He can be held for up to 90 days unless his lawyers succeed in having him released on bail. Astle says Lynn appeared calm when he saw him briefly at the police station on the day of his arrest, but Astle recalls Murphy telling him her husband was “very scared”.
Lynn has made it clear he will resist the attempt to extradite him. The Irish authorities are determined to have him returned. And in the middle are the 11 judges of Brazil’s Supreme Federal Court.
The closing act is theirs to write.