SEC drops FRM investigation

The U.S. Securities and Exchange Commission has ended its investigation of Financial Resources Mortgage Inc., the defunct business at the heart of New Hampshire’s biggest Ponzi scheme, leaving the entire matter up to the bankruptcy court.The federal agency has proposed orders that basically enjoin FRM and its affiliate mortgage servicing company CL&M, as well as their principals, Scott Farah and Donald Dodge, not to engage in fraud again. But the order does not ask for any damages from the bankrupt company, leaving the bankruptcy court to figure out how much money – if any – the company’s lenders or investors should get.All parties agreed to submit to the SEC order, without admitting or denying the original allegations. The U.S. District Court has signed off on it as well.The SEC also is dropping its case against Center Harbor Christian Church, run by Scott Farah’s father Bob Farah, deferring to the bankruptcy court adversary proceeding against the church.That adversary complaint, filed in April 2010, was in place when the SEC sought to freeze the church’s assets, alleging that the defendants transferred $669,000 in assets to the church over the years, even though the money was supposed to go to specific investments.The SEC declined comment on why it was dropping its case against the church, but it might be due to presiding U.S. District Court Judge Paul Barbadoro.In the criminal case against Dodge and Farah, Barbadoro appeared willing to defer any action of restitution to the bankruptcy court, although he did not issue a final decision on the matter.During that hearing, Barbadoro sentence Farah to 15 years and Dodge to 6 1/2 years. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW