By: Michael O’Farrell
Investigations Editor
NEW Beginning, which campaigns for those struggling with mortgage debt, saw a €2bn mortgage-to-let plan it promoted as an opportunity for ‘profit and publicity’.
Although it publicly endorsed a plan by a giant Malta-based investment fund to buy up thousands of indebted mortgages, New Beginning revealed in private communications that it was sceptical about the plan. New Beginning co-founder Ross Maguire apologised last week for failing to inform 1,500 of its clients that their financial details had been sold to Arizun.
He reported the matter to the Data Protection Commissioner the day after the MoS raised concerns about a possible data breach. Now confidential memos seen by the MoS shed light on the mindset in New Beginning at the time the Arizun plan – ‘Project Cowboy’ – was being considered.
One email, from New Beginning’s financial controller Johnny Moran to Mr Maguire and others, discusses whether New Beginning should become involved with Arizun’s plan to buy 15,000 distressed mortgages before renting homes back to families.
In his memo, Mr Moran – a former hotelier/developer whose businesses are in receivership – advised New Beginning to ‘ride on the tails’ of the Arizun deal because it ‘would be a massive profile boost’.
‘New Beginning getting association and credit for the concept in itself is very worthwhile and valuable even if it does not happen. But as we all agree, this in itself is not enough. It must be sufficiently PROFITABLE that is where New Beginning is AT!’ Mr Moran, who New Beginning last night described as a consultant who is not paid, gave this advice while also casting doubt on the viability of the Arizun plan. His private comments contradict New Beginning’s repeated public assertions that the Arizun plan offers a credible solution for tens of thousands of struggling homeowners. ‘There is a clear lack of detail on their own financial model, the status on financing, the regulation, timelines, budgets, ownership and it might never happen. OK let’s park that and play them along,’ Mr Moran wrote. The memo, which goes on to consider fees and other income available to New Beginning from the deal, is dated July 16.
Just over a week later – on July 25 – New Beginning signed a confidential Memorandum of Understanding (MoU) with Arizun. On the morning the MoU was to be signed, Mr Moran emailed Ross Maguire and others with some final pointers on the deal. ‘Insist on a specific date for the payment of the 50k upfront,’ he advised, before going on to outline the positives for New Beginning.
‘If you can pull it off and basically get a massive profile and media for New Beginning… I think that would be a fantastic coup. In effect, while taking a step back and downsizing and refocusing, New Beginning could in the same period substantially increase its profile and credibility…’ It was in this context that the data breach revealed by the MoS was made. Arizun says it deleted the sensitive data before using the database to calculate the scheme’s profitability. Throughout this period, internal accounts reveal New Beginning was under severe financial pressure, partly because of its commission and profit-sharing arrangements with insolvency practitioners and solicitors. The documents refer to a ‘1/3 profit sharing’ arrangement with Century Law. Century Law is owned by Seán Foley, a former DPP solicitor.
Further internal correspondence relating to Mr Foley indicates that New Beginning wanted to use Arizun’s initial payment as part of ‘buyout funds’ to enable New Beginning to disassociate itself from him. ‘Apart from getting him out and protecting brand this key step would get all legal work fees back in house, avoid losing 1/3 of fee and allow to expand and develop more legal services so it’s a key strategic profit move forward,’ the correspondence reads. Accounts seen by the MoS show Mr Foley’s share of the bankruptcy fees for 2014 stood at €72,000 by the end of July.
On August 13, Mr Moran wrote to New Beginning’s partners and management to say fees would have to be increased because the profit-sharing was unprofitable.
On August 25 – the day the unredacted database was sent to Arizun together with a payment request – Mr Moran emailed the person compiling the names to say: ‘Any news on money? Any chance you will get it in today? Loads of people to pay but not enough funds. ‘Asked how New Beginning could reconcile support of the Arizun plan with internal emails that cast doubt on it, Mr Maguire said: ‘This plan has itself had a number of iterations, some of which were rejected because they would not provide sufficient protection against repossession. We wholeheartedly believe that the current plan is the only viable solution for the tens of thousands of Irish families currently facing repossession.’
