Developer faces round four of questions in US

Sean Dunne is alone among the one-time super-wealthy Irish property developers in seeing his finances investigated by officers of two bankruptcy courts, in Ireland and the United States.

After voluntarily filing for bankruptcy in Connecticut last year, Dunne told The Irish Times he could be out of bankruptcy within six months and free to develop property again in his own name.

Almost a year on, the Co Carlow developer is still being questioned on his finances by his creditors, Ulster Bank and the National Asset Management Agency, as well as by the US bankruptcy trustee, Connecticut lawyer Richard Coan, who is liquidating the remnants of his €1 billion property empire.

Today, Dunne (59) faces a fourth round of questions from the trustee and creditors at a resumed “341” meeting. It has been a stop-start investigation so far. He refused to answer questions at a second meeting in July after Nama filed a fresh legal challenge against him in the US bankruptcy court.

The fact that a third creditors’ meeting in New Haven, Connecticut, in December, lasting eight hours over two days, did not provide enough time shows both the complexity of this case and the determination of Ulster Bank, the financier of his doomed Ballsbridge redevelopment, and Nama, the State loans agency, to pursue asset transfers to his wife which they believe they are entitled to unwind.

Filing for bankruptcy in the US, Dunne aimed to outflank Ulster Bank and the lender’s attempt to bankrupt him in Ireland over a €164 million judgment. The move backfired when the US courts permitted parallel bankruptcy proceedings straddling the Atlantic. Dunne was adjudicated a bankrupt in Dublin, four months after he quietly slipped into bankruptcy in the US late on Good Friday.

The developer is fighting on two fronts. He failed to overturn his Irish bankruptcy in December and is challenging the seizure of artwork, sporting memorabilia and other items taken from a property at the K Club golf resort in Co Kildare by the official assignee overseeing his Irish bankruptcy estate.

Nama, owed €250 million by Dunne according to his own US bankruptcy filing, has continued a legal action that it started in Connecticut's state superior court in July 2012 in the US federal bankruptcy court over the alleged fraudulent concealment and transfer of assets to his wife, Gayle Killilea. Dunne accounts for two of the five sets of legal proceedings Nama has taken in the US.

Annual rent
The agency launched a legal challenge in July seeking to block his discharge from bankruptcy that would stop the developer walking away from debts totalling $942 million (€690 million).

In a dispute that will likely end up at a trial – similar to the action faced by fellow US bankrupt, former Anglo Irish Bank chief executive David Drumm, in Boston this year – Dunne is alleged by Nama to have hindered, delayed or defrauded creditors by concealing or transferring assets out of his estate to Killilea and to have knowingly made a false oath or account in his bankruptcy proceedings. The agency has listed 22 false oaths it claims he made during his first creditors' meeting in June.

The assets in question range from the Lagoon Beach Hotel in South Africa to debts owed to Dunne by his companies and to the furniture and fixtures in Ouragh, Dunne's former home on Shrewsbury Road in Dublin, and even to the €180,000 in annual rent he receives on that house from the South African embassy.

Nama has also claimed that Dunne is effectively calling the shots in the property development business operated by his wife’s US companies, Mountbrook USA and Amrakbo, and that her companies are buying and developing properties with funds fraudulently transferred to her from her husband.

The agency has sought to subpoena bankers from Credit Suisse and First Republic and property agents Coldwell Banker, with which the Dunnes have had dealings, to question them about the couple's finances. Killilea has challenged the subpoenas, describing them as a "fishing expedition".

The trustee has even sought to examine the manager of a van removals company on the basis that he doesn’t believe Dunne is living at a house on Stillman Lane in Greenwich, Connecticut.

Dunne has said he and his family are living there, but in December the trustee said the premises “appear to be empty”.

Dunne has not denied that he transferred assets and large sums of money to his wife.

In fact, at the heart of the dispute between the sides are an agreement between the couple dating back to 2005 and a follow-up arrangement in 2008. Dunne agreed to transfer €100 million in assets, roughly a fifth of his net worth in 2005, to Killilea to make her financially independent of him.

Dunne said at the December meeting that, after the birth of their first son Bobby Luke, Killilea wanted to be independently wealthy.

Asked by Nama's lawyer Tom Curran what he received in return from his wife for "gifting" 20 per cent of his fortune, Dunne said: "Love and affection, and children. Having a happy marriage. Cooking the odd meal, washing the odd shirt, the very odd one." These were "all things that made me happy".
Asset transfer
Dunne has said that Bank of Ireland valued him at more than €500 million in October 2008 and said that it was "pure bunkum" to suggest he was not in a position then to gift assets to his wife. In January 2009, the New York Times quoted him in an interview saying that he "could be considered insolvent."

Among the assets transferred to Killilea under the 2005 agreement were 70 per cent of profits from the sale of Dunne's interest in lands at Rathfarnham, Clonskeagh and Malahide in Dublin, the Lagoon Beach Hotel, residential property at Charlesland, Co Wicklow, and a company called Rivertree, which owned 1 and 3 Shrewsbury Road in Dublin. These two houses sold for about €25 million in 2006.

In the 2008 agreement, because the sale of the Lagoon Beach Hotel did not proceed, Dunne transferred his full interest in the hotel to his wife as well as loans made by him to his company, Mountbrook Homes.

Dunne disclosed for the first time in December that “Creditor A” listed as being owed $44 million (€32 million) under “domestic support obligations” in his May 2013 bankruptcy filings was Killilea.

In response to questions, Dunne revealed he was involved in a family law case in Switzerland with Killilea in 2010. He initially confirmed that a judgment of the Swiss court was a reason for scheduling Killilea as a creditor for $44 million but, after consulting with his lawyer, he changed his answer and said that it wasn't – the claim was on foot of the 2005 and 2008 settlement agreements with his wife.

Dunne refused to answer further questions about the Swiss case. “I am not going to go there,” he said in response to one question, a position the bankruptcy trustee described as “a little absurd”, given that he voluntarily filed for bankruptcy and listed the claim. The Swiss proceedings were relevant, said Coan.

“A family law proceeding with a current spouse certainly raises the spectre of a planned, friendly legal proceeding designed to insulate assets, which happens from time to time and gets undone from time to time,” said the trustee.

Credit cards
Dunne relies heavily on Killilea's wealth, which he valued at €75 million in 2007 when they left Ireland. He uses three credit cards, one owned by her company Mountbrook and two owned personally by her, for his day-to-day expenses. He claimed that Mountbrook paid him a salary of $100,000 last year and that he was owed €5,000 for five months' worth of fees due from her company Amrakbo.

On a visit to Ireland in November, during which he attended the Ireland-New Zealand rugby game, Dunne told his creditors that he received the €5,000 in cash from a Dublin accountant who works for Amrakbo because his bank account had been shut down since his bankruptcy.

“Since I filed for bankruptcy, the bank in Ireland wasn’t accepting the cheques, so when I went back to Ireland I was owed five months and I collected €5,000 on that trip,” he said.

Further details of Mr Dunne's finances are expected to emerge at the Connecticut hearing today.

What he owes: Dunne's biggest creditors
Ulster Bank $394m (€286m)
Nama $343m (€250m)
Bank of Ireland Nama debt $149m (€109m)
Irish Nationwide Nama debt $188m (€137m)
AIB Nama debt $6.3m (€4.6m)
O'Flynn Construction $102m (€74.5m)
Gayle Killilea $44m (€32m)
Certus (former Bank of Scotland Ireland debt) $17m (12.4m)
Risali (former Bank of Scotland Ireland debt) $17m (€12.4m)
* Figures listed by Dunne in Connecticut bankruptcy court filings, May 2013