Irish Swindler Leaves Former Fund Manager Counting Cost

For a group of Irish investors, Breifne O’Brien was their deal maker, adviser and friend. Then they found out he’d robbed them of fortunes in a case that echoes the Bernard Madoff affair across the Atlantic.

O’Brien was sentenced to seven years in jail yesterday after pleading guilty in the Circuit Criminal Court in Dublin to theft and deception in June. The 53-year-old ran a Ponzi scheme that swindled friends and family connections out of at least 8.5 million euros ($10.8 million) until Ireland’s Celtic Tiger boom imploded in 2008.

“Is seven years justice?” David O’Reilly, a former hedge fund executive who lost 3.6 million euros investing with his old university friend, said by e-mail yesterday after the sentencing. “Five, seven or 10 years is not going to bring back any of the monies he stole from us.”

The case captures the lingering fallout from the real estate bust that devastated the Irish economy. O’Brien persuaded investors, including fund managers and bankers, to put up cash for illusory schemes ranging from Paris to Hamburg. He used their money to pay off other clients and fund his own lifestyle, including buying a $75,000 Audi and real estate in Barbados, prosecutors said.

“Because of the success of the Celtic Tiger, people weren’t as skeptical about who they gave their money to,” said Niamh Brennan, a professor at University College Dublin who specializes in corporate governance and forensic accounting. “They might be a bit more skeptical now.”

After his guilty plea, O’Brien’s lawyer, Patrick McGrath, told the judge that his client had unfairly been branded “Ireland’s Madoff.” He had shown true remorse and sought to hide nothing, McGrath said.

Living Lie

O’Brien told his clients he was buying and selling options on properties across Europe, prosecutor Luan O’Braonain said at a sentencing hearing in Dublin on July 30.

After clients confronted him in December 2008, O’Brien confessed to “living a lie for at least 10 years,” O’Braonain said, as he traced out the conman’s rise and fall.

The story begins in Cork in the southwest of Ireland, where O’Brien grew up as the son of a successful businessman. He moved to Dublin in the early 1980s to study economics and social studies at Trinity College, where students mingle across the cobbled squares, rugby fields and cricket pitches that provide an oasis in the center of the city.

After leaving university, O’Brien dabbled in different business ventures in the decade that followed, including taxi and laundry businesses, according to prosecutors. O’Brien became obsessed with investing by the 1990s, taking proposals to his network of wealthy friends and family, they said.

Starvin’ Marvin

He convinced one college friend, O’Reilly, to back a city center restaurant called Starvin’ Marvin’s. The investment was a “disaster” and went out of business, O’Reilly said.

O’Brien felt bad and asked him if he’d like to be considered for “short-term opportunities” in the future. They became “investor buddies” over the next two decades and brought possible deals to each other, O’Reilly said, in an e-mailed response to questions.

“We probably spoke on the phone weekly with updates on our portfolio of investments,” said O’Reilly. “Mine were real and his were fictitious but, boy, was he consistent in sticking with the sham from start to finish.”

O’Reilly, who met O’Brien through playing rugby at Trinity College, became an executive with Renaissance Technologies LLC, the $25 billion hedge fund founded by Jim Simons. Today, he’s chairman of GameAccount Network Plc, a London-based gaming company.

Investors believed O’Brien was keeping their money in a deposit account and using it merely to demonstrate to property sellers that he had the means to buy, O’Braonain said. Clients thought he was purchasing an option to buy an asset, including properties in Paris and Hamburg, which he’d then quickly sell on for a profit, according to the prosecutor.

Ponzi Scheme

Instead, he was using their cash to pay off other investors. This is the “absolute, quintessential nature” of a Ponzi scheme, O’Braonain said.

O’Brien tapped one client for more than 4 million euros in total from mid-2007 onwards, the court heard. He was supposed to use the money to purchase an option on a German property, prosecutors said.

Instead, O’Brien transferred about 2 million euros to other clients, the court heard. He put 388,000 euros of the money into an account in New York, which was used to purchase a property in Barbados, and spent another 10,000 euros insuring more of his own real estate, prosecutors said.

Like Madoff’s $17.5 billion Ponzi scheme in the U.S., which fell apart amid the U.S. financial crisis, O’Brien floundered in December 2008 as the property market plunged.

Celtic Tiger

“It had been easy during the Celtic Tiger to persuade people to invest their money,” O’Braonain said. “But recent events made it impossible to continue.”

“He invested in real opportunities that I brought to the table and I invested in what I thought were tangible, real opportunities,” said O’Reilly. “It only transpired when I got a call from his solicitor and visited his house that 95 percent of the opportunities were fictional.”

O’Brien’s wife divorced him after his schemes fell apart and now he gets to see his children one hour a week, Patrick McGrath, one of his lawyers, said at the July hearing. He lives on social welfare payments of 188 euros a week and is destitute, the court heard.

“Not only has he lost the lifestyle but he’s also lost his family,” McGrath said.

Expensive Lesson

Yesterday, Dublin Circuit Criminal Court Judge Patricia Ryan said while O’Brien’s cooperation, his guilty plea and remorse were mitigating factors, his sentence reflected the serious nature of the crime and the amount of money involved.

Slim and with his hair graying at the temples, O’Brien was led away by two officers to begin serving his sentence. His victims are left pondering their losses.

“I emotionally detached myself about 3 years ago as I try to regroup,” O’Reilly said. “The whole Breifne O’Brien experience was just another very expensive life lesson where I put too much weighting on trust.”

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