N.H. Banking Department blamed for firm's closure

Last modified: 9/3/2010 12:00:00 AM
After laying off seven lawyers and as many paralegals, an attorney under fire for modifying mortgages without a state license has closed the doors to his Concord law firm.

Dan Dargon says he had to take those steps because the state Banking Department's investigation into his firm has dealt his business a 'catastrophic' blow.

'The damage is done in the minds of the consumers who look us up on the internet,' Dargon said yesterday, sitting on a couch in his Concord home, where he is now managing what's left of his firm through a virtual office system. 'That's not good when you're in an area of law, business practice, that's full of scammers and shams already.'

Dargon, who opened Dargon Law Firm after graduating from Franklin Pierce Law Center in 2008, ran into legal trouble this spring when Banking Department officials accused him of violating a new state law that requires mortgage negotiators be licensed and overseen by the department. Dargon, whose firm specializes in loan modification, says another state law exempts attorneys from the requirement, and he is fighting the state in court.

Banking Department officials are reviewing Dargon's client files and will hold a hearing to determine whether he violated the licensing agreement. He could be fined as much as $10 million.

'Had I rolled over' and stopped taking on new customers like the Banking Department asked, 'we would have probably been okay,' Dargon said. 'But I would have given up the good fight.

'I tried to stick it out,' he continued, 'but I feel like I got screwed.'

Dargon said he thinks the Banking Department, facing questions about its oversight of failed Meredith investment company Financial Resources Mortgage, targeted his firm for political reasons, because 'they want to look tough.' FRM is alleged to have been a front for a massive Ponzi scheme that cost lenders and investors as much as $80 million.

Dargon said lawyers should be allowed to help people modify loans, or 'I don't know where they're going to get help.'

Richard Arcand, an informational representative with the Banking Department, said yesterday that the department couldn't comment on Dargon's case or accusations, citing the continued investigation into Dargon's firm.

Banking officials have said the law is intended to protect consumers, ensuring that anyone modifying mortgages for a client is not also being paid by an outside party involved in loan modification. Banking Commissioner Peter Hildreth has said his department isn't trying to make an example out of Dargon, but had received a complaint about the attorney. Hildreth wasn't available for comment yesterday.

After the 'immediate' drop in business Dargon said he experienced when the state issued a cease-and-desist order against him in April, he was forced to reduce his staff, he said. Starting in May, he cut what had once been a 33-person staff down to six: himself, two other attorneys and three paralegals.

'I feel the worst for the attorneys and paralegals I had to lay off,' Dargon said. 'They didn't do anything wrong.'

With far fewer employees, Dargon said he no longer needs the Concord office. He already closed his Salem location: 'I saw the writing on the wall.'

Having his attorneys work from home won't be a problem, Dargon said, because 'most of loan modification is talking to people over the phone, lenders.'

As attorneys were laid off, client files were reassigned among those who remained, Dargon said. He said he's told clients he's 'restructuring' the firm.

'I would say all of them know the trouble we've had with the Banking Department,' he said.

As for how they've been informed that Dargon is working out of his home - the door to his North State Street office was locked yesterday and calls made to his phone number didn't go through - he said his phone number isn't changing and will be working shortly.

The name may soon be different, however. The Dargon Law Firm name has been 'tarred and feathered,' Dargon said, and he's seeking approval from the secretary of state's office to change the firm's name to NHLaw.com Legal Services, entering into a partnership with attorney Don Lader.

Dargon said his firm has handled 700 clients this year. He estimates he still has 300 open cases.

'You would think that if I were a scam artist, we'd have someone disbarred by now,' he said.

Dargon has not been disciplined by the Attorney Discipline Office. That office's records show one complaint was filed against him and dismissed with a finding of no misconduct in 2009.

Whether any complaints have been filed recently isn't clear, however, since the office only makes public complaints that have either been dismissed or resulted in charges.

Dargon said Banking Department examiners spent six weeks in his office, copying each of his 700 client files. If regulators had spent one week listening to attorneys performing loan modifications, he said, they wouldn't have found anything wrong.

'But they led by way of the gun,' he said.




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