159 victims of FRM Ponzi scheme file claims to compensation fund

The state agency managing the new $10 million compensation fund for victims of the Financial Resources Mortgage Ponzi scheme received 159 claims as of the May 18 deadline. The claims administrator overseeing the fund at the Attorney General’s Office has not yet calculated how much claimants will receive, spokesman Michael Garrity said.

The Legislature created the fund last year to compensate investors who were harmed by not only FRM but also several state agencies that a 2010 state audit said had failed to investigate numerous complaints against the company, ignored conflicts of interest, and neglected to cooperate with one another. 

The audit, which said approximately 150 people were defrauded nearly $20 million, named the Department of Justice, Banking Department, and Securities Bureau. 

Sen. Gary Daniels, a Milford Republican, cited the state’s culpability in June when he defended the creation of the fund during a legislative hearing.

“Number one, the economy is going well,” he said then. “This situation is something that never should have happened. The fact that we had the revenue coming in as it has, it is the due diligence of the state to take care of this.”

The claims administrator is reviewing the 159 applications for completeness and accuracy, and contacting claimants if more information is needed. Payments will be made on Dec. 31, Garrity said. 

Investors are eligible, as are their surviving spouses and children if they have died. Awards are capped at 50 percent of the amount lost on a claimant’s original investment, according to the Attorney General’s Office.

Some Democrats objected to the fund last year and filed House Bill 1509 to repeal it. The legislation failed in the House.