Records dispute halts FRM document release

Monday, January 10, 2011

The state Bureau of Securities Regulation was about to release some secret documents related to the Financial Resources Mortgage investigation until an e-mail arrived from the state Banking Department warning that such a release would violate the law.

Securities Bureau Mark Connolly, who resigned Monday effective, saying he had been forced to withhold the documents, had planned to release them Wednesday in response to Gov. John Lynch’s statement on Tuesday to WMUR-TV that all state agencies should to make public all documents related to FRM and its alleged $80 million Ponzi scheme.

"All the records related to this Ponzi scheme should be released to the public, whether it's agency records, Securities, Banking -- whatever," Lynch said.

The Securities Bureau apparently took Lynch at his word, and told the media that it was planning to release the redacted “Appendix A” to its report on the Ponzi scheme, which was released last month.

The appendix, said a bureau official, is a word-by-word transcription of records that the Banking Department won’t release to the public. In order to access those records, however, the bureau signed a memorandum of understanding not to release them without the Banking Department's permission.

“Since the governor’s announcement yesterday that all agencies should release all records related to FRM … neither agency now requires the permission of the other to release documents. We will now be releasing Appendix A to our report,” the bureau informed the Banking Department in an e-mail.

Twenty minutes after receiving the e-mail, the Banking Department's attorney shot back, “Your interpretation of the legal effect of the Governor's statement to the press is wrong. The Governor's statement does not alter banking law nor the MOU. Accordingly, your release of the confidential information in Appendix A without the Department's prior approval is expressly prohibited by and is in direct contravention of the MOU and state law.”

On Wednesday, when contacted by NHBR, the governor's office appeared to qualify Lynch's statement.

“The governor wants answers, and the public deserves answers, said spokesman Colin Manning. “But the records will be released when the attorney general releases its findings. The Banking Department is preparing that information to protect private information”

In addition, Manning said, “There are banking statues in place that limit what can or cannot be released.”

The records were not released Wednesday. The attorney general’s report – which Connolly has suggested was suspect because of the office's own alleged failure to act when asked to by the bureau in 2003 – is due out May 12.

Legislative hearings into the matter begin on Friday.

What are in these records, which Connolly said would “embarrass” the state, is open to speculation.

But among the documents listed was one referring to an investigation of the "Frank Marino" file.

Marino is a complainant who said he had contacted the banking Department as late as February of 2009 and was told there was no serious complaints filed against FRM. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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