Hi 27° | Lo 4°

Consumer complaint team set up

Group tasked with preventing fraud

In an effort to better root out financial fraud, the state attorney general’s office has begun building a small legal team to investigate exclusively the thousands of consumer complaints it receives each year.

The office screened candidates earlier this week for five new positions – a lawyer, a forensics accountant, a financial investigator, a paralegal and a part-time secretary – said James Boffetti, a senior assistant attorney general and the head of the state’s Consumer Protection and Antitrust Bureau.

The unit has been funded by money the state received last year in a national settlement with major banks, in the aftermath of the foreclosure crisis. Its work will focus on the pursuit and prosecution of fraudulent behavior, be it a Ponzi scheme, payday loan or mortgage recovery scam, or other.

“We hope to get cases that have a bigger impact that we can investigate and prosecute if we find there has been fraud,” said Boffetti, who will work with and help manage the unit.

The attorney general’s office has been pushing for the unit since it came under fire for its handling of what officials have deemed the largest Ponzi scheme in state history. That involved the Meredith-based firm Financial Resources Mortgage, which collapsed in 2009 and left more than 250 investors out of $33 million. Though the firm’s two top executives were sentenced in 2011 to federal prison for their role in the fraud, investigations also faulted the attorney general’s office, as well as the state Banking Department and the Bureau of Securities Regulation, for failing to prevent it despite repeated red flags.

The problem in large part, Boffetti said, has been a lack of manpower. The state receives an average of 4,000 consumer complaints each year, and last year alone fielded about 10,000 hotline calls raising concern of potential fraud, he said.

Boffetti said the unit will work to prosecute potential scams such as the recent Dover case involving a former school board chairman who allegedly swindled investors out of more than $300,000 on claims that he would use the money to renovate distressed real estate.

The state received $10.5 million in the mortgage settlement, and used about $7 million of that to provide housing counseling and legal services for homeowners facing foreclosure. The remaining money will help finance the unit for the first four years, Boffetti said.

Rooting out fraud has become increasingly important – and difficult – Boffetti said, as consumers perform more and more of their daily transactions online.

“When the economy is bad, people are more likely to try to figure out ways to scam other people,” Boffetti said.

New Hampshire last year had the 10th-highest rate of consumer complaints in the country, with nearly 500 complaints per 100,000 residents, according to the Federal Trade Commission.

“I don’t see it getting better,” Boffetti said. “So it’s a matter of trying to keep one step ahead of it.”

(Jeremy Blackman can be reached at 369-3319,
jblackman@cmonitor.com or on Twitter @JBlackmanCM.)

Legacy Comments0
There are no comments yet. Be the first!
Post a Comment

You must be registered to comment on stories. Click here to register.