A Co Louth tax consultant who was declared a bankrupt on his own petition last month with debts which he estimated at £1.143 million attended the High Court yesterday for an examination into his affairs. He is Mr Michael O'Donoghue, Dunbin, Knockbridge, Dundalk, Co Louth.
Ms Justice Laffoy adjourned the proceedings to July 5th to allow the Official Assignee, Mr Noel Rubotham, to obtain further records from financial institutions.
The order to appear before the court stated that Mr O'Donoghue was to be examined on oath concerning receipt by him of monies from clients from the practice of the accountancy firm of O'Donoghue Reilly Donovan.
Mr O'Donoghue, in his statement of affairs, estimated his total debts at £1.143 million. Among a list of unsecured creditors was a sum of £1.2 million comprising claims notified to his former partners, Mr Brendan Reilly and Ms Siobhan Donovan.
Yesterday, Mr O'Donoghue told Ms Justice Laffoy that the partners might have estimated his indebtedness at £1.2 million.
During the hearing Mr O'Donoghue gave a list of 16 names of people who had invested a total of about £638,000 with him. Mr O'Donoghue said that in some cases he would have solicited funds and in other cases he would have received funds in the ordinary course of business. On balance, he would have solicited these funds. In terms of arrangements he had with these people, it depended on the amount invested, he said,
Asked by Mr Mark Sanfey, counsel for the Official Assignee, what interest would be given to a person investing £5,000, Mr O'Donoghue said he did not recall a specific amount of interest which he would advise would be refunded to an investor.
In reply to a question from Ms Justice Laffoy, he said the interest would be in excess of interest paid by the Irish Permanent, "way in excess", and would be "multiples".
Mr O'Donoghue said interest on £5,000 might be £1,000 "after a short number of months". Asked by Mr Sanfey what the interest would be on a £60,000 investment, Mr O'Donoghue said it would be pro rata - he could not be specific but it might be one in five. All the returns were to be short term. He said he paid clients by the "recirculation of funds." When asked to explain "recirculation", Mr O'Donoghue said that when he got money from individuals it would go to repay interest on capital in other cases. Mr O'Donoghue said that in some cases he would lodge monies. In other cases, he would negotiate to obtain cash or to change the money into a bank draft. He never put monies into bank accounts other than a current account and two deposit accounts which had been revealed to the Official Assignee.
Mr O'Donoghue was told that a doctor had made a claim to be owed £400,000 but Mr O'Donoghue said the doctor had invested monies totalling £120,000 and was claiming substantial interest on that sum.
In reply to Mr Sanfey, he said that he was "not necessarily" saying that all funds he received were undeclared income. As long as the investors were getting more (interest) than elsewhere, they were happy. No pass book or receipt was issued.