£1m Ulster Bank fraud case ends

Two men who defrauded Ulster Bank of over £1m (€1.26m) by lodging fictitious invoices with the bank to keep a business afloat have escaped jail at Dublin Circuit Criminal Court.

Niall Clarkin (aged 61), of Springfield Park, Foxrock, the managing director of the Label Centre Ltd, received a 12-month suspended sentence and Gerard Roche (aged 68), of New Row Square, Dublin 8, general secretary and financial controller, received a month suspended from Judge Frank O’Donnell.

Both pleaded guilty to carrying on a business with intent to defraud Ulster Bank between January 1, 1996 and October 14, 1998.

Clarkin and Roche lodged the false invoices in the hope that the company would get out of financial difficulty and they could repay the money.

Detective Sergeant Kevin Gateley said Ulster Bank operated a system known as invoice discounting, whereby they loaned companies money on receipt of invoices and they paid them 75% of monies owed to them.

When the company had been paid for their products and services they repaid the bank and the bank took their fee from the payment.

Ulster Bank Commercial Services Ltd had no reason to believe that the invoices they received from the Label Centre Ltd were fictitious.

Judge O’Donnell said he had to face the reality of the offence and massive loss the bank still carried.

"One might be tempted to feel sorry for the two defendants because there is no doubt that they’ve lost a lot," he said.

"However, there is a substantial loss to a financial institution. Financial institutions are the bedrock of our society. If they collapsed, everything else would collapse," he added.

Det Sgt Gateley told Mr Shane Murphy SC, prosecuting, that Clarkin was one of the founding members of the Label Centre Ltd in 1981 and the business was very successful up until the mid-nineties.

Around 1996 their sales figures were down and in order to save the business Clarkin concocted the scheme of defrauding Ulster Bank with the help of Roche. The company invested over £1m (€1.26m) in new technology, described as an over-ambitious expansion project.

Roche had no stake in the company and his only motive for getting involved was loyalty. Both instructed the accounts staff on how to issue the invoices.

Det Sgt Gateley said Ulster Bank gave its customers 90 days to repay the money, at which stage the Label Centre Ltd issued a credit note, thereby cancelling the invoice.

Ulster Bank held a meeting on October 15 at which a director of the Label Centre Ltd was present. Clarkin instructed him to admit to the scheme because the realisation had set in that there was no chance of repaying the money.

They estimated the figure outstanding was around £770,000 (€977, 698) but Ulster Bank assessed their accounts and discovered they were actually at a loss of £1,106,120 (€1,404).

The Garda Bureau of Fraudulent Investigation were called in to investigate and the company went into receivership.

Both men filed for bankruptcy and Clarkin reached a High Court settlement of £169,160 (€214,788) and Roche a settlement of £270,000 (€342,829). Both payments received the approval of their creditors. The two men had to sell their family homes as a result.

Ulster Bank received £444,000 (€563,763) repayment thanks to the settlements after another director paid the sum of £5,000 (€6,348). No charges were brought against him. The bank was still owed nearly £700,000 (€888,816).

During the period of the fraud Clarkin was also forced to get substantial loans from family and friends to help him out and this brought him further into debt.

Mr Brendan Grehan BL, for Clarkin, said his client had to re-employ himself and was now back to where he was over 20 years ago, on the road as a salesman. He never lived a lavish lifestyle and only persisted with the hope that "a sunny day" would arrive and the bank could be repaid.

Mr Patrick Marrinan SC, for Roche, said his client had now retired and stood to gain nothing, directly or indirectly, in the scheme. He should have been a man now enjoying his retirement with a nice nest egg but wasn’t.