Post by Logan on Jan 31, 2017 20:48:02 GMT -6
LACONIA — Donald Dodge, who together with Scott Farah, was sentenced to federal prison for his part in bilking more than 200 investors of more than $20 million in what ranks as the biggest Ponzi scheme in the state, was released on Jan. 12 after serving his six-year sentence. Farah was sentenced to 15 years and remains behind bars.
Farah and Dodge operated Financial Resources Mortgage, Inc. and CL&M, Inc., a private mortgage brokerage, in Meredith, which abruptly collapsed in November 2009, leaving investors empty-handed and funds unaccounted for. Although Dodge was years older than Farah, the two had a long friendship and Dodge was among the partners when Farah formed Financial Resources Mortgage, Inc. in 1989. Farah bought out his partners in the mid 1990s, but by 2005 the business had grown beyond his capacity to manage it and he turned to Dodge and together they created CL&M to service the loan portfolio.
While Financial Resources Mortgage, Inc. courted borrowers and investors, CL&M served as the bank, where all the funds were deposited and disbursed. Many of the loans were short-term construction loans, due in two years or less. Although investors paid CL&M in full before the loans closed, the loans were net funded at closing, when only closing costs and small disbursements were paid, leaving CL&M with the balance, which included an origination fee.
In June 2005, shortly after CL&M was formed, it loaned Farah $10 million; and between then and Nov. 2, 2009, when when the firms collapsed, he withdrew more than $20 million in 260 separate transactions. Meanwhile, CL&M took deposits from investors up front then applied the bulk of those co-mingled funds to the loan disbursement requests it received from borrowers and the monthly interest payments due the investors, even on loans that were past due, not performing or had never even closed. When original loans were retired or failed to close, CL&M rolled over investors' funds to other investments, which enabled them to avoid having to refund or repay large sums.
Read more: www.laconiadailysun.com/local-news/101518-donald-dodge-freed
Farah and Dodge operated Financial Resources Mortgage, Inc. and CL&M, Inc., a private mortgage brokerage, in Meredith, which abruptly collapsed in November 2009, leaving investors empty-handed and funds unaccounted for. Although Dodge was years older than Farah, the two had a long friendship and Dodge was among the partners when Farah formed Financial Resources Mortgage, Inc. in 1989. Farah bought out his partners in the mid 1990s, but by 2005 the business had grown beyond his capacity to manage it and he turned to Dodge and together they created CL&M to service the loan portfolio.
While Financial Resources Mortgage, Inc. courted borrowers and investors, CL&M served as the bank, where all the funds were deposited and disbursed. Many of the loans were short-term construction loans, due in two years or less. Although investors paid CL&M in full before the loans closed, the loans were net funded at closing, when only closing costs and small disbursements were paid, leaving CL&M with the balance, which included an origination fee.
In June 2005, shortly after CL&M was formed, it loaned Farah $10 million; and between then and Nov. 2, 2009, when when the firms collapsed, he withdrew more than $20 million in 260 separate transactions. Meanwhile, CL&M took deposits from investors up front then applied the bulk of those co-mingled funds to the loan disbursement requests it received from borrowers and the monthly interest payments due the investors, even on loans that were past due, not performing or had never even closed. When original loans were retired or failed to close, CL&M rolled over investors' funds to other investments, which enabled them to avoid having to refund or repay large sums.
Read more: www.laconiadailysun.com/local-news/101518-donald-dodge-freed