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Sunday, November 27, 2016

Nashuan sentenced in bank fraud case

By MIKE DONOGHUE
Correspondent

BURLINGTON, Vt. - A Nashua man will spend six months in home confinement and six more months with a curfew as part of his sentence in a multi-million dollar bank fraud case that spread across at least three New England states, according to the U.S. Attorney's Office for Vermont.

Arnold Hanson, 66, is the former co-owner, president and chief executive officer of a bankrupt steel fabrication business in Berlin, N.H., and one of three people implicated in a scheme to defraud several financial institutions, including the Passumpsic Savings Bank based in St. Johnsbury, Vt. ...

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BURLINGTON, Vt. - A Nashua man will spend six months in home confinement and six more months with a curfew as part of his sentence in a multi-million dollar bank fraud case that spread across at least three New England states, according to the U.S. Attorney's Office for Vermont.

Arnold Hanson, 66, is the former co-owner, president and chief executive officer of a bankrupt steel fabrication business in Berlin, N.H., and one of three people implicated in a scheme to defraud several financial institutions, including the Passumpsic Savings Bank based in St. Johnsbury, Vt.

Hanson also has been ordered to make $300,000 in restitution by Jan. 1, 2017 as part of the criminal prosecution in U.S. District Court in Burlington. His home confinement and curfew penalties will be part of a three-year term of supervised release imposed by Chief Federal Judge Christina Reiss this week.

Hanson conspired with the other former co-owner and chief financial officer Steven D. Griffin and an outside certified public
accountant - David J. Driscoll of Littleton, N.H. - to inflate figures for assets of Isaacson Structural Steel, Inc., including inventory, court records show. Those inflated numbers were submitted to the Passumpsic Savings Bank, and other banks participating in loans totaling over $12 million, including a $2 million loan guaranteed by the Small Business Administration in late 2010.

"Between August 2007 and April 2011, ISSI officers regularly submitted false and inflated figures to the banks regarding the value of ISSI's assets. ISSI submitted these false statements about assets in borrowing base certificates and financial statements. ISSI regularly inflated its assets by a million dollars or more," the U.S. Attorney's Office said in a statement.

ISSI before its bankruptcy was one of the largest businesses in the Northern New Hampshire and did work across the Northeast.

"ISSI fabricated steel used in commercial construction. It entered into construction contracts to provide not only the steel for commercial buildings but also to provide subcontractor services, principally the erection of the steel. ISSI purchased steel and fabricated the various pieces of steel needed for each contract at its Berlin, N. H. location and then shipped the steel to building sites," they said in a prepared statement.

Woodsville Guaranty Savings Bank and Ledyard Savings Bank, also were among those impacted, records show.

Hanson agreed to cooperate with prosecutors and the FDIC, which was stung by the fraud case. He waived his right to have his criminal case considered by a federal grand jury and agreed to plead guilty to a single felony count filed by Acting U.S. Attorney Eugenia Cowles in January 2015.

Hanson asked Judge Reiss to sentence him below the advisory sentencing guideline range of about four- to- five years in prison. The government supported the move based on Hanson's substantial cooperation in the investigation and prosecution of Griffin.

Griffin, 59, of Berlin. N.H., was recently sentenced to two years of home confinement as part of a five-year term of supervised release. Judge Reiss also ordered Griffin to pay $500,000 in restitution after his conviction for making a false statement to a financial institution, records show.

Griffin asked the court to sentence him below the advisory sentencing guideline range of 51- to- 63 months in jail because of his community service and physical illnesses. Judge Reiss agreed no prison time should be imposed, but in light of a variety of factors, including Griffin's health, a lengthy period of home confinement was proper.

Griffin was named in a nine-count criminal indictment filed March 31, 2015 and he admitted to one count with the others charges dismissed at sentencing.

"The government maintained Griffin was more culpable than Hanson. Griffin lied to Hanson when he asked about financial information," prosecutors said in a statement.

Driscoll never faced criminal charges, but recently settled a civil suit brought by the government to recover money. The U.S. Attorney's office in Burlington filed the civil lawsuit claiming Driscoll violated the Financial Reform, Recovery and Enforcement Act.

Driscoll had responsibility for the yearly audit of ISSI's assets, and according to the complaint knowingly prepared audit information that he knew contained inflated assets. At the time, Driscoll also served as a member of the Passumpsic Savings Bank board of directors.

The civil lawsuit was dismissed Nov. 21 after Driscoll signed an agreement to pay a $100,000 penalty for his conduct, records show. The money includes $20,000 to the Federal Deposit Insurance Corp. $30,000 to the New Hampshire Board of Accountancy, $5,000 to settle a civil lawsuit involving Driscoll in his role as a trustee. Driscoll also had to pay $37,000 to the U.S. Treasury in the agreement.

As part of the $100,000 settlement, Driscoll did not admit liability in connection with the allegations in the civil complaint.

The U.S. Attorney's Office discussed in court the elaborate scheme established by the three men. Prosecutors later further explained the plan in a written statement. In August 2007, ISSI officers discussed, and then submitted to the bank, inflated figures for the amount of money owed to ISSI for work done in connection with 303 Third St., a condominium construction project in Cambridge, Mass., they said.

"In early 2011, officers participated in the submission of an ISSI's draft financial statement for the financial year 2010, which contained significant overstatements about ISSI's inventory. That financial statement had an inventory representation of approximately $12 million dollars. In fact, the value of the inventory was less than $2 million," prosecutors said.

"Inventory was thus inflated by over $10 million. In April 2011, the banks learned about issues with ISSI's inventory figures. By June 2011, ISSI was in bankruptcy, and its assets were later liquidated. In the end, the banks lost millions of dollars as a result of the fraud," they said.

The records also showed change orders were recorded, but the work never done for Evergreen Solar, a manufacturing facility in Massachusetts, the indictment said. Among the other commercial projects were the Massachusetts General Hospital and the Russia Wharf, the indictment said.