Court again rejects convicted NH Ponzi mastermind’s appeal for early release

Scott Farah, the man behind the massive FRM Ponzi scheme, testified at a state hearing in 2010.

Another attempt by the convicted mastermind of the biggest Ponzi scheme in New Hampshire history to be released early from prison was foiled last week, this time by the First Circuit Court of Appeals.

On Friday, the federal court rejected Scott Farah’s request for a compassionate release to care for his ailing father. The court ruled that Farah did not prove that his siblings’ health and finances prevented them from providing that care and that he didn’t take into account the seriousness of his crime.

Farah, former owner of Financial Resources Mortgage Inc. in Meredith, has been serving a 15-year sentence in Loretto Federal Prison in Pennsylvania for his role in bilking several hundred people out of $20 million. The victims, thought they had – via FRM – invested in secured property, but the funds were commingled a single bank account, and when the company collapsed during the Great Recession, discovered that they had lost their life savings.

The New Hampshire Banking Department forced FRM into bankruptcy in 2009, but most of the money captured by the bank’s estate went into the pockets of attorneys and other professionals.

Farah had appealed his sentence in 2016, arguing that he was represented by ineffective counsel which not advocate adequately for a lesser sentence.  The court rejected that argument in June 2017.

Then in January 2020, Farah argued in front of the Court of the Appeals, emphasizing the need to care for his ailing father. U.S. District Judge Paul Barbadoro denied Farah’s request, but Farah appealed that decision, saying the court didn’t give him an opportunity to prove he had “extraordinary and compelling reason,” since he was the only sibling in his family who could provide that care.

He also argued that his early cooperation helped the federal government convict his partner, Donald Dodge, and claimed that he had an “indisputably stellar” record in prison, running its GED program as well as the ministry.

At the end of May, U.S. Attorney Scott Murray urged the court to reject Farah’s plea, saying he “perpetrated a fraud that stole millions of dollars from scores of victims.” He said the crime “ruined many lives” and that Farah should serve out his sentence as a “general deterrence message that such conduct will not be tolerated and that others should think twice before defrauding people out of their life savings.” On July 31, the court sided with Murray.

Earlier release attempt

In June, before the ruling, victims of the Ponzi scheme had learned that the Loretto prison was planning to release Farah to serve the last three years of his sentence in his father’s home in Moultonborough. The release was part of U.S. Attorney General William Barr’s directive to partially depopulate nonviolent federal inmates to prevent the spread and harm caused by coronavirus.

The victims, alerted by a victim’s advocate, contacted Murray and NH Business Review, which published an article on Farah’s pending release.  

Murray said he contacted prison officials, noting the court’s decision and the appeal and emphasizing the seriousness of the crime and the “devastating impact that it had on Farah’s victims,” who he said, were “extremely upset.” Prison officials later reversed their decision.

In a release after Friday’s court decision, Murray said,  “We are pleased with this decision, which will leave Mr. Farah in prison to serve the remainder of the sentence that was justly imposed on him in 2011. Farah’s fraud scheme deprived his victims of millions of dollars and caused terrible damage to their lives. Hopefully this ruling will bring at least some closure for them.”