CONCORD — A former Manchester alderman has been ordered by state regulators to pay back $100,000 to defrauded investors, along with a $5,000 state fine, after he allegedly solicited funds for a fraudulent kiosk business.
The New Hampshire Bureau of Securities Regulation also announced Thursday that it has obtained a consent order against Manchester resident Glen Gervais, permanently barring him from further sales of securities.
According to the consent order, Gervais allegedly issued 34 promissory notes to seven different New Hampshire investors, raising approximately $700,000 from July 26, 2003, to Aug. 6, 2008. Two investors are located in Manchester, two in Bedford, one in Hooksett and Northwood, and one in Fort Valley, Ga. The largest amount from any single investor was $380,000, contributed by one of the Bedford investors.
The proceeds were obtained to fund a specific computer kiosk businesses, to be operated by Gervais, as well as real estate projects and personal loans. New Hampshire securities regulators allege that Gervais fraudulently diverted the funds given to him for his personal use, and for business ventures not divulged to investors.
Attempts to reach Gervais for comment were unsuccessful.
“Promissory notes offered for investment purposes are generally securities under New Hampshire law,” said Eric Forcier, a staff attorney for the bureau. “Those who offer promissory notes need to understand that the Bureau of Securities will take action to enforce the state’s licensing and registration laws, particularly where fraud is involved.”
Jeff Spill, deputy director of the bureau, stated that Gervais’ alleged activities abused the trust of New Hampshire investors. “They expected him to be in compliance with the law and to use their investments in the manner agreed to,” said Spill. “Unfortunately, that did not happen.”
According to the order, Gervais pays $2,500 immediately, then $400 a month for one year, due the first of each month. The money raised will be distributed to each investor. Within a year, Gervais will make another payment of $2,500, then begin making payments of $600 per month until all restitution and fines are paid off.
The Bureau of Securities Regulation is charged with protecting New Hampshire investors. As part of this charge and to educate and warn the public, the bureau issues public announcements regarding significant enforcement cases, such as this one.