Former New Hampshire Attorney General Kelly Ayotte now a Republican candidate to represent New Hampshire in the U.S. Senate is facing scrutiny for her role in the state investigation of Financial Resources Mortgage, Inc., a company that allegedly defrauded investors out of $80 million to $100 million, the New Hampshire Union Leader reported. Bureau of Securities Regulation director Mark Connolly announced that he will resign from his position effective May 14 in order to examine Ayotte's involvement in the fraud, which would be the largest Ponzi scheme in New Hampshire history.
Neither Connolly nor representatives from Ayotte's campaign responded to requests for comment by press time.
Recent reports from the Bureau of Securities Regulation indicate that Ayotte's office could have initiated legal action against Financial Resources Mortgage sooner than it did, according to the Union Leader. The Bureau of Securities Regulation requested assistance from the Attorney General's Office as early as 2003, but FRM was not forced to close until "December of 2009 or January of 2010," according to Assistant Attorney General Richard Head.
Allegations that Ayotte purposely delayed taking actions against FRM coincide with Ayotte's announcement that all e-mails pertaining to the FRM case were erased from her computer after she left the attorney general's office.
It is the attorney general office's policy to disable the e-mail accounts of former employees and to erase all documents and correspondences on the employee's computer hard drive, according to Head.
A July 15 legal memorandum issued by Ayotte two days before she resigned requested that all e-mails on back-up tapes or servers be deleted, according to Matt House, press secretary for the campaign of Rep. Paul Hodes '72, D-N.H. However, Ayotte told the Union Leader that she "wasn't involved in the decision of how the e-mails and calendar were handled."
Hodes has no major challengers for the Democratic nomination and will likely face Ayotte if she receives the Republican nomination for the Senate race, The Dartmouth previously reported.
"It raises serious questions about timing," House said. "[Ayotte] said that she had nothing to do with the deletions, but issued a memo hiding e-mails from public scrutiny. The timing speaks for itself."
While the legality of the deleted e-mails is not in question, House said the timing of the memorandum may prove that Ayotte purposely hindered the FRM investigation.
"It's not a question of law it's that she failed to appropriately preserve records," House said. "This is hindering the Ponzi scheme investigation. The largest Ponzi scheme in New Hampshire history happened on her watch."
The Office of the Attorney General will issue "an extensive report" on the Ponzi scheme, detailing the involvement of state agencies in the investigation of Financial Resources Mortgage, according to Head. The report will be issued to N.H. Governor John Lynch and the executive council.
"[Ayotte] personally to my knowledge had no involvement in this particular company, but the Department of Justice did while she was attorney general," Head said. "Those actions by the Department of Justice will be outlined in our report."
House said he could not speculate as to why Ayotte would delay the investigation of the Ponzi scheme. The Hodes campaign requested access to all correspondence related to FRM from the New Hampshire Department of Justice on May 5, in conjunction with the state's Right to Know Law, House said. The Union Leader made the same request, according to House.
In conjunction with the legal requirement to respond to requests within five days, the attorney general's office sent a response letter to the Hodes campaign, Head said. He added that "it's going to take more than five days" for the Department of Justice to provide the requested documents, although he added that he did not know how long it would take to produce these documents.
The accusations could cause problems for Ayotte's Senate bid, Politico reported, although House maintained that the Hodes campaign's requests for more information about the case were not politically motivated.
