Ponzi scheme victims may recoup some of their losses
The Senate Thursday approved Senate Bill 180, which establishes a fund from access revenues from several state regulatory agencies and settlements to repay the 150 lenders who lost at least $33 million when FRM closed abruptly in 2009.
Co-sponsored by Senate President Peter Bragdon, R-Milford, the fund would be in place until all the claims are satisfied.
"This was a complete failure of state government. There were over 70 violations (of state laws) over nine years," Bragdon said. "The state did see something wrong and the state chose not to do anything."
In the FRM case, investors and others contacted state regulators at the Bureau of Securities, the Attorney General's Office and the Banking Department and those complaints and concerns were ignored.
"I think we have crossed the line where state recovery of assistance should be considered," Bragdon told his colleagues.
Senate Minority Leader Sylvia Larsen, D-Concord, expressed concern the bill would set a precedent which would open the state up to others seeking reimbursement when the state does not live up to its duties.
She also noted the state is not likely to fully reimburse the victims of FRM, while the bill would lead them to believe that.
And she said the money going into the fund would go into the state's general fund where it would be used for a higher priority. But bill co-sponsor Sen. Lou D'Allesandro, D-Manchester, called the bill a reasonable way to help people who were severely damaged.
He said lawmakers need to stand by their convictions and if that sets a precedent, so be it.
"It is important for us to recognize it is our job to right wrongs," D'Allesandro said.
The FRM scandal was investigated by a legislative committee, as well as the state agencies involved and by the secretary of state's office.
Numerous bills have been introduced in the last three or four years concerning the FRM scandal, including bills to establish a restitution fund for the victims.
Attempts to establish funds in the past have been unsuccessful.
Scott Farah, the former president of FRM of Meredith, is serving 15 years in federal prison on wire and mail fraud charges, and his co-conspirator, Donald Dodge, who was president of CL&M, a mortgage servicing company, is serving six years for wire fraud.