Businessman to repay €1.2m to investors

A BUSINESSMAN alleged to have converted to his own use some investment funds intended for a property investment project in Budapest has agreed to repay €1.2 million to four investors in the project.

Richard Fitzgerald, Rose Lodge, Blackrock, Cork, consented to judgment in that amount this week while proceedings were adjourned to next week by Mr Justice Peter Kelly against estate agent William Mahony, Cobh, Co Cork, concerning the same project.

The plaintiff investors are Peter Clarke, a management consultant, Mulberry House, Newbridge, Co Kildare; Brian Fallon, a restaurateur, Ladytown, Newbridge; Con O’Leary, a dentist, Warrensgrove, Lissarda, Co Cork, and Seán Bosco Mac Gearailt, a businessman, Greenane, Kenmare, Co Kerry.

The Budapest project involved the purchase of a large apartment building to be renovated within two years and sold on.

The plaintiffs claimed they paid €1 million to Mr Fitzgerald in early 2006 on being told they would get a 50 per cent return in two years.

After becoming increasingly concerned about their funds, they initiated court proceedings.

Mr Clarke said Mr Fitzgerald had since told him he had invested just €800,000 of the plaintiffs’ money in the Budapest project with the balance used for his own purposes in his other businesses.

Mr Mahony had also alleged the only funds that Mr Fitzgerald put into the project was €800,000 by means of a loan from Anglo Irish Bank.

Represented by Brian Cregan SC, the plaintiffs claim Mr Mahony was “deliberately opaque” in an affidavit concerning how the Budapest property was financed. Mr Clarke said “the entire financing of this transaction is murky in the extreme”.

In an affidavit, Mr Clarke said it was difficult to accept, in the absence of relevant figures, Mr Mahony’s claim that the sale price of €12.8 million represented an overall loss on the project.

He was also concerned Mary and JJ Frahill, a sister and brother-in-law of Mr Mahony, may have already received €1.5 million of their €2.5 million investment when the four plaintiffs were being told just €90,000 – one ninth of their sum invested – was placed in their solicitors’ account.

In his affidavit, Mr Fitzgerald said Mr Mahony was project manager for the Budapest development. He fully accepted the plaintiffs were entitled to be paid €1.2 million but he had no control over the proceeds of sale of the project and did not know where they were, he said.

In his affidavit, Mr Mahony said he was persuaded by Mr Fitzgerald to invest €400,00 in the Budapest building and also secured a €2.5 million investment from his sister and brother-in-law. He said he signed undertakings in the matter at Mr Fitzgerald’s request but understood those related only to the proceeds due from Mr Fitzgerald’s own investment in the property.

Mr Mahony said he did not dispute the plaintiffs had paid over money to Mr Fitzgerald but said it would appear Mr Fitzgerald “used this money for his own benefit”.

He himself had believed the project was financed by Anglo Irish Bank.

He said the sale price ultimately achieved was €12.8 million, a loss of up to €1.8 million, which, he said, was due to “the credit crunch”.

The proceedings were admitted to the Commercial Court this week, where Mr Justice Kelly was told Mr Fitzgerald was consenting to judgment for €1.2 million, plus costs.

The case against Mr Mahony, of O’Grady Mahony Estate Agents, Casement Square, Cobh, was adjourned to next week, with his consent to an accounts-freezing order continuing.