Eddie Hobbs and the management of clients' finances
An application is to be made by the liquidator of the Taylor investment companies to the High Court next month seeking direction on whether Eddie Hobbs should be restricted as a director of companies under Section 150 of the Companies Act 1990, along with the other directors. The Irish Financial Services Regulatory Authority (IFSRA), has already requested the liquidator of these companies to report to it on complaints made concerning the involvement of Eddie Hobbs in the handling of cases, possibly with tax implications.
Files made available to Village show that in 1993 and 1994 Eddie Hobbs handled files that related to the transfer of money from an account in Kerry that was held in bogus names with a bogus address. Also that he was involved in handling financial transactions for an elderly couple also in Kerry involving monies that may have been the subject subsequently of a tax settlement, involving substantial interest and penalties.
The application to the High Court under the Companies Act arises from files suggesting the apparent involvement of Eddie Hobbs in these arrangements. IFSRA's request to the liquidator of the Taylor companies also arose from information available from these files.
This arose from a complaint made to IFSRA by the former associate of Eddie Hobbs, Tony Taylor, who was convicted and jailed for financial fraud, arising from the misappropriation of clients' funds.
The liquidator of the Taylor Investment companies, Mr Patrick McSwiney, submitted his report to the IFSRA on 1 June of this year, having been requested by IFSRA to report on Tony Taylor's allegations. In his report to IFSRA submitted on 1 June this year, Mr McSwiney wrote:
"As it appears some of the files (of the liquidated Taylor group) I investigated suggest the avoidance of tax by individuals, I am of the view I am required under S 299 of the Companies Act to report such offences. I have met with the revenue (ie Revenue Commissioners) to discuss the appropriate way to make such a report, as the legislation was different when these alleged offences took place".
Under the heading "S (Section) 150 Applications (under the Companies Act)", Mr McSwiney wrote: "The applications have been drafted and are ready to be made against four Directors of companies. I will need possibly to include details of the complaint and the reporting in the applications so they cannot be completed until these investigations are complete". One of the directors referred to is Eddie Hobbs.
The documents we rely on in what follows below, were made available to us by Tony Taylor. Mr Taylor said he had made his initial complaint about Mr Hobbs to IFSRA without having had access to the files of the Taylor group, which are in the possession of the liquidator. However in his investigations at the initiative of IFSRA, the liquidator spoke to Mr Taylor and, in that connection, made certain files available to him (Mr Taylor). We have been able to establish that the files shown to us by Mr Taylor were the files that came from the liquidator. We have also been able to assure ourselves that we have seen all the relevant files in relation to the cases we deal with below.
The Hotelier File
The files concerning the first of the two cases with which we want to deal concerns a late Kerry hotelier, Mr A (we have decided not to disclose the names of the clients of Taylor Investments as their identity is not relevant to the issues we write about and Eddie Hobbs has concurred with this decision) with an address in Tralee. It appears from the documentation that Mr A had over £1m in the account with the bogus names and bogus address at the AIB branch in Kenmare, Co Kerry. For reasons that are not apparent from the file, Mr A wanted to move these monies from this account to an offshore account and, in connection with that, he engaged the services of Eddie Hobbs, then associated with the Taylor Investment group, which is now in liquidation.
Eddie Hobbs claims he was not aware this was an account opened for the purposes of evading tax illegally, such as a bogus non-resident account. He said, "lots of people used nominee accounts at the time and the term 'bogus non-resident account' was not in vogue then". This is even though false names were used on the account and a false address and Mr Hobbs was certainly aware of the use of false names. It is not clear whether Mr Hobbs enquired why false names and a false address was used for the account and how he satisfied himself that the account was bona fide.
These questions arise for it is apparent from the document that Mr Hobbs was aware that Mr A had full control over the monies in this account.
The movement of the monies required an elaborate series of transactions, whereby the funds were moved from the account in AIB, Kenmare with bogus names and with a bogus address to a number of other accounts. One of these other accounts was a nominee account in an investment fund for the benefit of Mr A. Some of this money was moved to a firm in Toronto, Canada, apparently to facilitate the purchase of an apartment in Toronto by Mr A. And then funds were released into two bank drafts to the benefit of a friend of Mr A, and a small residue to Mr A himself.
The sequence of events as disclosed by the files shows the following:
There was a meeting between Eddie Hobbs and Mr A on Tuesday 16 November 1993. It is evident from the files that Mr A had £1,280,343 in the account in the bogus names in AIB, Kenmare.
Also in file is a copy of a letter purportedly signed by the bogus account holders to the assistant manager of AIB, Kenmare, Mr C Hodnett, dated 6 December 1993. It notes that the total maturity value of the accounts (there were two accounts) amounted to the £1,280,343. It states: "You are hereby instructed to place this total on demand until further notice, which will contain instructions from us with regard to further investment".
There is then on the file a photocopy of a "post-it" note with the handwriting of Eddie Hobbs (we state it is in the handwriting of Eddie Hobbs because (a) Tony Taylor states this; (b) in an earlier draft of this article which we sent to Eddie Hobbs, he did not contest this assertion and (c) the letter we have received from his solicitors, Lavelle Coleman, states: It appears the only involvement our client (Eddie Hobbs) had with this transaction was a post-it note which appears on a copy of a letter. It states:
"(Mr A): 1: Get bank draft IR payable to (bogus names). Endorse reverse "(bogus names)". 2: Fill in final total and 'both' sign the attached irrevocable instruction to Anglo. 3: "We will send courier to collect from you."
The note appear to be addressed to Mr A or was so intended. It appears to advise Mr A to get a bank draft in the bogus names used on the AIB Kenmare account. It appears to advise Mr A to sign "both" bogus names on the reverse side of the bank draft and then sign a letter, again in bogus names, to Anglo-Irish Bank Corp in the Isle of Man. The letter was attached to the Post-It note.
Mr Hobbs and his solicitors are of the view any legal impropriety that attached to this matter was confined to the opening of the account in the first instance at AIB in Kenmare and he (Eddie Hobbs) had noting to do with that. However questions arise from the apparent advice he gave concerning the operation of this account. It might be commented: it would be surprising, given the use of bogus names and a bogus address, if Eddie Hobbs did not appreciate there was something suspicious about the account and that this might have caused him to refrain from giving any advice concerning any transactions to do with the operation of the account and the movement of funds from that account to the Isle of Man.
On the file is a photocopy of an AIB Kenmare Branch "Demand Draft", for IR£1,280.355.32 and there is a photo copy of what appears to be the reverse side of the copy of the bank draft, showing signatures of the bogus names. This accords with what appears to have been the advise of Eddie Hobbs as apparently recorded in the post-it note.
The advice, which appears to have been taken, to sign the reverse side of this bank draft with bogus names and signatures again raises questions concerning the handling of this matter by Eddie Hobbs.
As stated above, attached to the post-it note is a letter to the Manager of Anglo Irish Bank Corp, Isle of Man, St James Chambers, 65 Athol Street, Douglas, Isle of Man.
The letter states it is enclosing a bank draft for IR£1,280,366.32 (exactly the sum withdrawn from the AIB Kenmare branch) and goes on to instruct the Isle of Man manager to forward IR£1m in US dollar equivalent to the bank account of Fidelity Nominees of Fidelity International, which is one of the largest fund groups in the world. It gives the name of the bank in New York and the account number. The letter goes on to instruct the Isle of Man manager to convert sufficient funds to realise in 408,000 Canadian dollars and transfer this to the account of a legal firm in Toronto at a bank in Toronto.
It further instructs the Isle of Man manager to raise a bank draft for 40,000 Canadian dollars made payable to an associate of Mr A and a further draft for IR£15,000 to the same associate. It instructs the manager to raise another bank draft for the US dollar equivalent of IR£20,000 and made payable to Taylor Investment Group. And, finally, it instructs that surplus monies should be paid in the form of a bank draft made payable to Mr A.
The letter is signed in the bogus names of the AIB account in Kenmare.
Because the letter is attached to the Post-it note apparently drafted by Eddie Hobbs, it would not be unreasonable to infer that the letter was drafted by Eddie Hobbs but nothing special turns on this, aside from the fact that the letter invited Mr A to sign it in bogus names.
We cannot be sure that Mr Hobbs drafted this letter but it is not unreasonable to comment that this is a reasonable inference for the reasons given and since Mr Hobbs seems to have advised already that the reverse side of the bank draft was signed with the bogus names it would not be surprising it he advised the same in the case of the letter.
Remember the post-it note in the handwriting of Eddie Hobbs advised: "Fill in total (that would seem to be the total of the bank draft obtained from AIB Kenmare) and "both" (apparently his inverted commas) signed the attached irrevocable introduction to Anglo".
Also on file is an application to Fidelity Investments on behalf of Mr A with an address c/o Taylor Investment Group, Clyde House, Clyde Rd, Dublin 4, dated 16 December 1993, signed by Mr A and signed on behalf of Taylor Investment Group by Eddie Hobbs. This sates: "Taylor Investment Group Ltd ('Taylor') hereby appointed as Portfolio Manager of the investments and cash of the Client from time to time the subject of this Agreement ('the funds'). It states the funds to be managed comprise IR£1m to be invested in an international opportunity portfolio in US dollar denomination.
All money transactions in and out of Taylor Investment accounts were signed by Tony Taylor personally and there are several letters on file relating to these money transactions. Solicitors for Eddie Hobbs have made an issue of this starting". All matters in relation to this transaction (of Mr A) appear to be carried out at the direction of Tony Taylor". However from the file it appears it was Eddie Hobbs who advised that monies be withdrawn from the account in Kenmare and advised that bogus names be used and also gave advice on the letter to the Isle of Man bank manager.
In a letter dated 18 January 1994 signed by Eddie Hobbs, to Mr A states:
"I have pleasure to enclose the following:
"•Original Contact note for your investment with Fidelity of IR£1m, showing a total investment of $1,414,143,47.
"•Canadian dollar bank draft for $40,000 made payable to (Mr A's friend). This was undertaken at an exchange rate of 1.8785.
"•Irish pounds bank draft for £15,000 also made payable to (Mr A's friend).
"•Irish pounds bank draft of £8,900 made payable to yourself.
"Everything is now complete and I look forward to seeing some details from you regarding the AIB shares as we feel you should probably move on these some time in early February".
There are further documents on file, seen by Village, showing Eddie Hobbs handled the Fidelity account on behalf of Mr A.
On 8 July 1996 Mr A wrote to Tony Taylor on Hotel Intercontinental London notepaper stating: "I wish to advise you that I am ceasing my involvement in Taylor portfolios with immediate effect and I have advised Fidelity accordingly".
Tony Taylor says Mr A transferred his account to an entirely separate company of which Eddie Hobbs was then managing director. Eddie Hobbs has not contested this assertion.
Mr and Mrs B file
Two accounts were operated on behalf of a retired doctor in Tralee, Co Kerry, Mr and Mrs B. The first account was legitimate.
One account was accompanied by a from, signed by Tony Taylor, then chairman of the Taylor Investment Group, informing Gartmore Fund Managers International Ltd, based in Jersey in the Channel Island, that Sterling £112,000 had been transferred to their account in Chase Manhattan Bank, London, on 22 December 1993 in the name of Mr and Mrs B c/o Taylor Investment Group in Dublin. The accompanying documentation, we are informed, was completed in the handwriting of Eddie Hobbs and applied for the registration of the transaction in a nominee service. The form stated in bold letters that it was an "EX PATRIATE" account. Eddie Hobbs has not contested this.
Gartmore replied in a letter dated 30 December 1993, enclosing the client's personal account number.
A further IR£100,000 was placed on behalf of Mr and Mrs B in another account with Gartmore on 30 December 1994. This also registered for the nominee service.
On 21 December 1994 Eddie Hobbs wrote to Mr B not to the latter's home address but to the address of his accountant in Tralee. The letter stated: "I attached prepared instructions to AIB and Bank of Ireland to credit transfer specified amounts from your current accounts with those these banks to Gartmore. Please see the attached. You will need to complete the top paragraph in each instruction, inserting the Irish Punt value of the funds which will be moved from each account as appropriate".
Last March the Revenue Commissioners published a list of settlements with tax defaulters. Among these were Mr B, retired doctor of Tralee, Co Kerry. The total settlement was €1,256,004. This comprised of an assessment of the initial amount of €327,518 and interest and penalties of €928,486.
While it is not possible to link these transactions to the tax settlement made by the couple concerned, the fact that nominee accounts were used suggests it was these accounts that gave rise to the tax paoblem.
However even if this is so, it would still not mean that Eddie Hobbs did anything improper in his handling of these accounts. In the earlier draft of this article, which Eddie Hobbs saw he did not raise objection to the inclusion of this case in the article. However in the solicitor's letter issued on his behalf a linkage between the tax settlements and these accounts is challenged. We acknowledge there is no established connection but it is fair to comment that questions arise given the use of nominee accounts, which usually disguise the identify of the account holder, and the later tax settlement.