PREET BHAHARA, the United States Attorney for the Southern District of New York, announced that WILLIAM B. FOSTER, the former owner, President, and CEO of Cobalt Financial, Inc., was sentenced today to three years in prison on charges stemming from a fraud that raised more than $23 million from over 250 investors in private placement real estate offerings. FOSTER was sentenced in Manhattan federal court by U.S. District Judge KIMBA M. WOOD, who presided over the three-week jury trial at which FOSTER, along with co-defendants MARK ALAN SHAPIRO and IRVING STITSKY, were found guilty.

According to the superseding indictment, the evidence at trial, and statements made at the sentencing proceeding:

Beginning in late 2003, FOSTER, STITSKY, and SHAPIRO founded a group of companies that operated under the name “Cobalt,” which purportedly engaged in the acquisition and development of multi-family real estate properties throughout the United States. Through the Cobalt entities, FOSTER, STITSKY, and SHAPIRO fraudulently induced victims to invest by, among other things, (a) misrepresenting Cobalt’s operating history; (b) failing to inform prospective investors that Cobalt was owned and controlled by STITSKY and SHAPIRO, both convicted felons; and (c) misrepresenting and causing others to misrepresent Cobalt’s purported ownership interests in certain properties to prospective investors. In fact, Cobalt was a new company with little or no record of real estate investment success, was managed and controlled by STITSKY and SHAPIRO, and did not own several of the properties that it claimed to own.

In order to carry out their scheme, FOSTER, STITSKY, and SHAPIRO established Cobalt’s corporate headquarters in Springfield, Massachusetts, and a telemarketing center in Great Neck, New York. FOSTER, who worked out of Cobalt’s Massachusetts office, was identified in the Cobalt marketing materials as the individual responsible for overseeing all aspects of the operations of all of the Cobalt entities.

The defendants and their employees solicited funds from investors by making false and misleading oral and written representations about the investment for which the investors’ funds were solicited, including false representations about: (i) the identities and relevant background information about the individuals controlling the Cobalt entities; (ii) the identities of Cobalt’s business partners; (iii) the properties that Cobalt owned; (iv) the properties in which investor funds were to be invested; (v) the history of the Cobalt entities; (vi) the amount of management fees to be taken by Cobalt entities from the investor funds; (vii) the uses of the management fees taken by Cobalt entities from the investor funds; and (viii) SHAPIRO’s educational background. FOSTER, STITSKY, and SHAPIRO then caused millions of dollars of investors’ funds to be transferred to accounts for the defendants’ personal benefit.

In addition to the prison term, Judge WOOD sentenced FOSTER, 70, of East Hampton, Massachusetts, to three years of supervised release and ordered him to pay $22 million in restitution and to forfeit $23 million in proceeds from his offenses.

IRVING STITSKY, 55, of Milan, New York, was sentenced to 85 years in prison on July 6, 2010. SHAPIRO, 50, of Avon, Connecticut, is scheduled to be sentenced on October 14, 2010.

During the sentencing proceeding, Judge WOOD stated: “It is a very serious, egregious scheme that defrauded hundreds of people of their hard-earned money. Some people in fact face financial ruin.” Of Foster’s role, Judge Wood said, “Mr. Foster was in a position of trust with respect to the investors and it is a position of trust that he abused.”

Mr. BHAHARA praised the work of the Federal Bureau of Investigation in this case.

This case was brought in coordination with President BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney MARC P. BERGER is in charge of the prosecution.

A mortgage broker and real estate closing agent in the Twin Cities have been indicted in federal court for allegedly orchestrating a mortgage fraud scheme that resulted in a $2.5 million loss for financial lenders. The indictment, which was filed earlier today in U.S. District Court in St. Paul, charged Fawaz Mahmoud Wazwaz, age 33, address unknown, and Genevieve Marie McCullough, age 32, of Inver Grove Heights, with one count of conspiracy to commit mortgage fraud by commercial carrier and interstate wire, six counts of mortgage fraud through interstate wire, and one count of mortgage fraud through use of commercial interstate carrier.

The indictment alleges that from 2004 through 2006, the defendants conspired to defraud mortgage-lending institutions out of money. During that time, Wazwaz was employed as a loan officer, primarily at Commonsense Mortgage, Inc., a mortgage brokerage business in Shoreview. In his professional capacity, he originated mortgage loans by finding borrowers, preparing loan applications for those borrowers, and submitting those applications to lenders. McCullough, on the other hand, was employed as a real estate closer with two different title companies during this time period. At both companies, she prepared and oversaw the closing of real estate transactions.

The object of the defendants’ alleged conspiracy was to recruit straw buyers to purchase homes in the Twin Cities at inflated prices. The money to pay for those homes was acquired from area lenders, purportedly based on fraudulent loan applications. When loan proceeds were made available at transaction closings, portions of those funds were reportedly distributed to Wazwaz and others involved in the conspiracy. The indictment states that between January 24 and September 15, 2005, the defendants participated in the fraudulent purchase of 14 residences in Minneapolis, four in St. Paul, and one in Fridley, totaling approximately $2.5 million in losses to financial lenders.

To accomplish this fraud, Wazwaz allegedly arranged for an unindicted appraiser to prepare appraisals supporting the inflated home prices. He also purportedly caused lenders to receive false loan applications. Moreover, he reportedly provided down payments to straw buyers without disclosing that assistance to the lenders. Finally, according to the indictment, he arranged for McCullough to close the real estate transactions.

For her part, McCullough allegedly provided false documents, including false HUD-1 settlement statements, to the lenders and routinely violated the settlement instructions in those documents. She also purportedly closed the fraudulent real estate transactions for above-average fees, which she retained. Furthermore, the indictment states she disbursed some of the mortgage loan proceeds, usually the amounts over and above the true sale prices, to Wazwaz, the straw buyers, and others. In addition, she allegedly disbursed to her co-conspirators portions of the loan proceeds actually meant to go to the property sellers.

If convicted, the defendants face a potential maximum penalty of five years in prison on the conspiracy charge and 20 years on each mortgage fraud count. All sentences will be determined by a federal district court judge.

On May 4, 2010, Taleb Wazwaz pleaded guilty for his role as a straw buyer in this fraud scheme. Specifically, he pled to one count of conspiracy to commit mortgage fraud by interstate wire.

This case is the result of an investigation by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney David J. MacLaughlin.

NEWARK, NJ—The former owner and chief executive officer of Capitol Investments USA, Inc., a purported wholesale grocery distribution business, was charged today in a criminal complaint with operating a $880 million Ponzi scheme, U.S. Attorney Paul J. Fishman announced.

Nevin Shapiro, 41, of Miami Beach, Fla., surrendered this morning to special agents of the FBI and the Internal Revenue Service (IRS) in Newark, N.J. Shapiro is scheduled for an initial appearance and bail hearing this afternoon before U.S. Magistrate Judge Madeline Cox Arleo in Newark.

According to the complaint filed in Newark federal court:

From January 2005 through November 2009, Shapiro, through Capitol, solicited investors from New Jersey and throughout the United States, telling them that he would use their money to fund his wholesale grocery distribution business. To induce those investors, Shapiro directed others to create and show to the investors documents fraudulently touting Capitol’s profitability. Those documents included: financial statements, profit and loss figures that fraudulently represented that Capitol’s wholesale grocery business was generating tens of millions of dollars in annual sales; personal and business tax returns for Shapiro and Capitol which also fraudulently reflected those sales; and numerous invoices fraudulently reflecting transactions between Capitol and other companies in the wholesale grocery business.

As a result of these solicitations, more than 60 investors sent over $880 million to Shapiro and Capitol during this time period. To date, the investigation has revealed that Shapiro caused investor losses of at least $80 million.

In most instances, Shapiro and others under his direction provided investors with promissory notes reflecting the amount of their investment in Capitol and a schedule, varying from a matter of days to one year, for the payment of interest and the return of principal. The interest Shapiro and Capitol promised investors ranged from 10 percent to 26 percent annually.

In reality, Capitol had no active wholesale grocery business during the time period relevant to this complaint. In fact, Capitol had virtually no business sales. Shapiro used new investor funds to make principal and interest payments to existing investors, as well as to fund his own lavish lifestyle.

Shapiro misappropriated approximately $35 million in investor funds for his personal use, including paying millions of dollars in debts resulting from illegal gambling on sporting events. Using investor money, he also spent, at various times, more than $400,000 for floor seats to watch the Miami Heat professional basketball team; approximately $26,000 per month for mortgage payments on his residence in Miami Beach, recently appraised at approximately $5.3 million; approximately $7,250 per month for payments on a $1.5 million dollar Riviera yacht; and approximately $4,700 per month for the lease of a Mercedes-Benz automobile.

Shapiro also used stolen funds to purchase a pair of diamond-studded handcuffs, which he gave as a gift to a prominent professional athlete, as well as to make $150,000 in donations to the athletic program of a local university in the Miami area. As a result of a 10-year gift to the university, the Nevin Shapiro Student-Athlete Lounge at the university was named for the defendant.

U.S. Attorney Fishman stated: “Nevin Shapiro is charged with tricking investors with false documents and false promises. He spent tens of millions of their money on gambling debts, lavish gifts, and a luxury lifestyle built on a house of cards.”

FBI Special Agent in Charge Michael B. Ward stated: “This case is a perfect example of greed run amok. In pursuit of wealth and a lifestyle he was otherwise unable to attain, Mr. Shapiro allegedly preyed upon unsuspecting investors looking to secure a safe place to maximize their investments. Instead, their futures have been irrevocably damaged.”

“Scammers, con artists, and swindlers will do and say anything to get you to buy into their scheme,” stated William P. Offord, Special Agent in Charge, IRS-Criminal Investigation. “Remember the old cliché, ‘If it’s too good to be true, it probably is.’”

The criminal complaint charges Shapiro with one count of securities fraud and one count of money laundering. He faces a maximum term of 20 years in prison on the securities fraud charge, and a fine of up to $5 million. He also faces a maximum term of 10 years in prison on the money laundering charge, and a fine of up to $250,000, or twice the gross gain or loss from the offense.

In determining an actual sentence, the judge to whom the case is assigned would, upon a conviction, consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, and special agents of the IRS Criminal Investigation Division, under the direction of Special Agent in Charge William P. Offord, for the investigation leading to today’s complaint. Fishman also thanked the Securities and Exchange Commission’s Miami Regional Office, under the direction of Eric Bustillo.

The government is represented by Assistant U.S. Attorneys Justin W. Arnold and Jacob T. Elberg of the Criminal Division, in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The charges and allegations contained in the complaint against Shapiro are merely accusations, and the defendant is considered innocent unless and until proven guilty.

San Diego – United States Attorney Karen P. Hewitt announced that Michael Alexander, the owner of several San Diego telemarketing companies involved in a real estate investment fraud scheme, was sentenced today in federal court in San Diego to serve 30 months in prison and three years of supervised release based on his previous convictions for mail and tax fraud. U.S. District Court Judge Roger T. Benitez also ordered Alexander to pay restitution in the amount of $1,799,580.78 to the victims of the fraud scheme and to the Internal Revenue Service (IRS) for unpaid taxes.

According to court records, Alexander pled guilty on April 24, 2008, to charges of mail fraud and filing a false tax return. In his plea, he admitted that he formed the Rose Fund, LLC, to solicit investor money to fund loans secured by real property and that he formed TRF Holdings, Inc., a related entity, to provide “seed money” to capitalize the Rose Fund. Alexander hired a convicted felon, William Wright, to be his lead salesman.

Alexander further admitted that, in order to make sales, they misrepresented to investors, among other things, that investor funds were safe and would be used to make loans secured by real estate; they would receive a 5 percent sales commission; and that the businesses were well-established, successful, and operated by experienced real estate professionals. They also intentionally misled TRF Holdings, Inc. investors into believing that their investments would be used to fund real estate loans rather than provide seed money for the Rose Fund. In addition, they concealed from investors that Wright had been previously convicted of mail and wire fraud and that the Securities and Exchange Commission (SEC) had begun an investigation of the Rose Fund in April 2003. After learning of the April 2003 SEC investigation, Alexander solicited more than $2 million from new and existing investors by concealing the existence of the SEC investigation.

In pleading guilty, Alexander admitted that he fraudulently obtained more than four million dollars from more than 100 investors during the one year that the fraud scheme operated between October 2002 and October 2003. Although investors were promised that their investments would be used to make secured real estate loans, Alexander funded only 16 loans totaling $1.8 million. By contrast, Alexander fraudulently diverted more than $1.4 million of investor funds to himself and $665,000 to Wright.

In May 2008, Wright was indicted in San Diego on federal fraud charges stemming from his involvement in the Rose Fund/TRF fraud scheme. In February 2010, Wright pled guilty in a federal court in New York to conspiracy to commit mail and wire fraud and is scheduled to be sentenced on May 25, 2010.

This case was investigated by Special Agents of the Internal Revenue Service – Criminal Investigation, the United States Postal Inspection Service, and the Federal Bureau of Investigation.

DEFENDANT
Case Number: 07Cr1237BEN
Michael Alexander

SUMMARY OF THE CHARGES
Count 1 – Title 18, United States Code, Section 1341 – Mail Fraud
Count 2 – Title 26, United States Code, Sections 7206(1) – Filing a False Tax Return

PARTICIPATING AGENCIES
Internal Revenue Service – Criminal Investigation
United States Postal Inspection Service
Federal Bureau of Investigation

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Marina Dubin, a real estate paralegal, was sentenced yesterday to two concurrent three-year prison sentences in connection with her involvement in a multimillion-dollar, sub-prime mortgage fraud scheme and another foreclosure rescue scheme. Dubin, 33, of Brooklyn, New York, pleaded guilty to two counts of conspiracy to commit mail, wire, and bank fraud on June 12, 2008, before United States District Judge Richard J. Holwell, who also imposed the sentence yesterday in Manhattan federal court.

The Mortgage Fraud Scheme

According to the Indictment, other documents filed in these cases and related cases and statements made in court:

From 2004 through January 2007, DUBIN was a paralegal who acted as the bank attorney and settlement agent for numerous loans obtained by the participants in a wide-ranging mortgage fraud scheme. The scheme was led by Aleksander Lipkin 31, of Brooklyn, New York, and other participants included mortgage brokers and loan processors who worked at the Brooklyn mortgage brokerage firm AGA Capital NY, Inc. (“AGA Capital”) and its successors, as well as real estate appraisers, loan account executives, a lawyer, straw buyers, and others. DUBIN and her co-defendants submitted loan applications containing false information and material omissions, as well as other false documentation such as bank statements, to obtain loans that otherwise would not have been funded.

During the course of the mortgage fraud scheme, AGA Capital and its successors brokered over 1,000 home mortgages and home equity loans with a total face value of at least $200 million dollars and earned at least $4 million in commission fees on those loans. The various lenders defrauded by the scheme have claimed actual losses of approximately $11.6 million on loans that have completed foreclosure.

Of the 27 defendants charged in this case (United States v. Aleksander Lipkin, et al.), 25 pleaded guilty; one of the defendants, attorney Alexander Kaplan, 35, of Brooklyn, New York, was found guilty following a jury trial and is scheduled to be sentenced on April 6, 2010.

Garri Zhigun, 33, of Brooklyn, New York, who supervised the operations of AGA Capital and was Likin’s business partner, was sentenced on May 28, 2009, by Judge Holwell to 100 months in prison, three years of supervised release, and was ordered to forfeit $2.5 million and pay approximately $11.6 million in restitution.

The Foreclosure Rescue Scheme

From November 2003 through April 2005, Maurice McDowall, 55, of Brooklyn, New York, Lipkin and Dubin engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to “save” their homes. The proposed plan included the refinancing of the homeowners’ debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to “sell” their homes to straw buyers, who would apply for loans to be used to “save” the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners’ old debt and make one year’s worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to “save” their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners’ signatures on various documents that transferred the homes to straw buyers without the homeowners’ knowledge.

McDowall, who directed the daily operations of the scheme, and Lipkin, a mortgage broker who coordinated the submission of fraudulent information to lenders on behalf of straw buyers, obtained more than 80 home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby “cashing out” on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans.

Dubin served as the settlement agent for the vast majority of the fraudulent loans obtained in the course of the scheme. In that capacity, she organized closings, prepared documents, and disbursed the fraudulently obtained proceeds to various defendants.

McDowall was previously sentenced by United States District Judge Robert P. Patterson to 120 months in prison and three years of supervised release, with 100 hours of community service to be performed in the first year after release. In addition, Judge Patterson ordered McDowall to forfeit $2.5 million.

Of the three other defendants charged in this case, one pleaded guilty and the other two were found guilty on charges of conspiracy, wire fraud, and bank fraud, following a 12-day jury trial in Manhattan federal court.

Lipkin was sentenced by Judge Holwell for his role in both the mortgage fraud scheme and the foreclosure rescue scheme (United States v. Maurice McDowall, et al.) on June 4, 2009, to 110 months in prison, five years of supervised release, and was ordered to forfeit $7 million and pay approximately $11.6 million in restitution.

In addition to the 36-month prison term, Dubin was sentenced to three years of supervised release. Judge Holwell also ordered Dubin to forfeit $7 million and pay approximately $11.6 million in restitution.

Mr. Bharara praised the work of the Federal Bureau of Investigation, the New York City Police Department, and the Department of Homeland Security’s U.S. Immigration and Customs Enforcement. He also thanked the New York State Attorney General’s Office for its role in the investigation.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Likening the investigation into an alleged Meredith-based Ponzi scheme to Watergate, two Seacoast lawmakers have asked for a separate legislative inquiry into the matter.

In a letter addressed to House Speaker Terie Norelli, state representatives James Splaine and Paul McEachern cited what they believe to be a conflict of interest between the Office of Attorney General’s mandate to protect the interests of the state and its role in reviewing the actions of various state agencies in their dealings with Financial Resources Mortgage Inc. and its president, Scott D. Farah.

“This is not a matter of trusting … any individual or individuals or state agencies or departments — it is a matter of making sure that our state government itself can be trusted to do what it should,” Splaine and McEachern, both Portsmouth Democrats, said in an e-mailed letter entitled, “Tyring to Prevent a NH Watergate.”

Earlier this month, the pair as well as state Senate President Sylvia Larsen, speaking on behalf of the entire Senate, asked Attorney General Michael Delaney to “shine more sunlight” into the investigation.

State Rep. Francine Wendelboe, R-New Hampton, echoed the calls from across the aisle, adding she met with Gov. John Lynch last month to address the concerns of many of her constituents who, because of their proximity to the Center Harbor and Meredith-based company, have contacted her.

“I am not convinced my concerns as well as Paul and Jim’s are being properly investigated,” she said.

The three are reacting to a Feb. 12 news account in the New England Business Review in which Deputy Attorney General Orville “Bud” Fitch said there was not enough conflict of interest to warrant a third-party investigation into the role of the state agencies during the run-up to the mortgage company’s 2009 shut down. They are also concerned that the Office of the Attorney General “did not react positively” to a letter sent by Securities Director Mark Connelly in June 2003 requesting it “secure the assets” or freeze the accounts of Financial Resources and Assistance of the Lakes Region after an investigation into a complaint revealed the company was selling unregistered securities.

“I know it’s an old cliche, but ‘sunlight is a wonderful disinfectant’ is true,” said Splaine Tuesday morning regarding the latest letter which he e-mailed late Monday night. “I see the possibility of a cover-up.”

Calling it an “unacceptable delay,” Splaine and McEachern also have questioned the six-week time frame for the Attorney General’s review, saying the results will not come in time for the sitting Legislature to act in this session.

Responding to the criticism, Delaney said, “The timing of the legislative session should not warrant a rush review of this matter.” The attorney general added that Gov. John Lynch and the Executive Council asked him to conduct “a fair, thorough and impartial” review of what various government agencies knew about Financial Resources Mortgage Inc. and when they knew it.

What is known is that Scott Farah was running Financial Resources Mortgage, Inc., then known as Financial Resources Assistance of the Lakes Region, in the year 2000 when a complaint alleging his company was selling unregistered securities was brought to the attention of then-Securities Director and current Banking Commissioner Peter Hildreth.

Hildreth recused himself from the investigation because he said one of his brothers was an investor with the company. In 2002, Hildreth left Securities to become Banking Commissioner.

Hildreth could not be immediately reached for comment.

His successor, Mark Connelly, said the investigation continued until the winter and spring of 2003, but his investigators feared the company did not have enough assets to repay all of its investors should they ask for their money back. Despite the statements of Farah’s attorney that the company had enough cash flow to repay those who wanted out, Connelly said he felt an asset freeze was in order and he sent his request to the AG’s Office on June 17, 2003.

Delaney said part of his review of the oversight into FRM involves what happened after the AG’s office got Connelly’s letter; but he said Tuesday he would address it when the entire review was complete.

Ultimately, Financial Resources paid $1 million to investors who wanted their money and a $20,000 fine. It continued to do business until early November 2009 when Farah abruptly shuttered the doors, leaving hundreds more investors in the dark as to the whereabouts of what is estimated to be between $80 and $100 million.

But to investors like Ken Miller of Amherst and Susan and Al McIlvene of Kittery, Maine, no part of the investigation is satisfactory.

Miller and the McIlvenes have been in nearly continual contact with each other and hundreds of their fellow victims, exchanging information and, in many cases, conducting investigations of their own.

“What I’d like to know is whether or not anyone ever got any of their principal returned,” said Miller who said, while he is reluctant to use the words “cover up,” he thinks many state officials are not as forthcoming as they could be.

“I think my biggest complaint is that we don’t get any information,” Miller said.

Other issues facing investors are the cost of legal representation and the costs being incurred by the bankruptcy trustee, highlighted by an e-mail circulating with the hourly rates being charged by the forensic accounting firm that include a $390 per hour charge for one of the principals and an $80 per hour fee for clerical work.

“Who gets $80 an hour for clerical work?” questioned Susan McIlvene.

“I can’t afford any kind of lawyer,” said one Tilton woman who declined to be identified but who said that, since FRM’s shutdown, her husband has been laid off. Together she said they lost nearly $120,000 — almost of all of the money they had saved for retirement.

Still others are frustrated by a lack of any criminal charges against Farah and his partner, Donald Dodge.

In an e-mail sent to U.S. Attorney Mark Zuckerman, one Meredith investor said he had documented the way Scott Farah tricked him into investing $32,000 into a home improvement loan for a woman in Florida in September when he knew the woman who had requested the loan had withdrawn her application in July.

“For instance, my dealings with him were a pretty cut and dry case of theft by deception and fraud. I have certainly given you enough about that one case to justify an immediate arrest on this specific event,” he wrote in his e-mail to Zuckerman earlier this week.

Zuckerman confirmed last week the Office of the U.S. Attorney, assisted by the FBI and investigators from the Securities Exchange Commission, are conducting a criminal investigation but he declined to comment on the specifics.

By GAIL OBER