FRM’s downfall: a chronology

March 7, 2000: Jon Hildreth becomes preferred shareholder of Financial Resources Mortgage Inc.April 4, 2000: Attorney Steven Latici brings a federal suit against FRM, telling the state Bureau of Securities Regulation that FRM might be engaged in a “Ponzi scheme.” Oct. 16, 2000: Latici writes directly to Peter Hildreth, then the director of the Securities Bureau, forwarding the Ponzi scheme allegations. Nov. 1, 2000: Peter Hildreth recuses himself from the investigation after his assistant, Mary Jurta, informs him that his brother was investor.May 5, 2001: State Banking Department examination concludes FRM “has no liquidity and is insolvent.”Sept. 19, 2001: Peter Hildreth becomes banking commissioner. Nov. 18, 2001: Securities Bureau issues an order to show cause why FRM should not cease and desist from operating. Jon Hildreth’s loan is listed, but not named, in the attached petition for reliefApril 22, 2003: FRM informs Jurta, who has since moved from the Securities Bureau to the Banking Department, that Jon Hildreth is one of the preferred shareholders.June 17, 2003: Securities Bureau writes to the attorney general asking about “securing assets for the benefit of investors.”Oct. 11, 2004: Banking Department examination includes 18 “observations,” among them failing to notify the agency about the Securities Bureau investigation, late financial statements, and acting as a broker without license.June 1, 2005: Scott Farah of FRM gets a $10 million line of credit from Donald Dodge of CL&M to help pay off preferred shareholders. Oct. 31, 2005: Farah pays back Jon Hildreth’s $25,000 investment in full.Dec. 20, 2005: Banking Department issues show cause order to revoke FRM’s license because it didn’t shred confidential documents or explain a letter from a lender recalling the company’s loan. Hildreth recuses himself from case.May 18, 2006: Banking Department examination cites 11 observations, including missing financial statements. June 6, 2006: FRM informs Jurta of the Banking Department that Jon Hildreth redeemed his shares.Jan. 24, 2007: Securities Bureau and FRM reach settlement agreement over the sale of unregistered securities. A $20,000 fine is imposed, along with restitution of about $1 million to preferred shareholders.June 11, 2007: Banking Department examination details 20 observations, including missing financial records and dealing with an unregistered mortgage service. July 2, 2007: Securities Bureau agreement is amended and finalized, giving July 30 as the deadline for all remaining preferred shareholders to be paid in full.
Nov. 5, 2009: Farah signs note saying that he owes Dodge more than $20 million.Nov. 9, 2009: FRM closes. − BOB SANDERS