Tom Hayes, the convicted former City trader, and his wife mortgaged their seven-bedroom country house for £350,000 to pay legal fees but told the bank the money was for garden improvements, a prosecutor has told the Old Bailey.
Michael Parroy QC, representing the Serious Fraud Office, also told the court on Tuesday that Hayes and his lawyer wife, Sarah Tighe, went through “various manoeuvres” to transfer the £1.7m Old Rectory in Surrey into her name and failed to inform the SFO as required.
Hayes, 36, was convicted of rigging Libor, the benchmark inter-bank rate, last August and is serving 11 years in jail – reduced from 14 years. He used his contacts at banks and brokers to get the daily rate set in his favour, making him a star trader at UBS and Citi in Tokyo before his activities were discovered.
The SFO is now seeking £2.45m in bonuses from Hayes, which it says he was paid because of his Libor rigging. The case is likely to hinge on how much of those bonuses the court deems were because of illegal activity.
On the second day of the five-day confiscation of funds hearing, Parroy said Hayes and Tighe applied for a £325,000 interest-only mortgage on the Old Rectory in April 2013, more than a year after he was arrested in December 2011.
On the mortgage application they said the money was for garden refurbishments, but it was clear the real reason was Hayes’s mounting legal fees, Parroy said.
On the application, Tighe said Hayes’s share of the house would be transferred into her name. After taking maternity leave she had found a job with the US law firm Shearman & Sterling in London, enabling her to get the mortgage, Parroy said. The mortgage was later increased to £350,000.
When Hayes’s share of the house was transferred to Tighe it was valued at £250,000, undervaluing his stake by £600,000, Parroy said.
Parroy said emails between Hayes and his former barrister Lydia Jonson showed she warned him not to make changes to the ownership of the Old Rectory without telling the SFO because it would look like he was trying to rid himself of an asset. Parroy said: “As far as one can see [there is] no information at this stage at all that this process is going on.”
Parroy painted a picture of pressure mounting on Hayes and Tighe, who paid £1.2m in cash for the Old Rectory in summer 2011. They had earlier bought a flat in east London for £940,000 after Hayes lost his job at Citi in September 2010 and returned to the UK from Japan.
As with the Old Rectory, they used cash from Hayes’s savings to buy the flat. They added a three-floor extension to the Old Rectory and added a two-car garage, new entrance gates and other features during 2012 before Hayes was indicted in the US in December that year.
By early 2013 Hayes’s legal bills in Britain and the US were rising fast and them couple tried to sell the Old Rectory before opting to take out a mortgage, Parroy said.
Hayes, who has mild autism, shook his head and made regular comments from the dock during Parroy’s argument. At one point Tighe turned and told him: “Stop it.”
At his trial last year, Hayes claimed his bosses were aware of his actions and that he had been accused of actions that were widespread in the banking industry.
This article was written by Sean Farrell, for theguardian.com on Tuesday 15th March 2016 18.15 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010