FRM victims: Farah should have received more time
February 03, 2011MEREDITH — Victims of the Financial Resources Mortgage scheme say Scott Farah should have been sentenced to more time in prison but are also keeping a close eye on developments at the state level.
On Jan. 19, Judge Paul Barbadoro sentenced Scott Farah to 180 days, or 15 years, in federal prison for mail fraud and wire fraud conducted through his company Financial Resources Mortgage. Donald Dodge, the principal of the CL and M, was sentenced to 78 days, or around six-and-a-half years on a charge of wire fraud for his involvement. The second charge of mail fraud was dropped from the original indictment against Dodge.
US Attorney Mark Zuckerman requested that Farah serve closer to 10 years because of his cooperation with the investigation, though Barbadoro sentenced him to 15 years.
According to court documents, Farah was immediately imprisoned and ordered to serve each count concurrently. The court recommended to the Bureau of Prisons that the sentence be served in a facility as close to his family in Virginia if possible. After release from imprisonment, Farah will be on supervised release for three years.
Dodge will be required to surrender himself before 2 p.m. on Feb. 11. The court recommended to the Bureau of Prisons that he serve at a facility in Pennsylvania, which is closest to his family. After his release, he will be on supervised release for two years.
Attorney Steven Notinger, the bankruptcy trustee for the case, submitted a letter to Judge Barbadoro concurring with the US Attorney's Office's recommendations regarding restitution owed to the victims. Notigner wrote he concurred that the determination of restitution owed by Farah and Dodge be determined through the ongoing bankruptcy proceedings. Notinger wrote he has spent over a year determining the outstanding financial liabilities of the guilty parties as well as attempting to identify and recover all assets to disburse them to creditor.
Notinger wrote he has secured or obtained financial and business records of the debtors and engaged a forensic accounting firm to analyze them.
"To date, this process, which is not yet complete, has taken many months of concentrated work and has involved examinations of hundreds of complex financial transactions," Notinger wrote to Barbadoro.
Ken Miller of Amherst, who lost around $762,000 in the scheme, spoke at the sentencing hearing.
"I think Scott Farah got off pretty easy," Miller said. "I wanted to see that he get between 27 and 36 years. People were generally frustrated, I think relative to the sentencing of Scott, Don Dodge." However, "the judge did a marvelous job. The judge was fair the judge considered all of the victims involved. We were generally pretty satisfied, certainly satisfied with his effort."
Miller said he thought Dodge's sentence was "not unreasonable."
Miller and his wife started lending through Scott Farah in 2005. Miller said they had friends who were doing business through the operation and he spoke to Farah. The Millers lent around $199,900 for a piece of property for the Center Harbor Christian Church, a property that he said was already paid for. The Millers continued to work with Farah and Miller said they lost around $762,000 in the scheme.
Miller said he learned of the closing of FRM and CL an M after seeing a report on the 11 p.m. news on WMUR. He then called WMUR to confirm what he said before contacting another reporter about the matter.
Miller said he has contacted all lenders and been in regular, almost daily contact with many of the victims.
Miller said he did not hold much hope for sizeable restitution, especially from the bankruptcy trustees. Miller said the bankruptcy trustees have not been forthcoming with information.
He is continuing to watch the case at the state level, especially the proceedings through the Secretary of State's office conducted by Charles Chandler.
Miller said one final lesson of this incident is to beware of the government.
"It's one thing to have a guy whose a crook, its another thing to have a state government that kind of runs from the problem and doesn't enforce the law," Miller said, "and you've got a bankruptcy trust that's helping themselves to a lot of money."
Susan McIlvene of Kittery, Maine, and her husband Alan lost around $800,000 in the scheme. McIlvene said she and her husband were unable to attend the sentencing as they were awaiting the birth of their second grandchild.
"We were certainly pleased that (Farah) got more than what Attorney Zuckerman recommended," McIlvene said. "We both think it should have been a lot longer than 15 years. He got 15 days for each victim, when you look at it that way it's not a lot."
McIlvene said Dodge's sentence seemed fairer because he had only been involved for the last few years of the scheme and "he probably indeed was tricked."
McIlvene said Dodge appeared to show remorse while testifying at the Chandler hearings. She said Farah did not show any remorse when he testified, nor did he show any at a deposition for the bankruptcy proceedings
"It was quite obvious he was more concerned about himself and how long he was going to go to prison then he did about any of the victims," McIlvene said.
The McIlvene's are continuing to look at state involvement in the case.
"We're continuing to search for whatever clues on our own to what happened," McIlvene said. "The complete story has not been told. The Chandler hearings and the subsequent report I think will reveal a lot of new information. There are so many state agencies that had interactions with the company."
McIlvene said this includes the Attorney General's office, Bank Department, and Securities Bureau, up through to complaints submitted to the governor, actions taken by the Appraisal Board, and the involvement of numerous attorneys through the Attorney General's office.
"It's so interconnected its almost unbelievable," McIlvene said.
She said it is likely there will be some restitution from the bankruptcy proceedings.
"It probably will literally be pennies on the dollar," McIlvene said. "Our greatest hope is that the state (evens) up and provides restitution."
McIlvene said the state has been involved for the past 10 years and had the power to shut the companies down.
"The people of New Hampshire have to hold their government accountable and make sure they do their job," McIlvene said "As long as good people don't pay attention, bad people succeed and that is exactly what has happened over the past 10 years." As a result, McIlvene said, life savings were lost and two people have since lost their lives. "That's the ultimate price."