Farah plea deal reached in FRM criminal case



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The U.S. attorney's office has negotiated a plea bargain with Scott Farah, former president of the bankrupt Financial Resources Mortgage Inc., that could send the alleged mastermind of what prosecutors say is the biggest Ponzi scheme in New Hampshire history to federal prison for up to 19-1/2 years.Details of the deal were included in an e-mail sent by the U.S. Justice Department to FRM investors through its Victim Notification System. Under the deal, which has to be approved by a federal judge, Farah would plead guilty and the U.S. attorney would recommend a sentence at the low range of the scale, from 188 to 235 months (or about 15-1/2 to 19-1/2 years.)But the U.S. attorney also would file a motion seeking to reduce Farah's sentence beyond that, based on his cooperation in the investigation and prosecution of others. The e-mail does not detail who the others are or the amount of the potential sentence reduction. The e-mail does not mention Donald Dodge, the other defendant in the case. Dodge headed CL&M, an unlicensed affiliate loan servicing company where most of the actual money resided. One of the reasons state banking officials missed uncovering the fraud for more than 10 years is that their inspections focused on the licensed entity – FRM – while they never took action against CL&M, which was operating without a license.Indeed, in a meeting with many of the victims on Thursday, bankruptcy trustee attorney Jim Donchess referred to FRM as a "front." The U.S. attorney's motion to reduce Farah’s sentence would be contingent upon "truthfulness, his continued cooperation, and his not engaging in additional criminal activity." The U.S. attorney said there was "no concession as to the loss amount" and that it treated Farah "the same as any other defendant engaged in a wire fraud of similar size and complexity."At deadline, no motion had been filed with the court, and the U.S. attorney’s office declined to comment on specifics.The proposed deal comes on top of another proposed deal in the U.S. Securities and Exchange Commission's civil case against FRM and CL&M, which involves no monetary damages. The settlement, if approved, would leave any monetary restitution in the hands of the bankruptcy trustee.On Thursday, Donchess said his office was seeking court approval to hire a private investigator to track down as many hidden assets as possible, but offered little hope of recovering millions of dollars victims lost in the alleged scam. He said he would be surprised if investors received 50 cents on the dollar, though some victims holding mortgages might get more than that if they settle.Al McIlvene, a Kittery, Maine, who has been the spokesperson for many of the victims, urged the trustee to try to settle matters quickly, telling Donchess that they are feeling victimized again.On Friday, McIlvene told NHBR, that he thought the U.S. attorney could have been tougher on Farah, charging him with tax evasion and more counts of mail fraud."He is going to have a life. He'll probably get out in less than 10 years and is still going to be fairly young. For many people, their life is over. That’s injustice of the whole situation," McIlvene said. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

 

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