Local Government Center Loses Motion to Stay $52M Repayment

Now that there’s a bit of a break in the Complete Streets project hearings before it goes to the city council on Nov. 26, I have had a chance to catch up on the Local Government Center's continuing legal woes.

Just a quick refresher here: The Bureau of Securities Regulation (BSR) charged that the Local Government Center (LGC) and its subsidiaries broke the law (RSA5-B) in not returning excess funds, in accumulating too much surplus, in their reorganization in 2003, and a number of other issues.

A hearing officer (Donald Mitchell) ruled that the LGC was in fact in violation of a number of the charges brought by the BSR. While not finding unanimously in favor of the BSR, the main points were ruled in favor of the BSR’s complaint. Accumulating too much surplus, not returning the excess funds in a timely manner, problems associated with their restructuring, moving funds from one trust to another and taking real property from two trusts without compensation to those trusts, are the ones I recall off the top of my head.

The hearing officer set up a schedule for the LGC to return the excess funds and reorganize their trusts to conform to New Hampshire law, and comply with the rest of his rulings in the Final Order.

The LGC then asked the hearing officer to reconsider his Final Order and he denied their request. Next the LGC filed an appeal with the New Hampshire Supreme Court. The LGC further asked that the order to return funds, reorganize and the other issues in the ruling against them in the Final Order be put on hold until their appeal is ruled on by the Supreme Court.

The latest, as many of you may have seen, is a brief article in the Concord Monitor reporting that the LGC was denied a motion to stay (delay) their repayment of the $52 million, reorganize and the other issues the hearing officer ruled on in his final order.

There’s an opportunity for mediation, though I’m not betting that’s going anywhere. The LGC had an opportunity to settle with the BSR before the case was heard this spring. And with the LGC reportedly on the hook for $1.9 million in legal fees and their insurance companies refusing to reimburse them, I’m guessing if they settle they will still be on the hook for $600,000 or so in legal fees the BSR has accumulated. 

With so much skin in the game and the only chance to recoup their legal fees (assuming they’re not successful in suing their insurers) is to follow through with the appeals process and double down.

In the meantime their legal fees continue to rise, the BSR’s legal fees continue to accumulate and the loser gets the bill.

If I was a betting man (and I’m not) it seems to me that the LGC is running out of options. The fact that the Court wouldn’t approve the LGC’s motion to put on hold repayment, reorganization, etc., until after their  appeal is ruled on would make me very nervous if I was them.

So if both parties don’t agree to mediation, a court date will be set. Then a trail before the Supremes and finally a ruling both parties will be obligated to comply with. In the meantime remember who’s paying for this at the end of the day. That’s right take a good look in the mirror, because one way or another it’s coming out of the person’s pocket you’re staring at.

The Local Government Center continues to post information related to this case on its website. nhlgc.org/about/regulatorymatters.asp

The Secretary of States website also has information related to this case: sos.nh.gov/locgovctr/index.html

While the NH Supreme Court hasn’t yet posted the BSR’s motion to deny the LGC’s request for a stay, here’s their website: courts.state.nh.us/supreme/index.htm

And finally Elizabeth Dinan continues to provide excellent coverage on this case: seacoastonline.com/apps/pbcs.dll/article?AID=/20121116/NEWS/211160362/-1/NEWSMAP