David Drumm was once a very rich man, earning €15m during his tenure as chief executive of Anglo Irish Bank between 2005 and 2008.
In addition to a healthy bank balance, there was a €2.8m mansion in Malahide, properties in Cape Cod and millions of euro worth of Anglo stock.
But as he was released from prison this week under a “community return scheme”, three years after being handed a six-year term for a €7.2bn conspiracy to defraud, his financial situation could not have been more different.
His fortune is all but gone, mainly due to the collapse in value of Anglo shares he bought using €8.5m in loans from the bank.
The 54-year-old’s notoriety and his expulsion from Chartered Accountants Ireland also means his prospects are limited.
He now finds himself reliant on his wife Lorraine, who received a chunk of the proceeds from the forced sales of their former properties.
After Drumm’s extradition from the US to Ireland in 2016, she was able to buy a three-storey house in their native Skerries, Co Dublin, for €418,000 without a mortgage.
A Range Rover was parked outside this week. But it is a far cry from the lifestyle they once enjoyed.
Back in 2008, Drumm used one of the oldest tricks in the book to protect his riches from creditors. He started transferring them to his wife.
But the ruse failed spectacularly, with a US judge finding he had told “outright lies” and his conduct was “knowing and fraudulent”.
Despite coming through a protracted bankruptcy process, where his €4.4m pension could not be touched, his behaviour meant he failed to get a discharge.
As a result of this, creditors were still free to pursue him.
Anglo’s successor, Irish Bank Resolution Corporation (IBRC), did just that when it got Drumm to consent to a €7.5m judgment in its favour last year. Under a settlement agreement, a stay was placed on the execution and registration of the judgment.
Precisely what Drumm agreed to do in order to stop IBRC from executing the judgment was never revealed, but it is quite possible his pension pot came into play.
Pursuing a debtor’s pension is among the most difficult thing a creditor can do due to the protections the funds enjoy. Similarly, a debtor cannot simply assign their pension to a creditor.
However, securing a debtor’s agreement to cash in their pension so they can contribute to a settlement is a different matter.
According to legal and financial sources, it would be surprising if a payment schedule was not agreed to by Drumm as part of the settlement.
If this was the case, tapping into his pension would have been his only option given his lack of any other income.
IBRC would not be drawn in the matter, while Drumm declined an interview request from the Irish Independent.
Another common feature of such settlements is that a stay on the execution of a judgment is conditional on full and frank disclosure.
In other words, if it came to light Drumm was still concealing assets or income streams, IBRC could apply to have the stay lifted.
IBRC would have been well within its rights to insist on such a condition, given Drumm’s past behaviour.
Drumm initially made his name in Anglo when he was sent to Boston in 1998 to establish a new division.
After his resignation and Anglo’s collapse, it was to Massachusetts he returned to live with his family in 2009.
He would later claim the move was to escape the “blame culture” in Ireland.
Drumm started a financial advisory business in Boston, and he and his wife bought a home for around €1.4m in a nearby upmarket commuter town, Wellesley.
Weekends were spent in Chatham, Cape Cod, where they bought a shoreside home for €3.4m.
But he could not escape the past for long and by the following year, with Anglo seeking the repayment of his loans, he filed for bankruptcy.
A ruling by Massachusetts bankruptcy judge Frank Bailey in 2015 unmasked a web of lies and half-truths constructed by Drumm as he tried to shelter assets from circling creditors.
As the global financial collapse was gathering pace in 2008, he set a plan in train.
This started with an initial cash transfer to his wife of €150,000 on September 24 that year, just days after the collapse of Lehman Brothers.
Drumm’s net worth dropped €3m that month and by another €1.9m that October.
Within weeks of the Lehman debacle, Drumm was considered “balance sheet” insolvent. But significant cash transfers continued to his wife’s accounts that November and December.
By September of 2009, sums amounting to €772,000 had been transferred, none of which were declared by Drumm when he filed for bankruptcy in October 2020.
Property interests and the proceeds of sales were also transferred to his wife, again without being declared.
Drumm admitted to giving false information under oath, but denied fraudulent intent.
However, the judge did not accept this, finding Drumm knew what he was doing and intended to defraud creditors.
Court documents subsequently showed Lorraine Drumm got $1.64m (€1.35m) from her share of the enforced sale of personal property and homes in Ireland and the US but she also had to pay $1.3m (€1m) to the bankruptcy estate to settle a lawsuit over the asset transfers from her husband.
Source: Irish News