According to several media reports, former Anglo Irish Bank chief executive, David Drumm was recently denied a bankruptcy discharge by a judge in Boston. Drumm appealed the ruling on Friday. Not only did the judge keep Drumm on the hook for $10.5 million euros in debt, but he released a 122-page judgment with damning findings about Drumm’s attempts to defraud creditors by hiding assets in his wife’s name.
Drumm was the CEO of Anglo Irish Bank in September 2008 when its finances fell apart in the global crash. He left his post later that year, following disclosures that the bank’s chairman had received $115 million in hidden loans from the bank. Drumm ultimately fled to Massachusetts and purchased a $5 million Cape Cod estate before moving to a $2 million home in the suburbs of Boston.
At trial, the bank claimed that Drumm had secretly transferred his interest in his homes to his wife to shield them from creditors, in addition to making $1.2 million in cash transfers to his wife. Drumm was also accused of hiding proceeds of sales of property in Ireland and luxury vehicles.
Drumm tried to chalk up his failure to disclose these asset transfers to poor record keeping, memory lapses and harmless accounting differences, but the judge didn’t buy it. According to the judge’s opinion, the fact that Drumm misunderstood what he was supposed to have disclosed as to some of the transfers and “simply forgot several others” was “exceedingly implausible” and Drumm was “not remotely credible.”
Transferring assets into a spouse or other family member’s name is common. We see it frequently in a number of contexts, including divorce, which is why we always propose to look at recently obtained assets of people close to the debtor. Real property is a typical asset to transfer to someone else, but it’s not the only thing to watch out for. We recently found that a debtor in Nebraska transferred a tractor and a boat out of his name and into his aunt’s to keep those assets out of his divorce proceedings.
There is no simple formula when approaching an asset search. Often, a successful search turns on factors such as how much information our client gives us, the comprehensiveness of the search and our intuition. The intuition comes into play when we see something that, for whatever reason, just seems a little off. A small bit of information that others might gloss over, often leads us down a path to finding hidden assets that would not have otherwise been uncovered.