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Connolly Book: AG conducted a whitewash on FRM

New Hampshire Union Leader

December 19. 2011 12:51PM

MANCHESTER - The state Attorney General's office whitewashed its failure to act on criminal complaints against the Financial Resources Mortgage Inc. Ponzi scheme, former state Bureau of Securities Regulation Director Mark Connolly alleges in a new book.

Attorney General Michael Delaney's May 12, 2010, report on FRM, which was written by Associate Attorney General Richard Head, ignored the office's own conflicts of interest and overlooked criminal complaints and wrongly shifted blame to the securities bureau, he said.

'What Head didn't say in his report was that several of the FRM complaints referred by the Consumer Protection Antitrust Bureau of the attorney general's office were of a criminal nature. Criminal allegations in fact are the sole jurisdiction of that office,' Connolly said.

'Head also failed to mention he had seen complaints involving Skill Med Services, a Laconia-based nursing school where Scott Farah allegedly had misused funds.

'These complaints were referred by him to the state Postsecondary Commission. There was no meaningful discussion in the report concerning all the FRM-related complaints it had received and how it dealt with them,' the book asserts.

Neither Head nor Delaney immediately returned a phone call from New Hampshire Union Leader Monday.

'The testimony by members of the office of the attorney general can only be characterized as institutional cover,' Connolly writes in 'Cover Up: One Man's Pursuit of the Truth Amid the Government's Failure to End a Ponzi Scheme,' available today.

At a joint legislative committee reviewing the FRM matter in May 21, 2010, Connolly writes, Attorney General Michael Delaney '...blamed a change in state law in 2002 that assigned civil matters concerning banking, securities, and insurance to the exclusive jurisdiction of those agencies.

'As a result, he claimed FRM complaints sent to the attorney general's office were referred to the (securities) bureau and banking.' This was an incorrect statement,' Connolly said. 'No FRM complaints were ever sent to the bureau by the attorney general's office. This is not even a gray area.

'Delaney should never have testified to the committee that the agency he now headed had referred FRM complaints to the bureau,' Connolly said.

FRM, which was based in Meredith, closed abruptly in November 2009, leaving more than 150 lenders with an immediate loss of $33 million, but $80 to $100 million passed through FRM over several years.

Connolly, 56, of New Castle, resigned in May 2010 citing the state government's failure to release all records relating to FRM and his desire to shed light on the matter.

In a telephone interview Monday morning, Connolly said he believes some state records concerning FRM still have not been released.

'The book is about helping victims tell their story but it is also a wake up call to all citizens and investors of New Hampshire that they are at risk' Connolly said.

'When I spoke to the victims of FRM, they have told me they've never had anybody from the attorney general's office sit down to hear them directly.

'They (the AG's office) didn't make the victims the No. 1 priority; they made the perceived liability of the state their priority,' he said.

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