INBS wrote off €4m loan to Michael Lynn 10 months after issuing it, court hears

Former solicitor facing charges relating to alleged theft of €27m from lenders

Irish Nationwide Building Society (INBS) wrote off a €4 million mortgage taken out by former solicitor Michael Lynn 10 months after the loan was issued, a multimillion euro theft trial has heard.

Mr Lynn (53) is facing 21 charges relating to the alleged theft of around €27 million from seven financial institutions. 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 at Dublin Circuit Criminal Court to 21 counts of theft in Dublin on dates between October 23rd, 2006 and April 20th, 2007.

An extended jury panel of 15 jurors is required for the trial, which is expected to last up to 14 weeks and hear from more than 70 witnesses.

Patrick McGrath SC, prosecuting, previously outlined to the jury that it was the State’s case that Mr Lynn obtained multiple mortgages on the same properties.

He told the jury they will hear of a repeated method where Mr Lynn applied for mortgages to at least two, and in many cases a number of, different financial institutions which then lent him the money, unaware of the other mortgage applications.

Giving evidence on Thursday, Killian McMahon told Mr McGrath that between 2003 and 2008 he was the internal auditor for INBS.

Mr McMahon said he had no personal dealings with Mr Lynn and was going to give evidence simply from the records of the bank. He said as a result of certain investigations he was asked to review records regarding applications made by Mr Lynn.

He said he made a statement based on information contained within INBS documents and entries in its record books. He said these were documents received by employees in the course of business and that copies were produced that are before the court.

Howth home

Before the jury, Mr McMahon said that a home loan application made by Mr Lynn and his wife Brid Murphy for the purchase of a home in Howth, Co Dublin indicated a loan amount of €4,125,000 and was signed by Mr Lynn and Ms Murphy.

He said that a statement of affairs for Mr Lynn which was purported to have been signed by accountants Kinsella Mitchell & Associates represented the amount of Mr Lynn's assets and the loans on them. He said this statement was given in with the loan application on April 2nd, 2007.

Mr McMahon identified a document as being a solicitor’s undertaking which was provided in relation to the purchase. He said it is said to be signed by solicitor Fiona McAleenan and is dated January 16th, 2007.

He told Mr McGrath that when a letter of undertaking is given, as far as an institution is concerned, there are no other loans on the property. He said that means if a person defaults on a mortgage, the institution can sell the property and take the balance owed to them from the sale.

Mr McMahon said a solicitor would make checks to make sure no other mortgages were on a property and that a financial institution would rely on them because they are an officer of the court and it is a solemn undertaking.

He identified a document as being a cheque issued by Irish Nationwide for the amount of €4,125,000 on April 4th, 2007.

Mr McMahon said that a statement of the account of Mr Lynn and Ms Murphy shows the debit of €4,125,000 on April 4th, 2007.

He said the statement shows payments being made for the mortgage, but then later shows a few receipts where attempted direct debit payments ultimately bounced.

Mr McMahon said that in February 2008 a decision was made by Irish Nationwide to write off the loan and take a loss of over €4 million.

The trial continues on Friday, before Judge Martin Nolan and a jury.