The High Court has disqualified three former directors of Custom House Capital Ltd for 10, 12 and 14 years after finding that each was guilty of fraud, repeated breaches of duty and conduct showing a lack of commercial probity.
In a judgment delivered on 2 December 2016, Mr Justice David Keane made the orders under the Companies Act 2014. The application had sought disqualification under the Companies Act 1990, or alternatively declarations restricting the directors. The court found disqualification justified and rejected the request to impose a restriction instead on John Mulholland.
The company, which is in liquidation, provided investment and pension-related financial services. The court considered the inspectors’ report and evidence from the official liquidator. The inspectors had identified improper transfers of client funds valued at €56.15 million and a further €10.4 million owed to clients who invested in a company-created bond fund, excluding interest. Those figures described potential losses when the report was produced; the judgment did not determine final client losses.
The liquidator’s evidence included allegations of false client statements, unauthorised transfers between client accounts and property businesses, undisclosed commission payments, and inadequate accounting records. The court said the evidence showed widespread and deliberate misuse of client funds, much of it used to support the company’s property business. It found all three directors signed a board resolution pledging misappropriated client funds as collateral for a bank loan.
The court found that Harry Cassidy controlled and directed the misuse and concealment of client funds and personally benefited from unauthorised commissions. It described him as the primary actor and ordered his disqualification for 14 years. Cassidy did not appear in answer to the application.
The court found that John Whyte knew client money was being diverted and complied with Cassidy’s directions to release or transfer funds, despite challenging him. It also found that the company, through Whyte, had fraudulently procured the retention of a client’s loan. The judge accepted that Whyte did not initiate the conduct or personally profit from it, and that he later made helpful disclosures and co-operated with the liquidator and inspectors. He was disqualified for 10 years.
The court found that John Mulholland personally benefited from unauthorised commissions and breached his duties. He had acknowledged failures in his corporate governance responsibilities. The judge rejected his submission that a restriction should be imposed instead, and disqualified him for 12 years, taking account of his co-operation and other mitigating factors.
The judge said the conduct was deeply dishonest, continued over a prolonged period and had a grave impact on clients who entrusted the company with their savings and pensions.