What Does a Guilty Verdict Mean For White Collar Crime?

We learnt earlier this week that the trial of Sean Fitzpatrick will begin next Monday. He was previously charged in the District Court with 12 counts of failing to disclose to auditors Ernst & Young the true value of loans worth at least €139m. The loans were given to him, or people connected to him, by Irish Nationwide Building Society. They were made from 2002 to 2007 while he was an officer of Anglo Irish Bank.

If he is convicted Mr Fitzpatrick faces a maximum term of imprisonment of five years. He is accused of offences which are one of a series under the Companies Acts that on conviction can attract a five-year sentence. The list of such offences is extensive and includes:

  • failure to ensure proper books of account are maintained
  • failure to keep proper books of account when this contributes to a company’s insolvency
  • knowingly or recklessly making a misleading, false or deceptive statement to an expert carrying out a valuation or reporting on the consideration of a non-cash asset
  • failure of directors to convene an EGM on becoming aware that the company has suffered a serious capital loss
  • failure by a director to repay surplus business expenses
  • knowingly or recklessly making a misleading, false or deceptive statement to the auditor

Under the Companies Acts, there are two types of criminal offence, summary and indictable. A summary offence is generally less serious and is tried before a judge only in the District Court. Indictable offences are usually more serious. Indictable offences can also be tried in the District Court before a judge only. However, due to their more serious nature, indictable offences can also be tried in the Circuit Court i.e. before a judge and jury.

Where an offence is prosecuted on indictment, the potential penalties are generally considerably higher than had the offence been prosecuted summarily. In general the maximum penalty on conviction of a summary offence is €1,904 and/or 12 months’ imprisonment. Prosecutions in respect of summary offences are brought by the ODCE. On average about 4 or 5 cases are brought a year. In most cases those found guilty have been fined or disqualified from acting as a director. For example in May 2014 Michael Bailey and Thomas Bailey directors of Bovale Developments were disqualified for 7 years.

In respect of an indictable offence generally the penalty on conviction can be €12,697 and/or 5 years imprisonment. However, the Companies Acts also provide for considerably higher sanctions in respect of certain offences e.g. fraudulent trading (€63,487 and/or 7 years imprisonment) and market abuse (€10 million and/or 10 years imprisonment). Prosecutions in respect of indictable offences are brought by the DPP.

However, convictions arising directly from the Financial Crisis are rare. Between 2009 and 2013 a total of 689 reports were sent by the Central Bank of Ireland to An Garda Siochana containing information that caused the Central Bank to suspect that a criminal offence may have been committed by an entity supervised by it. The 689 reports resulted in two prosecutions and so far at least, just one conviction.

Contact Ronan McGoldrick for more information.

Disclaimer

This publication is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Leman Solicitors for any action taken or not taken in reliance on the information set out in this publication. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. Any and all information is subject to change.

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