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Drumm v. McDonald

United States District Court, D. Massachusetts

January 11, 2016



RICHARD G. STEARNS, District Judge.

Petitioner David Kenneth Drumm, the former Chief Executive Officer (CEO) of the now defunct Anglo Irish Bank, is the subject of an extradition demand by Irish authorities who seek to prosecute him for his alleged fraudulent activities at the Bank. Drumm was arrested on October 13, 2015, on an Extradition Warrant issued pursuant to the Treaty governing such matters entered between the United States and the Republic of Ireland in 1983. After proceedings before Magistrate Judge Donald Cabell, on December 15, 2016, Drumm was ordered held without bail pending an extradition hearing scheduled for March 1, 2016. See In the Matter of the Extradition of David Kenneth Drumm, Criminal No. 15-mj-01104-DLC, Dkt. #36 - Dec. 10, 2015 Order on Defendant's Motion for Release on Bail Pending Extradition Proceeding (Bail Order). On December 24, 2015, Drumm filed a petition for writ of habeas corpus pursuant to 28 U.S.C. § 2241, appealing the denial of bail.[1] This court held a hearing on the petition with Drumm present on January 8, 2016.

In his petition, Drumm asserts that Magistrate Judge Cabell's decision was flawed by several factual and legal errors, that there is no evidence that he poses a danger to the community or a risk of flight, and that "special circumstances" exist that support his release on bail. Drumm represents that he has no connections to any countries besides Ireland and the United States and that his appearance in this matter can be secured through a combination of conditions including home confinement, electronic monitoring, and a bond secured by his family's home as well as by properties offered as surety by three family friends. Drumm seeks a remand to Magistrate Judge Cabell with an order that he fashion appropriate conditions of release.


The facts underlying the extradition request are as follows. As a young executive with Anglo Irish in 1998, Drumm moved with his family to Boston to establish a U.S. beachhead for the Bank. The Drumms purchased a home in Sudbury, Massachusetts, and enrolled their children in local schools. In 2003, Anglo Irish recalled Drumm to Dublin "to serve in various other leadership capacities within the bank, " naming him as CEO in 2005. Pet. at 8. Although then domiciled in Ireland, the Drumms spent "extensive periods of time in Massachusetts" at their vacation home in Chatham on Cape Cod. Id. at 9.

The now defunct Anglo Irish Bank was a commercial and property lender with a limited retail banking business. Because of the Bank's heavy exposure to real estate, it suffered more than most in the 2008 worldwide market collapse. Drumm resigned from Anglo Irish in December of 2008, just prior to the nationalization of the Bank by the Irish Government. Among the questionable practices that subsequently came to light were a large number of off-the-books loans made by the Bank to its directors (or more accurately by the directors to themselves). Drumm is alleged to owe approximately $11 million "on account of loans made to him by the [B]ank." In Re David Drumm, No. 15-cv-10184-LTS (bankruptcy appeal), Dkt. #31 at 3. After resigning from Anglo Irish, Drumm returned with his family to the United States and purchased a home in Wellesley, Massachusetts, enrolling his daughters in private schools. Drumm found employment, eventually becoming CEO of a family asset management company. On October 14, 2010, Drumm filed for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code.[2]

In February of 2009, the Irish Financial Services Regulatory Authority filed a complaint with An Garda Síochána, Ireland's national police force, concerning financial irregularities at Anglo Irish. The complaint led to the indictment of a number of former Anglo Irish officers and employees. Drumm was among them. In July and August of 2014, the Dublin Metropolitan District Court issued thirty-three warrants for Drumm's arrest for alleged offenses based on his "fraudulently concealing Anglo's financial position through various acts, including failing to disclose certain transactions, providing financial assistance to a group of investors to induce them to purchase Anglo's stock, and using circular transactions to inflate the corporate deposits on Anglo's financial statements." Bail Order at 3. The request for Drumm's extradition followed.[3] See Gov't Ex. 1 (Transmission Letters and Affidavits).


In the First Circuit, "[t]he standard of review of a Magistrate Judge's bail determination in extradition cases is narrow. This court's inquiry is limited to the issue of whether or not there were reasonable grounds for the Magistrate Judge's denial of bail." Kin-Hong v. United States, 926 F.Supp. 1180, 1184 (D. Mass. 1996), rev'd on other grounds, 83 F.3d 523 (1st Cir. 1996). "In applying the [reasonable grounds] standard, the court defers to the Magistrate Judge's factual findings, unless they are unsupported by the record, but reviews the Magistrate Judge's legal determinations de novo. " Kin-Hong, 926 F.Supp. at 1184; see also In re Extradition of Siegmund, 887 F.Supp. 1383, 1385 (D. Nev. 1995) (evaluating de novo legal question of whether availability of bail constitutes a special circumstance).

The availability of bail in international extradition cases is extremely limited.[4] That a right exists at all arises from Chief Justice Fuller's dictum in Wright v. Henkel, 190 U.S. 40, 63 (1903), alluding to a common-law authority of circuit courts to admit persons to bail in cases of foreign extradition where "special circumstances" are at play.[5] As a student of extradition law has noted, "federal judges have [since] struggled to figure out whether they have the authority to grant bail, in what stage of the extradition proceedings they can grant it, and what special circumstances' might justify it." Nathaniel A. Persily, International Extradition and the Right to Bail, 34 Stan. J. Int'l Law, 407, 408-409 (1998). This struggle is reflected in the aphorism that "[t]here is a presumption against bail in extradition cases, " as well as in the assignment to the extraditee of the burden of showing: (1) that he is neither a flight risk, nor a danger to the community; and (2) that there are "special circumstances [that] justify [his] release on bail."[6] Kin-Hong, 83 F.3d at 524, quoting Wright, 190 U.S. at 63; see also Beaulieu v. Hartigan, 554 F.2d 1, 1-2 (1st Cir. 1977) ("[T]he matter should be approached with caution and bail should be granted only upon a showing of special circumstances.").[7]

The determination of what constitutes a "special circumstance" is fact-intensive and largely left to the Magistrate Judge's discretion, subject to the caveat that in order to qualify as "special" a circumstance must be atypical. This requirement is fairly read as meaning that the "special" circumstance must be more or less unique to the supplicant and not be one that is applicable to extraditees generally. As Judge Learned Hand noted, the finding should be limited to situations where "the justification is pressing as well as plain, ... or in the most pressing circumstances, and when the requirements of justice are absolutely peremptory." In re Mitchell, 171 F.Supp. 289, 289 (S.D.N.Y. 1909). In those rare cases in which bail is determined appropriate, courts typically particularize as many special circumstances as are thought to be applicable. See e.g., Castaneda-Castillo, 739 F.Supp.2d at 58-64 (charge pending in Peru more than twenty-five years, incarcerated five years pursuing amnesty petition, facing lengthy extradition proceeding); In re Extradition of Santos, 473 F.Supp.2d 1030, 1035-1036 (C.D. Cal. 2006) (appellant demonstrated delay and a high degree of uncertainty regarding the merits of the request for extradition); In re Extradition of Molnar, 182 F.Supp.2d 684, 687 (N.D. Ill. 2002) (combination of financial assistance to seriously ill mother, provisional nature of arrest, lengthy extradition proceedings, and criminal charges dropped and then reinstated when petitioner left Hungary held to be sufficient special circumstances).


As previously noted, the court's review of denial of bail is limited to whether the record reasonably supports the Magistrate Judge's decision. Magistrate Judge Cabell reviewed each of the circumstances advanced by Drumm as "special, " and rejected them serially (as well as in the aggregate).[8] On December 10, 2015, in his written decision, Magistrate Judge Cabell ruled that Drumm "ha[d] not established the presence of special circumstances sufficient to overcome the presumption in favor of detention in extradition cases." Bail Order at 1. While noting the government's concession that Drumm poses no danger to the community, the Magistrate Judge made a tentative finding that "the seriousness of the charges pending against [Drumm] in Ireland provides [him] with an incentive to flee, " and that his "background and experience in international matters and his presumed substantial assets provide him with the ability to flee if he were so inclined." Id. at 5. That said, the Magistrate Judge "assume[d] without deciding... that it would be possible to fashion a set of conditions to adequately mitigate the risk of flight." Id.

With regard to special circumstances, the Magistrate Judge found that "Ireland (through the U.S. Attorney) has specifically asked that [Drumm] be detained pending his return to Ireland, underscoring... the diplomatic necessity for detention." Id. at 4-5.[9] The Magistrate Judge also noted that there are factual distinctions between Drumm and the Anglo Irish employees granted bail in Ireland - they are subordinates charged with fewer crimes, all are cooperating with Irish authorities, and they are all in Ireland, not the United States.[10] As to Drumm's argument that Ireland's delay in prosecuting him underscores the lack of "diplomatic necessity, " the Magistrate Judge held that Ireland has actively investigated the case since 2009 (the "normal passage of time inherent in the litigation process") and that Drumm's relocation to the United States, "at least in part" forestalled the bringing of charges against him. Id. at 8-9, citing Kin-Hong, 83 F.3d at 525. As for Drumm's plea that he is the sole source of income for his family, the Magistrate Judge observed that "unwelcome financial strain... is present in almost every case where a defendant with family ...

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