Businessman agrees to repay €1.2m to investors

A BUSINESSMAN alleged to have apparently converted to his own use some investment funds intended for a property investment project in Budapest has agreed to repay €1.2 million to four investors in the project.

Richard Fitzgerald, of Rose Lodge, Blackrock, Cork, consented to the judgment while proceedings were adjourned to next week by Mr Justice Peter Kelly against estate agent William Mahony, of Cobh, Co Cork, concerning the same project.

The investors are Peter Clarke, of Mulberry House, Newbridge, Co Kildare, Brian Fallon, of Ladytown, Newbridge, Con O’Leary, Warrensgrove, Lissarda, Co Cork and Sean Bosco MacGearailt, of Greenane, Kenmare, Co Kerry.

They claim Mr Mahony was “deliberately opaque” in an affidavit concerning how the Budapest property was financed. Mr Clarke said: “The entire financing of this transaction is murky in the extreme.”

He said it was difficult to accept, in the absence of relevant figures, Mr Mahony’s claim the sale price of €12.8m represented an overall loss on the project.

He was also concerned Mary and JJ Frahill, a sister and brother-in-law of Mr Mahony, are to, or have already received, €1.5m of their €2.5m investment when the four plaintiffs were told just €90,000 — one ninth of their investment — was placed in their solicitors account.

The Budapest project involved the purchase of a large apartment building to be renovated within two years and sold on. The four investors said they paid more than €1m in early 2006 on being told they would get a 50% return (€1.5m).

After becoming increasingly concerned, they initiated court proceedings against Mr Fitzgerald and Mr Mahony. Mr Mahony has since alleged the only funds which Mr Fitzgerald put into the project was an €800,000 loan from Anglo Irish Bank.

In his affidavit, Mr Mahony said he was persuaded by Mr Fitzgerald to invest €400,000 in the Budapest building and he also secured €2.5m from his sister and brother-in-law.

Mr Mahony said he did not dispute the plaintiffs had paid over money to Mr Fitzgerald, but said it would appear Mr Fitzgerald “used this money for his own benefit”. He had believed the project was financed by Anglo Irish Bank. He said the sale price achieved was €12.8m, a loss of €1.7m – €1.8m which, he said, was due to “the credit crunch”.

In an affidavit, Mr Fitzgerald said Mr Mahony was project manager for the Budapest development.

He fully accepted the plaintiffs were entitled to be paid €1.2m, but he had no control over the proceeds of sale of the project.

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