A former bank manager who stole €2.7 million from Allied Irish Banks after he created fictitious undocumented loan accounts for customers when their own legitimate applications were delayed or refused, has been jailed for two years.
Patrick Challoner, 54, from Chanel Road, Artane, Dublin 5, funded these bogus loans by taking money from other customers who believed they were authorising Challoner to set up an investment fund for them.
These customers gave Challoner authorisation to take money from their accounts for the purpose of investment but the cash was never invested.
Challoner pleaded guilty to five sample charges of theft from Allied Irish Banks, Artane branch, on dates between August 2002 and February 2011 and one charge of deception, in that he fraudulently induced a named person to authorise a transfer of €300,000 from their bank account on 2 December 2016.
The charges were representative of over 100 charges and the court heard that there were thousands of transactions involved.
The bank was at a total loss of €3.2 million, which included reimbursing the affected customers and the cost of an external audit.
Detective Garda Gareth Lynch said Challoner told the gardaí during a number of interviews that the whole situation started when he found that, due to other work pressures, he had not progressed a mortgage application for a customer's "dream house" as efficiently as it should have been.
The customer then became concerned that they would lose the property so Challoner took money from the account of another customer and effectively gave the prospective home buyer what they believed was a bridging loan.
He then set up a bogus loan account without any supporting documentation.
Det Gda Lynch said the fact that the loan had no supporting documentation meant that the bank then had no way to enforce the payment of the money.
He explained that one way Challoner funded these accounts was by getting other customers to invest funds into an investment account that he never actually created.
When these customers came back to Challoner looking to withdraw cash from these investment funds, Challoner often used his own money to pay them back.
Det Gda Lynch said Challoner also used this scheme to provide loans to businesses that found themselves in financial difficulty.
Judge Elma Sheehan said today that Challoner was operating a Ponzi scheme and had used his own funds to keep it going but what he did was illegal and wrong.
It was not however she said motivated by personal gain, has no "trappings of wealth as a result of his offending" and has had the most drastic consequences for him and his family.
She also said he pleaded guilty, repaid €60,000 and cooperated with the garda investigation.
She sentenced him to three years in prison with the final year suspended for 12 months.
