Search This Blog

Friday, May 7, 2010

New Hampshire Securities chief quits over scheme

 The state’s securities chief resigned Monday and issued a scathing indictment of the government’s handling of the legal case against Financial Resources Mortgage that’s become a Lakes Region Ponzi scheme robbing investors of up to $100 million.
Mark Connolly, director of the Bureau of Securities Regulation, vowed to press the Legislature to beef up powers to prevent this kind of case from recurring.
“There is a legal concept known as noisy withdrawal whereby someone – typically a lawyer – has knowledge of impropriety in a matter and publicly withdraws from representation when he or she has knowledge of wrongdoing,” Connolly told reporters. “That is what I am doing today through my resignation.”
Connolly contends the Banking Department stonewalled his investigators by not giving them all documents relating to the FRM matter.
Asked if it amounted to a cover-up, Connolly answered, ‘’If someone is not providing the information that is available, then in fact that is a cover-up.”
Banking Commissioner Peter Hildreth has maintained FRM was a securities matter, and as such, subject to Connolly’s jurisdiction. Connolly repeated Monday that fraudulent commercial mortgages don’t come under his realm, and instead, Hildreth should have done a better job of policing the company.
“It is time for the government to come clean and release all the records and stop trying to assign blame,” Connolly said.
Had the banking agency done its job, regulators there could have stepped in before FRM executives took more than $15 million in cash out of the company before going belly up Nov. 6, Connolly said.
“I think the doors should have been shut before Nov. 6,” Connolly said.
Gov. John Lynch repeated Monday that he looks forward to receiving an investigative report on the FRM matter from Attorney General Michael Delaney on May 12. State agencies should be held accountable if there were any shortcomings in regulatory work, Lynch said.
Ryan Williams, communications director for the Republican State Committee, said it’s Lynch’s fault that FRM left investors holding the bag.
“Instead of taking an active role in investigating his administration’s failure to stop this massive fraud, Gov. Lynch has deliberately sat on the sidelines,” Williams claimed.
“The governor has failed to provide any leadership while state officials have engaged in shameful finger pointing and public bickering over responsibility for this fiasco. Gov. Lynch has remained suspiciously silent while senior members of his administration have been accused of deliberately misleading the public about their involvement in this critical investigation.”
Last month, federal authorities indicted FRM and President Scott Farah, of Meredith, on wire fraud charges. They allege that many of the projects that investors contributed to were bogus and that Farah had pooled all the money collected into a single account.
Farah and Donald Dodge, of Belmont, were accused of transferring investment money into a trust that benefited Farah and his family.
Dodge ran CL&M, a mortgage servicing business that worked with FRM to defraud investors, federal prosecutors said.
A trial date is set for June 5 in US District Court in Concord.
House and Senate committees will open their investigation of the FRM matter Friday. Reps. Jim Splaine and Paul McEachern, both D-Portsmouth, sought the probe to determine whether state regulators had been slow to act against FRM.
The quickly convened group of legislators will take public testimony next week and must give recommendations to the Legislature by the end of this month

No comments:

Post a Comment