Law firm seeks payment in FRM case


The law firm representing the trustee in the Financial Resources Mortgage Inc. bankruptcy wants to be paid about $324,000 for its work and expenses over the last six months -- and wants $260,000 of that money now. The funds would bring the amount due to Donchess & Notinger of Nashua to more than $500,000.Thus far, FRM's estate has raised about $1 million through the sale of various assets, and another $5 million is expected to be raised -- a small fraction of the $82 million of active loans on the books of FRM and the affiliated company, CL&M.Many of the 500 loans on FRM's books are “associated with partially built subdivisions or real estate projects which have poor market value at best, and do not reflect a value commensurate with the amount of funds supposedly invested in them by FRM/CLM," said the law firm in its filing.In its request, the firm said it has been attempting to organize “voluminous records,” liquidate assets, investigate claims against third parties, sell off properties and deal with various motions by lenders, regulators and investigators, including the FBI to "strategize on possible recovery of hidden assets.”All this work has put the small firm at “financial risk” and it will experience a “financial hardship” if it doesn’t receive get 80 percent of the fees and $11,000 in expenses.The bulk of that work -- some 681 hours – was done by James Donchess, at a rate of $315 an hour, for an individual total of almost $215,000 during the six-month period. Following the fee motion, the trustee has proposed the sale of two properties, both of which are under an agreement of sale.One is a lakefront cottage and land in Moultonborough owned by Pastor Robert Farah (father of Scott Farah, president of FRM) that would be sold for $975,000 to Michael Wentworth of Moultonborough, if the sale is approved by the bankruptcy court.Robert Farah, according to the trustee is “embroiled in the “Ponzi scandal both individually and as pastor of the Center Harbor Christian Church,” according to the filing.But very little of that money would go to the estate, since there were liens totaling nearly $3.4 million against the property, including an $830,000 mortgage owned by American Home Mortgage Corp.The mortgage will be paid off in full, and after taxes and real estate fees and an homestead exemption for Robert Farah and his wife, the estate would only get a $20,000 “carve-out” for the “estate’s effort” in marketing the property. The estate and the Realtor's efforts in the sale came “despite difficulties from the Debtor (Pastor Farah)" in allowing "the Property to be shown to potential buyers, such as refusing for a time to have a “For Sale” sign placed on the Property, refusing for a time to allow the Realtor access to the cottage on the Property, and chasing away potential buyers who stopped to write down the Realtor’s phone number from the sign that was eventually placed," according to the filing.The other property, -- the a single-family home on 32.5 acres in Meredith owned by Scott Farah’s wife Susan -- would be sold for $275,000 to Kristin Markowich of Hollis, if approved by the court. The home is in “disrepair” and mainly on wetlands, according to the filing. The home is also underwater financially. It would take $269,000 to pay off the mortgage company, a $5,000 carve-out that would go to the trustees, and after closing costs, nothing left for a homestead exemption for Susan Farah, much less the 13 investors who filed attachments against the property. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
Edit Module
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags