Former Custom House Capital chief executive jailed for six years for fraud

The former chief executive of Custom House Capital (CHC), Harry Cassidy, has been sentenced to six years and 10 months in jail for conspiracy to defraud investors.

Judge Orla Crowe in the Dublin Circuit Criminal Court said she believed a headline sentence of 14 years was warranted, given that what had happened at the company would not have occurred were it not for him, but then reduced the actual sentence because of mitigating factors.

What had happened at CHC had been highly organised, systematic, and a gross abuse of trust, with the victims being “blameless people” who had trusted the company with their investments. That the fraud involved pension money was a “particularly aggravating factor”, she said.

[ Custom House Capital investors commend sentencing decision by judge ]

Conspiracy to defraud is a common-law offence with no maximum sentence set down in legislation. CHC collapsed in 2011 but was being monitored for years before that by the Financial Regulator and the Central Bank of Ireland because of concerns about how it was being run. The business was put into liquidation in 2011 because investor funds were used without the investors’ consent to prop up property investment schemes that were in financial difficulty.

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Judge Crowe gave Cassidy credit for pleading guilty and, because of his age and his previously good character, she sentenced him to seven years, but reduced it by the two months he had already served in prison in Germany, before his voluntary return to Ireland.

The former CHC chief executive, director and shareholder stood with folded arms in the packed courtroom as the judge explained the reasoning behind her sentence. “He was the man in charge,” she said.

In April, Judge Crowe heard directly from a number of investors about the devastation they suffered when they lost their pensions after investing through CHC. In the period since April, she said, she had read the 202 victim impact statements she had been given.

The CHC liquidator Kieran Wallace, she noted, had reported that of the €61 million that had been improperly diverted within CHC, it was now estimated that €41 million would be recovered, with €39 million of that available for investors.

[ Investors tell of devastation caused by Custom House Capital collapse ]

At the time of its collapse, CHC was looking after €252 million in assets and had 2,701 clients, of which 2,101 were pension accounts.

Judge Crowe said investors had suffered stress, loss, upset, worry for themselves and their families, health difficulties, and marital difficulties. Some had had to sell their homes while others had since passed away.

Before the court were Cassidy (67), Paul Lavery (47), John Mulholland (72), and John Whyte (52). Cassidy, Lavery and Whyte pleaded guilty to conspiracy to defraud, while Mulholland pleaded guilty to neglect in the discharge of his duties as a non-executive director.

Cassidy, of Clon Brugh, Aitkens Village, Stepaside, Co Dublin, is the former chief executive of CHC. Lavery, of Rafeenan, Ballynod, Co Monaghan, is a former financial controller. Mulholland, of the Foxes Collvert, Mount Juliet estate, Thomastown, Co Kilkenny, is a former non-executive director, and Whyte, of Beechpark, Lucan, Co Dublin, is a former head of private clients. Cassidy and Mulholland were the main shareholders in the business.

Whyte was sentenced to four years, Lavery to three years, and Mulholland to one year. The headline sentences before mitigating factors being taken into account were, for the three men, eight years, six years, and two years.

Judge Crowe said Cassidy had been the “dominant force” in the scheme and had breached every duty and trust placed in him by “blameless” investors, most of whom were trying to provide for their retirements but had seen their plans “destroyed”.