A Connecticut architect testified on Wednesday that property developer Sean Dunne supervised him and made all major decisions after he was hired to work on Mr Dunne’s new home and a New York site he was developing.
The plaintiff's lawyer in Mr Dunne's US civil trial called architect Scott Raissis to the stand in an effort to prove that Mr Dunne effectively controlled his new US entity Mountbrook USA. His lawyers say his wife, Gayle Killilea, owned and ran the firm.
Mountbrook is among assets the plaintiff – the trustee in Mr Dunne’s bankruptcy case – says Mr Dunne turned over to his wife and other relatives in an effort to evade creditors seeking payment of the millions of euro he owed after his Irish property business went bust. The trustee is seeking return of the assets to pay off creditors.
Mr Dunne’s lawyers deny he transferred assets to thwart collection efforts, saying he did so instead out of love for his wife and to secure her and his children’s future .
Mr Dunne convinced Mr Raissis, whose practice caters to the well-heeled residents of what is known as Connecticut’s “Gold Coast”, to serve as trustee in 2010 and 2011 for the trust that owned the New York site.
Mr Raissis testified that he later signed as trustee a $1.55 million (€1.39m) loan to Ms Killilea for the project without being informed of the amount or the terms, which included an interest rate of 17.5 per cent.
“I wasn’t really aware of the responsibilities at that time,” he told the jury. “I was surprised I had to do something like that.”
Mr Raissis said he later learned that lawyers typically serve as trustees. He ceased serving as trustee after he and Mr Dunne ended their business relationship over a billing disagreement.
Under cross-examination from Ms Killilea’s lawyer, Mr Raissis clarified he was not liable for the loan he signed.
“Are you part of an international fraud scheme, sir?” Mr Raissis was asked regarding the loan.
“No,” he responded.
On another project Mr Dunne wanted to keep a building permit in the name of a construction firm also owned by Mr Raissis instead of transferring it to Mr Dunne’s name, according to an email entered into evidence.
“Can’t we just leave it in your construction company’s name as we don’t want anyone on to us?” Mr Dunne wrote in the email.
Mr Raissis said Mr Dunne agreed to transfer the permit after Mr Raissis told him it would be a significant cost to keep it in his firm’s name.
Emails introduced during Mr Mr Raissis’s testimony revealed several instances of Mr Dunne seeking to reduce his fees to him and to other professionals he hired to help him develop his US projects.
In one email Mr Dunne attempted to include the cost of designing interiors in Mr Raissis’s original design fee, which Mr Raissis refused to do. In another email a lawyer hired by Mr Dunne said Mr Dunne didn’t want to pay her to co-ordinate his submission to local authorities.
The plaintiff’s expert witness, George Maloney, a Dublin charted accountant and insolvency specialist, took the stand on Thursday and gave the jury a quick insight into the Celtic Tiger property boom and subsequent crash. “The tiger ran out of road,” he said.
Mr Maloney, who was hired by the plaintiff to review loan documents and business records of Mr Dunne’s businesses, testified that Mr Dunne had personally guaranteed much of his firms’ debts. A chart prepared by him and shown to the jury identified a total of 37 entities tied to Mr Dunne’s two major companies Mountbrook and DCD Building.
By 2007, Mr Dunne’s companies were showing “obvious signs of liquidity strain”.
“The companies’ ability to generate its own cash was drying up,” he said.
A key part of the case is the plaintiff’s contention that Mr Dunne was insolvent at the time he made the asset transfers in the late 2000s, a contention his defence disputes.