MOST OF the money held in trust for two customers at a separate firm run by investment manager Harry Cassidy was used to meet property debts of his failed investment firm, Custom House Capital.
According to the report by two Central Bank inspectors, Mr Cassidy, the chief executive of CHC, said he managed “€7 million or €8 million” in client trusts through a firm called ARF Management. The inspectors found that about €4.9 million of equity and bond assets, representing most of the value of two client trusts, were cashed and transferred to accounts in Bank of Ireland.
“Much of this money was transferred to and used to meet the liabilities of various property-related developments promoted by CHC,” the inspectors said.
The report also revealed that €415,000 was transferred from client accounts in Dublin to purchase a property for John Mulholland, a director of Custom House.
The payment was routed via a Luxembourg bank account jointly held by Mr Cassidy and Mr Mulholland to Fred Olsen and an account in the Canary Islands in July 2008.
Mr Mulholland told the inspectors that the transfer to Mr Olsen was “for the purchase of a property in my name”, the report says.
The High Court appointed a liquidator to CHC last week after the inspectors found “systemic and deliberate misuse” of more than €56 million of client funds.
A further €10.4 million is owing to clients on an investment bond.
The judge said the inspectors’ report described “a sort of Irish Ponzi scheme”. The firm had been using clients’ funds to cover shortfalls on property investments.
Mr Cassidy told the inspectors Bank of Ireland Trust Services approached CHC some two years ago about taking over the business as it wanted to “get out of the trust business, which is trusts established under wills”.
He saw this as an opportunity to build ARF following the planned break-up of CHC after its takeover by Appian Asset Management, which the firm later abandoned.
Mr Cassidy said he started his career “many, many years ago in the Bank of Ireland... in the tax and trust department”. He had discretion as the clients’ trustee to invest where he liked and two of “23 or 24 trust clients” had property investments.
Asked whether trusts’ owners were consulted about investments, he said: “The only people we consult with is us because most of the beneficiaries are probably in some way indisposed.”
The inspectors said the trustee business is not authorised or supervised by the Central Bank.
