When Mark Connolly resigned from state government in 2010, he faced questions about the failed Meredith company Financial Resources Mortgage Inc., which defrauded investors out of their life savings.
The Ponzi scheme continued for a decade, despite complaints filed with the state’s Banking Commission and the Bureau of Securities Regulation, which Connolly led.
The Attorney General’s Office said Connolly’s division could have taken a more active investigative role and better protected investors.
It also criticized the Banking Commission and its own office for missing warning signs and failing to punish the company as it broke laws over the course of a decade.
Now that Connolly, a Democrat, is running for governor, he regularly talks about his time as New Hampshire’s top watchdog, going after financial giants including Merrill Lynch, Tyco and Morgan Stanley. It’s a large part of what’s motivating him to run for governor, he said.
But he received the most attention for FRM, and his insistence that other state agencies were more concerned with covering their tracks than helping victims after the company collapsed.
“There became more of a turf battle than protecting the people who were harmed,” Connolly said in a recent interview.
Connolly is not the type of gubernatorial candidate who proposes radical policy change, instead telling voters he would continue the progress made by the last two governors on education, health care and building a better economy.
Where Connolly stands out is on how to make state government more transparent, reforming consumer protection laws and installing an independent arbiter such as an inspector general.
Sitting in the living room of his New Castle, N.H., home, the 60-year-old said his time working at the Bureau of Securities Regulation has shown him government’s ability to do good as well as its capacity to do harm.
“Government can make a huge difference in people’s lives,” he said.
Several FRM victims who continue to speak out about the case hold no grudge against Connolly.
In fact, some are actively supporting his gubernatorial bid, saying he took appropriate action by resigning from his post and speaking out publicly.
“He is the only person who had the courage,” FRM victim Al McIlvene said. “The governor didn’t have it, the banking commissioner didn’t have it, the Attorney General’s Office didn’t have it.”
McIlvene and his wife, Susan, live in Kittery, Maine, but they still display a Connolly sign on their front lawn for those driving over the bridge to see.
“Mark is the one person that I would stand by,” McIlvene said. “I may not agree with him on everything politically, but he will do what he knows is correct without an ulterior motive.”
Connolly became involved with government early on.
Working to put himself through Dartmouth College, he also served in the state House of Representatives as a Republican from Bedford.
He was one of about 100 representatives under 30 and said his short time in the state Legislature was “a great experience.”
Connolly characterizes the GOP back in the 1970s as much more progressive, but as the years passed, “the party shifted dramatically to the right. I found myself increasingly voting Democratic.”
After graduating with an MBA from Northwestern University, Connolly spent years in the private sector, working at Chubb Life Insurance in Concord and Fleet Bank before making his way to the New Hampshire Secretary of State’s Office in 2000.
In 2002, he took over as the director of the Bureau of Securities Regulation, a part of the Secretary of State’s Office.
Looking back on his career, Connolly said his time there is what he’s most proud of.
“We did our jobs, we had no concern about politics and just did what we thought was in the best interest of the state,” Connolly said.
The bureau was a small, little-known office, but it took on some large cases under his leadership.
Tyco was one of Connolly’s first fraud cases, ending with a $5 million settlement and the board of directors resigning. The case was followed by many more investigations into financial giants including ING, UBS and Merrill Lynch.
“When I look back, that was an incredibly rewarding experience, and I can actually say and feel I helped people,” Connolly said.
On the other side of the aisle, many Republicans talk about loosening regulations on businesses to generate economic growth. Though Connolly said he agrees government should be made more efficient, he also believes regulation is a necessary tool to protect consumers and boost consumer confidence in business and the stock market.
“The issues facing our state and our country are complex,” he said. “To put out simple responses like, ‘We’re going to cut taxes, we’re going to cut regulation,’ that’s not answering these complex questions in the way they should be.”
When FRM collapsed in 2010, Amherst, N.H., resident Ken Miller saw about $750,000 of his life savings vanish.
He wasn’t the only one. Sometimes referred to as “New Hampshire’s largest Ponzi scheme,” FRM lost tens of millions of its clients’ money.
Owners Scott Farah and Donald Dodge went to prison for fraud, while various state agencies that were supposed to regulate the company accused each other of missing signs of FRM’s schemes.
Though FRM was under the oversight of the state Banking Commission, Connolly’s office was assigned a share of the blame by the Attorney General’s Office.
The Bureau of Securities Regulation failed to take full advantage of its power to investigate FRM, according to a 2010 report compiled by the Attorney General’s Office.
“A more aggressive assertion of its investigatory authority would likely have detected the fraud before it collapsed on its own,” the Attorney General’s Office wrote. “The fundamental error by the Securities Bureau was that it failed to follow the money.”
Connolly fired back, saying the bureau had tried to investigate FRM in past years but did not get cooperation from other state agencies. He made waves when he resigned from the bureau, accusing other state agencies of being involved in a coverup over FRM.
“I really came to a point where I was advocating change as a regulator, so I felt the best role I could take was to leave my job,” he said. “What it really became was turf maintenance and blame game and not looking out for the people who were victimized.”
Connolly said a large part of his resignation was to advocate for FRM victims.
“Part of it was saying to people, ‘See these people here? They are just like you and me and you could have been one of these people,’ ” he said. “ ‘Their story is your story and this kind of fraud exists all across our country.’ ”
Throughout the process, some of the more outspoken fraud victims said Connolly’s office was the only group that listened to them and helped them.
Ken Miller changed his party affiliation from Republican to undeclared earlier this year so that he could vote for Connolly in the primary.
Like the McIlvenes, Miller said he believes Connolly’s honesty and integrity matter more than any of the issues.
“Mark is one of the few state employees that helped us,” Miller said. “He’s honest and he’s a good financial guy. Those are the two key things we saw with him. I think he’d make an excellent governor.”