CONCORD, N.H. – The state Bureau of Securities Regulation said Friday that it acted appropriately in dealing with a company now accused of running a giant Ponzi scheme, but that two other agencies didn’t do enough.

Securities regulators said in a 22-page report that they received one complaint about the former Financial Resources Mortgage of Meredith in 2000 and ordered it to stop selling securities. Beyond that, most of the company’s actions should have been regulated by the state banking department, they said.

The company and its president, Scott Farah, have been accused of swindling hundreds of investors out of at least $80 million. Since it closed abruptly in November, dozens of former investors have sued the company, and federal authorities have brought criminal wire fraud charges.

The report by the securities bureau recommends creating a reporting system to allow the state to better monitor complaints and identify fraud. It notes that 16 complaints were received by the banking department, attorney general or securities bureau in nine years but that there was no comprehensive framework to take action.

It suggests that the banking department has been unreasonable in withholding records tied to the case, and that the attorney general’s office should have taken action sooner.

Banking Commissioner Peter Hildredth responded in a statement: “The results of the attorney general’s review will be the appropriate report to discuss the state’s response to the FRM ponzi scheme. And, the Legislative hearings will be the appropriate forum to discuss this issue.”

The attorney general’s office is investigating and the Legislature plans to hold hearings on whether state agencies missed warning signs that the mortgage company was breaking the law.

Senior Assistant Attorney General Richard Head said he expects his report to be completed by mid-May.

“That will fully detail facts as it relates not only to the securities division and the banking department, but also the Justice Department,” he said.

But the securities bureau argues that it would be more appropriate to create an inspector general’s office to provide a thoroughly objective review.


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.