INBS would not have lent €4.1m to Lynn if aware of other mortgage, court hears

Building society officials have told a trial they would "absolutely not" have issued a €4.1 million loan to former solicitor Michael Lynn if they had been aware there was another mortgage taken out on the same property.

A former branch manager and senior underwriter with Irish Nationwide Building Society (INBS) told Dublin Circuit Criminal Court on Friday that they believed the mortgage taken out by Mr Lynn and his wife, Bríd Murphy, for Glenlion House in Howth, Co Dublin was the sole mortgage on this property.

Mr Lynn (53) is facing 21 charges relating to the alleged theft of about €27 million from seven financial institutions, the trial has heard. He denies all charges against him.

The financial institutions involved are Bank of Ireland Mortgages Bank Ltd, Danske Bank, Irish Life and Permanent, Ulster Bank, ACC Bank plc, Bank of Scotland Ireland Ltd, and INBS.

Mr Lynn, with an address at Millbrook Court, Red Cross, Co Wicklow, has pleaded not guilty to 21 counts of theft in Dublin between October 23rd, 2006 and April 20th, 2007.

It is the prosecution case that Mr Lynn obtained multiple mortgages on the same properties in a situation where banks were unaware that other institutions were also providing finance.

The trial on Friday heard evidence of a €4.125 million mortgage application Mr Lynn made to INBS in late 2006 to purchase Glenlion House, a property valued at €5.5 million.

Good contact

Mark Mulcahy, a former branch manager at INBS in Dún Laoghaire, told the trial he was introduced to Mr Lynn through a broker as a young self-employed solicitor "who might be a good contact to meet".

The pair began a business relationship and Mr Mulcahy said he looked after a number of Mr Lynn's buy-to-let mortgages for him in the early 2000s. When asked if they had a social relationship, Mr Mulcahy said they weren't friends, but Mr Lynn invited him to three functions in the Burlington Hotel, Citywest Hotel and Vicar Street.

“He had outgrown me and was doing bigger things then and I hadn’t seen him for a number of years,” Mr Mulcahy told the trial.

The court was brought through documentation in relation to the Glenlion House mortgage application.

Mr Mulcahy said he had no authority to grant mortgages, but would send on applications to underwriters in the building society’s headquarters, who would in turn approve and sanction the mortgage.

Building society documents said Michael Lynn has “always maintained an immaculate repayment record” and was in a “strong financial position”.

“His profits for last year were approximately €1.25 million. He has assets valued at over €45 million,” one document said. At the time, Mr Mulcahy said he would fully recommend the loan for Mr Lynn “given his excellent repayment record, strong financial position and valuable assets”.

The court has heard the mortgage was drawn down in April 2007.

“As far as you were aware, this was the sole mortgage being taken out on this property?” prosecution counsel Patrick McGrath SC asked Mr Mulcahy.

“Absolutely,” Mr Mulcahy replied.

“If you had been aware that there was another mortgage, would you have recommended this to headquarters?” Mr McGrath asked.

“Absolutely not,” the witness replied.

Credit check

The court was shown an Irish Credit Bureau check on Mr Lynn around this time, which came back with "no difficulties", Mr McGrath said.

Olivia Greene, senior underwriter with INBS during the same period, gave evidence that as far as she was concerned, the Glenlion House mortgage was the sole mortgage on the property.

When asked if she would have advanced the money if there was another mortgage on the property, she replied: “Absolutely not.”

Andrew Snow, a former business relations manager with Bank of Scotland Ireland, told the trial that he first dealt with Mr Lynn when he applied to the bank for a €3.85 million mortgage to purchase Glenlion House in December 2006.

Internal documentation from the bank described Mr Lynn as a “strong, commercial, capable individual” who already had property loans with a value of €10.2 million with the bank.

His wife was described in bank documents as a nurse manager with an annual salary of €47,000, who had taken a career break to care for her sick father.

Glenlion House was described in bank documents as “very prestigious with cliff views in an excellent setting”.

A declaration signed by Mr Lynn and his wife stated that there were no existing loans in their names with Bank of Scotland Ireland or any other lender other than those declared in that form, the court heard.

A condition of the mortgage was that it was “the only mortgage on the property”, Mr McGrath said. Mr Snow agreed.

Second charge

The court was shown documents signed by Mr Lynn and his wife which stated, “You are not allowed to create a second charge over this property.”

The loan was taken out in April 2007.

The court heard that after these matters came under investigation, the bank established that the undertakings provided by Michael Lynn & Co solicitors had not been complied with and the bank was unable to protect the security of Glenlion House.

“The bank therefore suffered a loss of not less than €3.85 million,” Mr McGrath said.

It was later established that Mr Lynn obtained another mortgage for Glenlion House with ACC bank in October 2007, Mr McGrath said.

The trial, which is expected to run for up to 14 weeks, resumes on Monday before Judge Martin Nolan and a jury.