A retired Garda Superintendent is among several investors suing former Fianna Fail councillor Gerard Killally, a firm of solicitors and others for more than €10 million arising from an alleged land deal “scam” in Co Offaly in which Mr Killally allegedly made secret profits.
It is alleged Mr Killally, unknown to the investors, had acquired the lands at Mount Lucas, Daingean, for some €4.7 million and aranged a scheme under which they were sold to the investors for €10.6 million in May 2007 at a time when they believed Mr Killally was a co-investor with them.
Former Supt Peter Wheeler said today he had trusted Mr Killaly completely when considering in late 2006 whether to invest in the purchase of lands at Mount Lucas as Mr Killally was chairman of Offaly County Council, had run in general elections and was of standing in the community.
Mr Killally assured him this was a “no-risk” investment but at no stage disclosed Mr Killally himself was the seller of the lands, having bought them from his father-in-law and others, he said.
Mr Killally instead represented he was a co-investor entering into a partnership with Mr Wheeler and others and had also so indicated at meetings with investors there would be no problem securing planning permission for the lands, he added. Mr Wheeler ultimately invested €73,000 while other investors provided sums ranging from €61,000 to €1.2 million.
Mr Wheeler, two of his brothers, six other investors and two companies are suing Mr Killally, a firm of solicitors, financial advisers and others over the land deal completed in May 2007. The defendants include a number of persons who themselves also invested in the deal and are alleged to have been engaged by Mr Killally to advise about the investment.
The action opened today before Mr Justice Michael Peart and is listed to last three weeks.
At the outset, the judge was told Mr Killally had been declared bankrupt since the case was initiated and the Official Assignee in Bankruptcy would not be participating in the case. A motion for judgment in default of defence is to be brought against Mr Killally, it was stated.
The other defendants have denied the claims against them.
It is claimed Mr Killally represented to investors the lands were available for sale for €10.4 million from Mr Frank Mulligan (father-in-law of Mr Killally) and Mr Mulligan’s partners and that Mr Killally was a co-investor.
Ronan Murphy SC, for the plaintiffs, said Mr Killally was in fact setting up a scheme to buy the lands from Mr Mulligan and partners for €4.7 million and sell them on for twice the price to a group of people of which he purported to be a part.
Some €10.4 million was sought for lands from both the investors and the Educational Building Society when the lands were sold apparently for €4.7 million, itself an inflated figure as valuation evidence indicated the true value of what was sold to the investors was €3.25 million, counsel said. The lands were ultimately sold to the investors in May 2007 for €10.6 million.
It is also claimed Mr Killally told investors he held booking deposits of between €4.5 million and €6.3 million in relation to the selling on of sites on the lands once the investors had completed their purchase. While the investors could not say information supplied to them about booking despots was “completely fictitious”, the fact was the contracts were never fulfilled, Mr Murphy said.
Mr Murphy said it was his case the solicitors firm acting in relation to the land deal - Bourke & Company, Drimnagh Road, Walkinstown, Dublin - had the gravest concerns whether those deposits were real but had not advised the investors of those concerns.
Counsel also said a memo discovered by the solicitors’ firm for the action, dated March 8th 2007, appeared to be an aide memoire to someone in the firm concerning the Mount Lucas lands.
It included the words: “Is the sale of three sites a scam and do the consortium know?” and also stated: “If they don’t know, GK will — on this”. Counsel said the word “will” in that sentence was followed by a word which was either “lie” or “die” but he could’t make it out.
That memo used the word “scam” and, while his side was not accusing the solicitors themselves of fraud, the situation was there was a fraud and the issue was the degree to which the solicitors were responsible for not alerting the investors, counsel said.
It is also claimed Mr Killally had told the plaintiffs certain portions of the Mount Lucas lands were not included in the sale to the investors when those portions were in fact included in the sale by Mr Mulligan and others.
It is claimed those portions of the lands were instead acquired by Mr Killally and/or his servants or agents or corporate vehicles acting for him and Mr Killally made secret profits as a result.
