Head of failed mortgage firm gets nearly 20 years in plea deal
Will admit to role in Ponzi scheme
CONCORD, N.H. — The head of a failed mortgage firm who was accused of swindling investors out of millions of dollars in a Ponzi scheme has agreed to plead guilty to federal wire and mail fraud charges in exchange for a nearly 20-year prison sentence.
Scott Farah, former president of Financial Resources Mortgage, is accused of using investor funds to pay other investors and personal expenses. He was scheduled to go on trial early next month but instead reached a plea agreement, according to an e-mail prosecutors sent to investors Thursday night.
Assistant US Attorney Donald Feith and Farah’s lawyer, Michael Ramsdell, declined to comment on the settlement.
The 15 1/2- to 19 1/2-year sentence prosecutors are proposing is on the low end of federal sentencing guidelines, and prosecutors also plan to seek a further reduction based on Farah’s cooperation, according to the e-mail. Donald Dodge, a former assistant to Farah, also faces criminal fraud charges.
Al McIlvene, who with his wife lost about $800,000 through FRM, said yesterday that he wasn’t surprised by the settlement but wishes prosecutors had charged Farah with more counts of fraud. He noted that Farah would be relatively young when he leaves prison, unlike many of the investors in their 70s and 80s who are in financial ruin.
“He has an opportunity for a second life’’ said McIlvene, 70, of Kittery Point, Maine. “Many of the people he devastated do not have that opportunity. That is the tragedy of this and I don’t know how you overcome that.’’
Don Gates, 64, of Amherst, called the settlement the latest in a series of insults to victims, who he said were treated badly by Farah, the state, and now the federal government.
“I’m not sure the punishment fits the crime,’’ said Gates, who lost more than a half-million dollars he had invested for his retirement. He now works part-time repairing engines.
Dozens of former investors have sued since Financial Resources Mortgage in Meredith closed abruptly in November.
Attorney General Michael Delaney issued a report in May faulting his agency, the banking department and the state securities bureau for not doing a better job investigating complaints against the company. A legislative committee did its own investigation and reached a similar conclusion, according to a draft report released last month.
The scandal has come up in political campaigns as well, with opponents of former Attorney General Kelly Ayotte suggesting she should have done something to stop it. Ayotte, a Republican running for US Senate, was attorney general when complaints surfaced about the mortgage firm, but the complaints were sent to the state banking department, which has jurisdiction over such matters.