Jury in Custom House Capital trial told of unauthorised client transfers

Former head of operations who approached financial regulator gives evidence

A jury has heard that unauthorised transfers were made from some clients of Custom House Capital (CHC) to make up a shortfall in payment due towards a €100 million property investment in Germany.

Angela Mahon was giving evidence on the second day of the trial of Ciara Kelleher (51), Blackhorse Avenue, Dublin 7, who has pleaded not guilty at Dublin Circuit Criminal Court to one count of conspiring with others to defraud investors, clients and customers of CHC Ltd by intentionally misleading them as to where or how their assets had been placed in the investment firm.

The offences are alleged to have happened within the State on dates between October 2008 and July 2011.

Ms Mahon told Lorcan Staines SC, prosecuting, that she worked at CHC for 18 months, initially as a project manager, before becoming head of operations in November 2007.


She said she attended a meeting during which CHC’s chief executive, Harry Cassidy, told her that while €31 million had been raised from clients towards a €100 million property investment in Germany, there was a shortfall of €11.7 million.

Mr Cassidy said this money had been used as deposits towards other property funds, and there was a shortfall on a payment due by October 31st, 2008.

Ms Mahon said she “could not believe” what she was hearing and that others at the meeting did not appear to have an issue with this.

Ms Mahon said she asked Paul Lavery, CHC head of finance, about this, and he told her that Mr Cassidy would sort it. Ms Mahon also spoke to John Whyte, CHC investment director and head of private clients, and he said €6 million had been transferred from PRSA accounts in 2007. Ms Mahon said she later asked Mr Cassidy about the transfers from PRSAs in 2007. He said Mr Whyte was wrong and he had full discretion over PRSA accounts. Ms Mahon said Mr Cassidy told her there was an issue of timing and that funds were due back to the company.

She was later present at a meeting during which PRSA and client accounts were used, some without authorisation, to make up the shortfall in the payment due on October 31st towards the German property investment. Ms Mahon said a part-payment was then made using funds authorised by clients.

She said that on November 5th, Mr Whyte arrived at her office, which she shared with Mr Lavery, to prepare the outstanding balance of this payment. She asked Mr Whyte if clients had given their authorisation. He told her they hadn’t and he wasn’t happy about it.

She said Mr Cassidy entered the office 90 minutes later, and when she raised her concerns with him, he asked her to live with it.

Ms Mahon said she handed in her notice when it was confirmed that the balance of the payment had been made using unauthorised transfers from client accounts.

She told prosecuting counsel that she also spoke to John Mulholland, non-executive director of CHC, about her concerns.

Ms Mahon said she was called into a meeting with Mr Mulholland and Mr Cassidy during her notice period. They asked her to stay on, but she refused, saying all she had was her integrity and her accountancy qualifications.

Ms Mahon said Mr Mulholland told her she was “not old enough or experienced enough to know that commercial reality often has to take precedence over integrity”.

Ms Mahon said she contacted Mr Lavery in January 2009 to request her P45, and he told her during the call that the client funds had not come back. Ms Mahon said she then decided to take her concerns to the financial regulator.

Ms Mahon agreed with Michael Bowman SC, defending, that CHC was exposed to the credit crisis in 2008 due to its involvement with properties in Europe.

She agreed with defence counsel that neither Mr Whyte nor Mr Lavery seemed surprised that Mr Cassidy had taken some of the money raised from clients for the German property investment and used it towards other property plans.

Ms Mahon told Mr Bowman her main concern was the use of unauthorised client transfers; if the practice continued, other clients’ equity could be put at risk.

Ms Mahon agreed with defence counsel that she met staff from the financial regulator but was not satisfied with the regulator’s response.

The trial continues before Judge Orla Crowe and a jury.