His winning personality and gold-plated reputation drew investors with ease but as John Hearne reports by Dec 2008, as the financial crisis morphed into recession, everyone wanted their money back... but it wasn’t there
EVERYTHING fell apart on Friday, Dec 12, 2008. In the months leading up to that date, the global economic outlook had grown darker by the week.
The housing market had collapsed in the US, stock markets had plummeted.
As the financial crisis morphed into recession, banks collapsed, credit dried up and economies shrank. Investors everywhere scrambled to cash in their chips and exit the market with whatever they could take.
Breifne O’Brien’s were no different. For the best part of the previous 15 years, O’Brien had given every appearance of having an unerring financial eye. Each time an investment matured, O’Brien reported handsome returns to a close circle of friends and family. And each time an investment matured, another, equally attractive one materialised to take its place.
O’Brien rarely had trouble convincing his investor clique to stay the course and try another horse from his successful stable. If someone needed cash, wanted to exit, that was no problem. All O’Brien had to do was put the word out and extend the golden circle to include another old friend or friend of a friend. These were the good times; there was money about and O’Brien’s winning personality and gold-plated reputation drew it in effortlessly.
But by Dec 2008, everyone wanted their money back.
Peter O’Reilly was just one of O’Brien’s investors. He had known O’Brien since they were students in Trinity. They had managed a laundry business together after they graduated. Cut to 2008 and Peter is running a finance brokerage in Kildare. His long association with O’Brien has been characterised by one successful investment after another, to the point where O’Reilly had introduced O’Brien to several of his own investor clients. They were drawn into the inner circle and profited from the association.
As they came looking to liquidate, O’Brien suddenly came up with another gilt-edged investment, this one an option on a property in the salubrious Place Vendome in Paris, once home to a list of European notables, including Coco Chanel and before her, Frederic Chopin. O’Brien needed €2m to complete the deal. O’Reilly dutifully passed the offer on to his clients. Three of them came up with €500,000, all of which landed in O’Brien’s account in September. The investment was to mature just over a month later.
But instead of money from the maturing investment, O’Brien gave O’Reilly excuses. Lawyers were on holidays, flights were missed, money was promised in various tranches. Then, just ahead of the latest deadline, another investment opportunity miraculously appeared. When there were no takers, O’Brien promised to deliver the full capital plus interest in December.
On Dec 4, he sent O’Reilly an email, telling him the office had been broken into and chequebooks stolen. The gardaí, he said, had asked him to stop all cheques.
On Dec 10, O’Brien left a phone message for O’Reilly, telling him the money had been ‘erroneously’ transferred to his brother-in-law, Bernard Lambilliotte, a wealthy Belgian investment manager who lived in New York. O’Brien told him he was on his way there to sort it out.
By now, the long association with O’Brien wasn’t enough to dampen Peter O’Reilly’s suspicions. Not alone was his own money on the line, but also that of several of his clients. All that day, he rang and emailed, and was told by O’Brien’s secretary that he would not fly in until Friday morning.
O’Reilly got in his car and at 5am on the Friday morning, he was hovering at the arrivals gate in Dublin Airport, waiting to confront his increasingly elusive friend. Two New York flights dispatched their passengers with no sign of him. Then, at last, later that same day, O’Brien finally got in touch. O’Reilly was told simply that Breifne O’Brien was in deep financial difficulties, and that he should get in touch with O’Brien’s solicitor, Michael Lavelle.
That same Friday morning, O’Brien made perhaps a dozen phone calls, all of which prompted a flurry of frantic activity at the other end of the line. It’s unlikely that any of the recipients got any sleep that night.
The following day they convened at the offices of solicitors McCann Fitzgerald on Sir John Rogerson’s Quay in Dublin. It was here O’Brien came clean. He told solicitor Brian Quigley he’d been “living a lie” for 15 years.
Where had all the money gone? Some, it would emerge, went to finance O’Brien’s tycoon lifestyle, but much of it went to pay off other investors as part of a scheme of fictional transactions. Money in from one investor, money out to another.
It was a pyramid scheme; Nothing more, nothing less.
He told the group of stunned investors he thought he owed 11 people between €16m-€19m. These were smart guys, these were all men who were highly successful in their own right, yet they had been taken in by what Justice Peter Kelly would eventually call “a highly successful but not particularly sophisticated confidence trick.”
The truth reverberated out from Sir John Rogerson’s Quay.
Breifne O’Brien was the type of ‘businessman’ only the Celtic tiger could have produced. Suave, tanned, well connected. An excellent pedigree. He frequently drifted across the society pages, wife Fiona Nagle on his arm, exuding the kind of confidence that you need to
carry off so audacious a scam.
He wore designer suits and drove a €70,000 Aston Martin. There was a villa in Barbados, there were frequent skiing holidays. The O’Briens frequented the world’s only seven-star hotel, the Burj Al Arab in Dubai.
His wife, who knew nothing of his alleged fraudulent activity, was every inch the consort of a tiger baron. Image magazine voted her one of Ireland’s most stylish women. In an interview that has frequently come back to haunt her, she told the magazine: “My style is practical but totally impractical after 8pm. I never stick to one designer — Chanel always rises to the top of the pile. Roland Mouret makes me feel like a woman.” She had been married before, to estate agent Gerard Hoban, with whom she had two children. A sister to Ciaran Nagle of Three Irish Tenors she had her own career in PR and was well known for organising charity events around Dublin, including the annual Sinatra Ball.
When Nagle started going out with O’Brien, the social whirl cranked up several notches. The day they christened their son Oscar in 2005, 200 guests, including Fianna Fáil minister Mary Hanafin and VIP publisher Michael O’Doherty partied in the garden of their exclusive home on Silchester Road, Glenageary. Two years later, they married at a lavish ceremony at O’Brien’s family home, Carrigrohane Castle, Co Cork.
O’Brien sat on the boards of Bulberry Properties and Hawridge Properties, alongside Ulick and Des McEvaddy and accountants Greg Sparks and Pearse Farrell of FGS, formerly Farrell Grant Sparks.
There is no suggestion that any of these were involved in any way with O’Brien’s duplicity; O’Brien stepped down from the boards of both companies within a week of Dec 12.
Two days after that landmark meeting at the offices of McCann Fitzgerald, the commercial court listened as O’Brien’s modus operandi was laid bare. He sought money from one investor, then when the putative investment matured, he would try to convince him to roll it into a new investment.
If the investor insisted on payment, O’Brien would find a new investor and use their funds to pay off the first. This went on for between 10 and 15 years. In the two months leading up to the collapse of the pyramid, O’Brien admitted receiving payments of €6m, and using that to repay two investors to the tune of €5m and €600,000 respectively. They were the lucky ones.
As the list of victims emerged, it became clear O’Brien kept his alleged fraud close to home, conning a list of long-time friends and even family. Privately educated by moneyed parents, he studied economics at Trinity College, where his debonair style and obvious wealth allowed him to build up a circle of equally well-heeled colleagues, many of whom would go on to become very wealthy men.
Evan Newell was present at the offices of McCann Fitzgerald that Saturday morning. He had known O’Brien for 20 years, and had even mentored him in the 1990s, when O’Brien was contemplating the launch of a diner business, ‘Starvin’ Marvin’s’. At the time Newell’s financial projections suggested that this was not a sound investment.
O’Brien went ahead anyway, but the business got into difficulties and closed after less than a year of trading. The two remained on friendly terms.
Then, in 2007, O’Brien approached Newell with a proposition. He invited him in on an investment to secure an option on 75% of a shopping centre in Munich.
In June of that year, Newell paid over €3.35m. This money was supposed to simply facilitate the transaction; it would never leave O’Brien’s account. In April of 2008, Newell advanced a further €750,000.
In November, just weeks before the pyramid fell, court documents indicate that an increasingly desperate O’Brien was using his usual technique to secure additional money and time.
Newell was told the option on the Munich property had been acquired ‘and that repayment of the money with accrued interest was imminent, but that if the total funds on deposit were brought above the level of €4m then a more attractive deposit rate would be achieved and bonus interest would accrue if the total above €4m was left on deposit for in excess of one month.’ Newell handed over another €300,000.
The next he heard was a voicemail that Friday, urging him to contact solicitor Brian Quigley, who invited him to that Saturday morning meeting at McCann Fitzgerald.
The Starvin’ Marvin’s episode is a telling one, if only because it revealed something of the reality of O’Brien’s business acumen. The mundanity of his real business interests could not have been further removed from high-flying property deals in Paris or Munich.
He was director of a number of taxi and laundry companies in Dublin, none of which was particularly substantial. In addition, he was a director and shareholder of a UK-based subprime mortgage business. Launched in 2007, the business was turning over mortgages valued at £20m a month for a time, before the credit crisis hit. Later that same year, it went into administration.
It was widely known that O’Brien had made a major killing in a property deal with his father in Cork at the beginning of the boom. This fact bolstered his credibility significantly when it came to selling other investments.
LOUIS DOWLEY is a successful dairy farmer from Carrick on Suir, Co Tipperary.
Louis began investing with Breifne O’Brien in 2003, on the advice of a mutual friend. Dowley’s wife had known O’Brien in Trinity, and, in a familiar pattern, Dowley trusted O’Brien completely.
Dowley’s brother and business partner Robert was also drawn into the circle, and as their investment relationship developed, so too did their personal relationship. They attended rugby matches together. Both brothers were guests at O’Brien and Nagle’s wedding in 2007.
In all, the Dowleys invested €4.2m with O’Brien. In court, Louis Dowley recorded that he had even paid tax on a supposed €500,000 in profits that O’Brien had reported. The Dowleys began looking for their money back in Oct 2007.
O’Brien promised them prompt repayment, and even handed over cheques, asking that they not be cashed until certain transactions had been finalised. So complete was their trust in O’Brien that they ended up transferring more money to his charge in 2008 — €1.12m in June and a further €450,000 in October, this to fund the supposed purchase at the Place Vendome.
When O’Brien’s call came on that Friday morning, both brothers got on the road and drove straight to Glenageary, where O’Brien finally came clean.
David Bell may not have lost the most money to O’Brien, but his story is one of the most compelling. Bell was 88 in 2009. A retired lawyer and former High Court taxing master, his son Peter went to school with O’Brien, and reportedly, O’Brien paid tribute to David Bell at his wedding reception in 2007.
Nearly 10 years earlier, O’Brien had approached father and son offering a guaranteed return on an option to buy land in Co Meath. The price tag was €1m. When that investment matured, O’Brien suggested rolling the profits into another, then another after that.
On Friday, Dec 12, 2008, the Bells were to learn that their €1m was long gone, in a scam which justice Peter Kelly described as “particularly odious”.
In all, seven plaintiffs were in the commercial court that Monday, seeking a court order to prevent O’Brien from reducing his assets below €20m. David and Peter Bell, the Dowley brothers from Carrick on Suir, Evan Newell and David O’Reilly, who was a cousin of Peter O’Reilly and another long-time friend and associate of O’Brien’s.
Foxrock businessman David Maher was also among them.
Maher had known O’Brien for 25 years, and had no reason to be suspicious when O’Brien approached him early in Oct 2008, outlining the now infamous Place Vendome scam.
Maher was told there would be no risk associated with the investment, and he duly forwarded €450,000, anticipating a 10% return.
Before Justice Peter Kelly that day, solicitor Brian Quigley attested to O’Brien’s “deep sorrow”.
Yet O’Brien is also reported to have told Quigley that “it was easy to pull suckers in when the economy was booming”. Recent events, Quigley added, had made it impossible to continue his method of operation.
As January wore on, the list of investors who had been duped by O’Brien grew longer. The High Court ordered O’Brien to repay some €13m plus interest and costs to his former friends, and referred papers in the case to the Garda Fraud Squad.
Meanwhile, documents before the court revealed the extent of O’Brien’s disparate wealth. In addition to the family home in Glenageary, O’Brien and his wife jointly owned an apartment at exclusive Vico Road in Dalkey, another in Sandyford, a villa in Barbados and a 20% share in three apartments under construction in Dubai.
There were syndicated property investments in Berlin, Spain, Berlin and Belize, while his commercial portfolio consisted of properties in Reading and Paris, and closer to home in Monkstown and Sandyford. Besides the Aston Martin, he held shares in various companies, as well as several artworks.
Peter Bell may have been the oldest victim, but he wasn’t the closest to home.
Bernard Lambilliotte, the Belgian financier and MD of London investment management firm Ecofin is married to O’Brien’s sister Aoife. O’Brien took him for no less than €1.85m.
It would emerge later in January the real reason for O’Brien’s 11th-hour trip to New York was twofold; to confess to his brother-in-law and to beg his help in paying back some of O’Brien’s other creditors.
Unsurprisingly, Lambilliotte declined the opportunity to bail him out. In an affidavit before the court, Lambilliotte said that until the December confession, he had “no idea that there would be any difficulty in securing repayment of these monies”.
O’Brien meanwhile gave every impression of being deeply repentant. In an email to his brother-in-law the same month, O’Brien wrote: “Myregret for what I have subjected you to does not decrease but instead I feel nothing but increasing shame.”
It is difficult not to feel for Fiona Nagle, for whom the loss of money and status has been immense. The couple separated in the aftermath of O’Brien’s devastating revelations.
That January, she applied to the court to vary the order freezing her husband’s assets so that she could get weekly payments of €4,000 for household expenses. The amount was the subject of much derision in the media, but Nagle withdrew the application when Justice Peter Kelly refused to hear it in private.
Privacy is clearly of substantial importance to Nagle, who has made very few public statements over the last three years. She wrote to a Sunday newspaper pleading for privacy, and there was one further statement relating to her involvement with Blackrock Taxis after the company was liquidated by the county sheriff to pay O’Brien’s debts.
O’Brien resigned from the business in Dec 2008 and Nagle took over as MD. It was, she claimed, her only source of income at the time.
“I worked very long hours,” she said in the statement released in 2010, “and often worked seven days a week. I was unable to assume these full-time responsibilities at that time as I had five children, ranging from an infant of six months to a son of 18 years who was studying for his Leaving Certificate, all of whom, as well as myself, were devastated by the revelations of my estranged husband’s business activities and the subsequent trauma to our lives.”
At a meeting of Blackrock Taxi creditors in 2010, a company director found what he described as “alarming irregularities” in the accounts for the year 2008. There were director’s loans to Breifne O’Brien which dwarfed the company’s legitimate turnover, as well as cash payments for household bills and foreign travel.
He went on to allege that when Fiona Nagle took over, she used company money to pay people who had no relationship with Blackrock Taxis.
In defence of her year-long tenure as MD, she said: “At all times while I managed the company’s affairs after Dec 2008, I sought and relied upon professional advice as to how the finances of the company should be arranged and dealt with further.”
When she was removed from her position after the firm was taken over by the sheriff, she subsequently took an unfair dismissals case. It has yet to beresolved.
Given the broad nature of O’Brien’s property portfolio, it was inevitable that the banks might have something to say about the case, and in November of 2009, Anglo Irish Bank was granted leave in the Commercial Court to sell properties and assets worth €11m belonging to O’Brien.
The properties include apartments in Paris and Reading, the house in Monkstown, a car showroom in Munich, and a share in an investment fund linked to a Boston property development.
The Dowley brothers — understandably — objected to Anglo’s request to vary the freezing order in order to allow the sale to go ahead, but the judge ruled that the court couldn’t prevent the bank from taking control of assets over which it had a prior charge.
The gardaí finally arrested Breifne O’Brien last July, swooping on the Monkstown house where he now lives and charging him under section 4 of the Criminal Justice Act, 1984. He was subsequently released, but it’s now thought that the voluminous file which has been prepared by the Garda Fraud Squad is complete and that it has been passed on to the Director of Public Prosecutions.
It should be said that O’Brien’s confessions have saved his victims considerable distress. So great was the trust in which he was held that in many cases the transfers of cash lacked any formal structure. Had he dug in his heels and resisted justice, finding proof of every count of fraud would inevitably have proved time-consuming and expensive.
In any case, the wheels of justice grind incredibly slowly. It’s more than three years since the grim Friday morning when Breifne O’Brien gathered his friends to tell them of his deceit. Three years too since the Commercial Court granted various applications and orders against him.
It’s hard not to compare O’Brien’s situation with that of infamous New York fraudster, Bernie Madoff. Admittedly, Madoff’s pyramid towered above O’Brien’s, running to many billions of dollars and counting several A-listers among its victims.
It’s worth noting however that he was arrested just a day before O’Brien’s black Friday, yet is already on the second of the 150 years to which he was sentenced.
Breifne O’Brien has yet to learn his fate.
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