US judge seeks list of David Drumm’s alleged frauds

A US judge has requested a list of alleged misrepresentations made, assets hidden from creditors and money and property transferred by former Anglo Irish Bank chief executive David Drumm to his wife.

Judge Frank Bailey asked Irish Bank Resolution Corporation and Mr Drumm's trustee, the court-appointed officer overseeing his US bankruptcy, to submit the list ahead of the five-day trial, starting next week, to help him decide whether the former banker should receive a discharge from bankruptcy.

At a pre-trial hearing in Boston, the Massachusetts judge said that a preparatory statement submitted by lawyers for both sides was one of the best pre-trial statements he had seen during his six years in the bankruptcy court but that the additional list would be "enormously helpful" in making his ruling.

“It would be helpful for me to have the ‘who, what, where, when’ of what you expect to prove,” the judge told American lawyers for the State-owned bank and Mr Drumm’s bankruptcy trustee.

The lawyers have until late afternoon on Monday to file the statement before the trial starts on Wednesday. “We will get it done,” said attorney John Hutchinson, one of IBRC’s lawyers.

IBRC said that it intends to call Mr Drumm (47) as a first witness in a trial that comes three and a half years after he filed for bankruptcy in the US. The judge has allowed lawyers for the former banker to recall him as a witness later in the trial following testimony from other witnesses.

“I would prefer that Mr Drumm will only have to testify once,” said David Mack, one of the two lawyers representing the former Anglo chief executive who now lives in the US.

The court permitted him, as a party in the case, to sit in court for the duration of the trial.

Mr Mack reminded the judge of a ruling he made two years in which he stipulated that anything relating to Mr Drumm’s role as chief executive of Anglo would not be included in the trial.

The pre-trial hearing, which lasted just over an hour, dealt with housekeeping issues such as the witnesses being called, submission of evidence and the timing of opening and closing statements.

Mr Drumm resigned from Anglo in December 2008 and moved to the US in June 2009. He filed for bankruptcy in October 2010 after failing to reach a settlement with Anglo, which he owes more than €8.5 million. Some €7.65 million of debt relates to loans to buy shares in the now defunct bank.

IBRC and the trustee are trying to stop Mr Drumm walking away from debts of more than €10 million on the basis that he concealed assets and tried to defraud creditors by shifting assets to his wife.

Mr Drumm claims that asset transfers fall outside the one-year time limit in which a fraudulent claim can be made against him and that the only transfers made during that time benefitted creditors. His failures to disclose information about certain assets were not intentional but “honest mistakes,” he argues.

The judge said that he would allow both sides 30 days after the trial to submit proposed findings against Mr Drumm, pushing any ruling made by the judge in the case out until late summer.

Mr Mack said that the defence might call Boston lawyer Shari Levitan to challenge evidence from the bank and trustee of Mr Drumm’s “past conduct of alleged fraud.”

He told the court that Mr Drumm had conferred with Ms Levitan about moving to the US to conduct business. The defence will only call her as a witness if that the bank and trustee submit evidence concerning Mr Drumm’s transfer of their former home in Malahide, Co Dublin to his wife in 2009.

Mr Hutchinson, for the bank, said that the plaintiffs should be entitled to depose the witness outside court before the trial if she is going to be called to give evidence during the trial.

“I am hearing heartburn, not an objection with her being called,” the judge said in response. He allowed the bank to take sworn testimony from the witness in a deposition.