Monday, January 30, 2023

Eimear Dodd

A jury have heard that staff in Custom House Capital were reassured that reversing a transaction was part of the process to calculate a valuation.

Ciara Kelleher (51) of Blackhorse Ave, Dublin 7 has pleaded not guilty at Dublin Circuit Criminal Court to one count of conspiring with others to defraud investors in and clients and customers of Custom House Capital (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.

On the third day of the trial Susan Fennell told Lorcan Staines SC, prosecuting, that she prepared client valuations in CHC. These valuations gave an update on clients’ investments in cash, property or stocks as appropriate and also allowed CHC to send an invoice for their fee.

Ms Fennell said Ms Kelleher, her line manager, or John Whyte, head of private clients, would check the valuations before they were sent to clients. She said valuations would also be provided to CEO Harry Cassidy for client meetings.

Ms Fennell said Ms Kelleher would review a valuation she prepared using a checklist. Ms Fennell was shown an example of a pop-up message, asking staff to contact Mr Cassidy or Paul Lavery, head of finance, before issuing a valuation.

In these cases, Ms Fennell said she would usually contact Mr Lavery or a member of the finance team and ask them to “back out”, or reverse, an amount of money.

Expressed concerns

She said she queried this as it was not part of her role and was told it was okay. Ms Fennell said she expressed her concerns to Mr Whyte, Mr Cassidy, Mr Lavery and Ms Kelleher.

Ms Fennell agreed with Michael Bowman SC, defending, that she only completed back outs following express instructions from Mr Lavery. She agreed with defence counsel that a transaction could be reversed if a project did not proceed or money had been misallocated.

Ms Fennell agreed with prosecuting counsel that the phrase “do the magic” was used to request a transaction to be backed out. She told defence counsel this phrase was intended as a polite way to ask for a transaction to be backed out quickly.

She agreed with defence counsel that she prepared valuations using information from the internal system, or as provided by the finance team. She agreed with Mr Bowman that it was her understanding that backing out of a transaction was a change on the internal bookkeeping system, but money did not actually move.

Mr Bowman put it to Ms Fennell that client money could be notionally allocated for certain projects, that may not come to fruition and she said she had no visibility of these projects in her role.

She agreed with Mr Bowman that a pop-up message could be a reminder of important information about a client. She told Mr Bowman if there would be delays in getting information from finance, she would escalate this to Ms Kelleher.

Ms Fennell agreed with Mr Bowman that she described Ms Kelleher to the regulator in 2011 as a “stickler” for ensuring compliance packs were correct.

Client queries

Michelle Donnelly told prosecuting counsel that she joined CHC in 2005, working in the property team before becoming an accounts assistant in 2007.

She said she was instructed by Mr Lavery to add a pop-up message on some accounts.

She said she was told there were client queries and Ms Kelleher was looking for a more streamlined process to respond to these.

Ms Donnelly said Mr Lavery would tell her which transactions to reverse out of. A specific client transaction would not be reflected on the client’s valuation, and they would see a cash amount.

Ms Donnelly said the client team would let her know when the valuation had been run, and she would then reverse the transaction.

Ms Donnelly confirmed she would also carry out an interest calculation, which would be reviewed by Mr Lavery. She said interest would not be earned as the money had been transferred elsewhere.

Ms Donnelly said she acted under instructions from Mr Lavery to reverse transactions, and he reassured her this was correct. However, she stopped doing this during 2010 as she wanted to learn more about the reasoning behind the process.

The trial continues on Tuesday in front of Judge Orla Crowe and the jury.

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