A property development company which lost more than £250,000 in a “sophisticated” scam will get most of the money back immediately if the fraudster surveyor who conned them is not jailed, a judge was told.
Chartered surveyor Niall Gallagher (56) admitted what Judge Richard Greene QC described as “an abominable breach of trust” to steal £277,231 from Bell Orr Properties Ltd.
But a business associate gave sworn testimony at Antrim Crown Court that he would pay £200,000 of that if Gallagher was still able to work for his firm.
Defence counsel Neil Moore put to Gary Scott, the managing director of Windsor Developments: “You are willing to put your money on the line to support this man?”
He declared: “I am yes, absolutely.”
Prosecuting counsel Robin Steer said he had a solicitor's letter which confirmed “the offer of restitution is conditional of him [Gallagher] not being imprisoned because then he cannot pay it back” and highlighted to the judge that with the fraudster declared bankrupt, the £200k “may be of great benefit to the complainants”.
In June 2020, Gallagher, from Oakwood Park in the upmarket Malone area of south Belfast, entered guilty pleas to eight counts of fraud by abusing the position of trust he held with Bell Orr Properties Ltd on various dates between February 26, 2013 and November 6, 2014.
Outlining the background of the case, Mr Steer explained how Bell Orr Properties Ltd had bought a site on Minerva Street in Glasgow at the height of the property boom but when it crashed, they decided to develop the site to prevent a loss and employed an architect as well as a quantity surveyor to build 55 apartments on the site.
Gallagher, he told the court, was the quantity surveyor. His role was to “put the work out to tender, select a contractor, employ design engineers, look at build costings and monitor the build and contractor”, signing off each stage of the build to the developer’s satisfaction before payments were released.
He had worked for the company before and as a result “was held in a high position of trust by Bell Orr to protect their interests from the start of the project through to its conclusion”.
On Gallagher’s recommendation, Cookstown-based contractors MACM Ltd was chosen with the building work finishing in October 2013 but due to various issues, it ended up in Civil litigation and an arbitration process in the High Court.
As a result of that, Mr Steer said Bell Orr instructed a quantum expert who reported “discrepancies had been uncovered in payments made by Bell Orr Properties to MACM (NI) Ltd”.
“These anomalies were in respect of a total of £277,231.32 of work that had been paid for during the build but had not actually been conducted and that these payments were fictitious,” said the lawyer.
He said that within days of the discovery, Gallagher met with the Bell Orr directors and confessed “he had arranged to take money belonging to their company without their authorisation and had channelled these funds through the contractor MACM (NI) Ltd who then paid him directly”.
He met with them twice more and candidly admitted he had received “four or five” payments since June and that these were overstated valuations with a payment then being made to MACM who then refunded him every month.
“The defendant said that he had told MACM that Bell Orr had agreed to ‘forward fund me for a problem I was having’, meaning that they had agreed to give him an advance loan and that MACM then forwarded a BACS transfer to him without knowing the reason for this payment. The defendant stated that MACM never questioned this arrangement and that they did not benefit from it,” Mr Steer explained.
Gallagher had claimed he was “under pressure from the Bank of Ireland from 2013 and this was why he hadn’t attempted to repay the monies”.
But, the court heard, the directors put to him he had taken money when “he knew that the company didn’t have bank funding for the project and there were difficulties with cash flow”.
Arrested and interviewed by police, father-of-two Gallagher “immediately admitted that this was true and made full admissions”.
Describing the offences as a “cataclysmic fall from grace”, Mr Moore told the judge how Gallagher himself had invested in a property development which had been backed by the Bank of Ireland but because of the property crash, the bank withdrew.
“In his words, the bank ‘pulled the rug out from under his feet’,” said the lawyer, adding that Gallagher has “lost everything” in that he has been made bankrupt by HMRC and although he is still living in the family home, it is owned by the bank.
In an impassioned plea for mercy and leniency, Mr Moore submitted “these were the actions of a man in the throes of desperation, trying to keep his company afloat and provide for his own family” and a man whose crimes have “significantly tarnished and blackened” his reputation.
Freeing Gallagher on bail until February 11, Judge Greene warned that while he faces a prison sentence “in and around two and a half to three and a half years… the difficult question that the court has to consider in your particular case is whether the prospect of restitution for the victim of your fraud should affect the outcome and that is not an easy matter to reconcile, I have to say”.
Highlighting that “there is the principle that everyone should be treated equally before the law”, the judge told Gallagher any chance of him not going to prison “only exists when restitution is available for me to make an order from cleared funds”.
“But I also make it clear that you are under no promises as to the outcome of this case - these are matters very much finely balanced,” the judge concluded.