David Drumm’s bid to be declared bankrupt fails again
The 49-year-old remains in custody while fighting extradition to Ireland where he could face 33 criminal charges in relation to the Anglo collapse.
The extradition hearing has been set for March 1 in Boston. In January, US bankruptcy Judge Frank Bailey described Drumm as “not remotely credible” in ruling against his attempt to seek bankruptcy. That left him facing debts of up to $11m (€10.3m).
Drumm appealed the ruling, but US District Court Judge Leo T Sorokin has been equally as withering in his assessment of the banker in relation to his disclosures in financial statements.
Drumm conceded that his initial Statement of Financial Affairs (SOFA) failed to disclose nine cash transfers to his wife amounting to over €680,000. That also called for the reporting of all other property transferred during the prior 24 months.
Drumm did not declare a €250,000 mortgage obtained with his wife, Lorraine, on investment property Skerries Rock. They bought property in 1999 and Drumm got the loan from KBC in 2008.
“After obtaining the mortgage, Drumm put the €250,000 proceeds into a newly opened account held solely in his wife’s name,” said Judge Sorokin.
“These funds never passed through any account in which Drumm held an interest, ie, neither an account in his own name nor an account held jointly by Drumm and his wife.”
The judge said Skerries Rock was a transfer related to real property, “but nonetheless it was not disclosed on SOFA-10”.
“At trial, he offered no explanation whatsoever for the omissions relating to Skerries Rock,” said Judge Sorokin, adding that when Drumm filed his SOFA in 2010, he signed declarations they were true and correct.
“Of course, the evidence at trial revealed that they were not remotely true or correct. And, the reason given for the omissions was ever-changing.”
He said Drumm’s excuses included he did not know why cash transfers to his wife were omitted; he understood when he read the SOFA that it was asking exclusively for real estate; he forgot about the transfers.
Judge Sorokin said the testimony raised more questions than answers. He referenced the bankruptcy court’s ruling that Drumm made an obvious attempt to deflect from the fact Skerries Rock should have been disclosed in response to SOFA.
“This court agrees,” he said. “A logical and plausible conclusion is that this is misdirection and dishonesty on its face... Drumm knew he had to make full disclosure, including disclosing Skerries Rock. There is no evidence that even comes close to suggesting that he did not understand this simple fact, or that it was otherwise not transparently plain that Skerries Rock was required to be scheduled. It was transparently clear that Skerries Rock had to be scheduled.
“On the record before this court, the bankruptcy court’s determination that the failure to list assets, and particularly Skerries Rock, was done with an intent to hinder or delay, and was otherwise intentional and fraudulent, is wholly logical, plausible, and supported by the record. The record demonstrates convincingly that Drumm knowingly failed to disclose the 2008 mortgage on Skerries Rock, and the transfer of the proceeds to a newly opened bank account in Mrs Drumm’s sole name.”
