Monday, January 16, 2012

Estate agent in Ponzi land scheme jailed for six years - The Irish Times - Fri, Jan 13, 2012

A FORMER estate agent who stole €1.6 million after he used solicitor Gerald Kean’s name to encourage 25 investors to participate in a Ponzi scheme has been jailed for six years.

Eamonn Kelly, who had owned two RE/MAX auctioneers franchises, told investors they could make €15,000 profit on a €50,000 investment within six months if they bought sites he claimed he had identified in the UK.

He said the sites were incredibly lucrative and that planning permission for a hotel was imminent. He subsequently used funds from later investors to repay profits to the early investors to encourage them to reinvest.

Kelly (48), Decies Road, Ballyfermot, pleaded guilty at Dublin Circuit Criminal Court yesterday to sample charges of theft, one of producing a false instrument and one of forgery between October 2007 and February 2010. He has no previous convictions.

Det Garda Séamus Padden told Kerida Naidoo, prosecuting, that Kelly forged Mr Kean’s signature on a letter sent to potential investors to encourage them to invest in a bogus property operation in Manchester. The letter stated that the solicitor was representing Kelly and that the estate agent acted as an adviser to Mr Kean. Mr Kean knew nothing about the letter.

Kelly also provided potential investors with a bogus letter from the Ulster Bank in Crumlin, stating that he had €4.6 million on deposit in an account there.

Det Garda Padden said the scheme involved 25 groups from Dublin, Wexford and Donegal, whose investments ranged from €10,000 to €100,000. Kelly told the investors that the sites could be purchased at cut-price and hotels could then be built on them which would in turn produce a significant short-term profit.

Det Garda Padden told Mr Naidoo that the investors represented a “cross-section of society”, some of whom used their recent redundancy to purchase the site, others used their savings, while others were “business people who would have the means to survive” despite their financial loss.

Kelly had paid commission to RE/MAX agents in both Donegal and Wexford to source potential investors but gardaí accept that these estate agents genuinely believed the operation was legitimate. He found Dublin investors through his contacts with his local GAA club in Crumlin, through friends and acquaintances.

Det Garda Padden said the bulk of the funds, just over €1 million, came from the Donegal investors.

He said Kelly had paid back €410,000 to a small number of investors before he was caught and €480,000, he then held in three different bank accounts, was frozen by order of the High Court upon his arrest.

Det Garda Padden told Mr Naidoo that the scheme came to light after the bogus letter from Ulster Bank came to the attention of the bank. They contacted the Garda, Kelly’s accounts were frozen and he then presented himself voluntarily at the Garda station.

He made full admissions and said he had started the scheme after he ran into financial difficulty following the property crash. He said he was under pressure to keep up to date with his €8,000 monthly mortgage repayments on properties in Kildare, Dublin and Portugal.

Judge Martin Nolan described the offence as a “classic Ponzi scheme”. He said Kelly had been a decent man until he engaged in this activity and found himself “totally out of his depth”. Kelly’s crime “involved deception, severe losses to some and breaches of trust”. He imposed consecutive sentences totalling six years.

The case was adjourned to allow the State time to consider what should be done with the money frozen in Kelly’s account.

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