Petition 18: the Frost Petition

Additional commentary by Timothy Horrigan
(member of the House Petitions & Redress Committee)

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This petition was filed by a powerful person who is in a significant amount of trouble: i.e., Jeffrey Frost, a prominent businessman who is the former head of the New Hampshire Red Cross. (He also has been the chair of the Manchester city Republican committee, but that job postdates the events which led to the petition.) His real estate business led him into private mortgage lending, which is a sore subject in New Hampshire after the "FRM scandal." Two of his private mortgage deals got him prosecuted, although he was eventually acquitted after running up six-digit legal fees. His petition is directed at several of the officials who went after him.




11-1116.0

09/10

PETITION 18

PETITION FOR REDRESS OF GRIEVANCE

TO: The Honorable House of Representatives
FROM: Petitioner Representative Ross Terrio, Hills. 14
DATE: October 10, 2011
SUBJECT: Grievance of Jeffrey Frost, Manchester, New Hampshire

Your Petitioner, Representative Terrio on behalf of Jeffrey Frost of Manchester and for the citizens of New Hampshire who may likewise be affected, hereinafter presents the following summary of his grievances involving the New Hampshire Banking Department and the Attorney General's Office and invokes the constitutional authority and duty of the Honorable House of Representatives pursuant to said Articles 31 and 32 to bring about redress:

Grievance involving the New Hampshire Banking Department and Attorney General's Office for, after multiple fair and quiet warnings to the contrary, knowingly and willfully violating 2 constitutional rights of Mr. Frost including illegal search and seizure; over-stepping their authority with charges that did not exist; filing, engaging, and pursuing a law, RSA 397-A, retroactively against Mr. Frost and/or his businesses; and continuing to pursue, as determined by the courts, a strained, untenable, and unconstitutional interpretation of its regulatory framework wasting the public treasury, retroactively affecting New Hampshire citizens, and destroying Mr. Frost's business, his reputation, and his family.

Wherefore, your petitioner prays that the House of Representatives consider this proposed remedy:

  1. Find the appropriate remedy, which may include initiating impeachment proceedings, for the actions of the former Banking Department Commissioner Peter Hildreth, Attorney General Michael Delaney, and Assistant Attorney General Karen Gorham who condoned and or knowingly and abusively overstepped their authority and/or professional obligation as representatives of the court (Bar Lawyers) and as officers for the State of New Hampshire.

  2. Request by house resolution that a public apology for the unconstitutional search upon Mr. Frost's residence and the law firm representing Mr. Frost, Cronin and Bisson, PC, be made by the Attorney General's office and the Banking Department

  3. Forward a professional conduct complaint to the state Bar from this body on behalf of Mr. Frost for all 3 lawyers involved in his prosecution.

  4. Introduce legislation compensating Mr. Frost for attorney's fees and costs directly related to and associated with prevailing in his case pursued by the State.

Respectfully Submitted by Petitioner Representative Terrio on Behalf of Jeffrey Frost and the citizens of New Hampshire.

Co-Petitioner:
Rep. Infantine, Hills. 13
October 10, 2011

Somewhat unusually, Frost's petition was officially filed with the House a month before a Supreme Court date. Frost has won the majority of his recent legal battles (albeit at a high price) and he still has a lawyer— several of them, in fact. Alexander Walker, the President of the prominent local law form Devine Millimet argued his case before the State Supreme Court on November 10th, 2011. Frost has had at least two other high-powered law firms working on other aspects of his case.

Frankly it seemed strange (at least, to me) that he would bother to file a House Petition.

We found out what Frost was up to when he testified on November 3rd.. He wanted the legislature to consider impeaching several officials, and he also hopes for the passage of a bill or resolution appropriating funds to pay off his legal bills. Those bills have run well into six figures. I personally am unsure whether or not the legislature could constitutionally pass such a resolution. In either case, the state government is broke. On the other hand, Frost was able to cite some possible precedents, including the legendary Ayotte vs. Planned Parenthood case where the state ended up paying Planned Parenthood's legal fees. (This was, however, a federal case where Attorney General Ayotte was the plaintiff and where a federal judge ordered her to pay the fees.)

Superior Court Judge Richard B. McNamara noted towards the end of his December 21, 2010 Frost vs. New Hampshire Banking Department order that:

Mr. Frost expressed the belief that this means the legislature could pass a resolution to pay his attorney's fees. (Not everyone shares that belief, but this is worth looking into.)

On March 16, 2012, the New Hampshire Supreme Court issued its ruling on case #2011-121, "Jeffrey Frost & a. v. Commissioner, New Hampshire Banking Department & a.". It was a split decision in Frost's favor, in more ways than one. Firstly, it was literally a split decision: Justice Lynn dissented.

It was also figuratively a split decision: Frost got some of what he wanted but not all. The Supreme Court upheld the Superior Court's ruling that Frost shouldn't be subjected to further administrative action by the New Hampshire Banking Authority. But, the Supreme Court also chose not to order the NHBA to pay Frost's legal fees. They also did not reprimand or impugn the integrity of any of the officials involved in Frost's case.

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Frost provided the following written statement to the committee:

Jeffrey Frost— Summary of Grievance

(by Jeffrey Frost; November 3, 2011)

This hearing was requested because of a false arrest and the abuse of process by state employees whose job it is to see that justice is done.

I and the other co-owner of a piece of lakefront property on Newfound Lake had engaged in a legal installment mortgage referred to as 'owner financing'.This is a private contract property transaction that was legal when we did it and a right of all New Hampshire citizens for decades. The buyer, Robert Recio, approached us in September of 2008 in mine and my friend's property with the option to purchase and a seller-financed first mortgage. That transaction was consummated in March of 2009. When the purchaser failed to pay the taxes and payments for a period of months we began foreclosure proceedings. We won in court but on or about December 2009, the person against whom we foreclosed went to the New Hampshire Attorney Genera|'s office with a false and fraudulent claim to try and force a cash payment from us.

The NH Banking Department and the Attorney General's office

  1. circumvented the subpoena process (RSA 397A: 12 I-Ill),

  2. got an illegal search warrant,

  3. arrested me, and,

  4. then filed false charges against me.

Of these charges one does not exist in law and the rest are unconstitutional ex post facto applications of a new law. They were made aware of this by competent counsel who suggested that they needed to drop and dismiss the charges. Without a pressing reason they threatened us with a grand jury indictment which would have caused "grave harm" in the loss of my partner's government job.

In August of 2010 Judge Clifford Kinghorn of Merrimack District Court found that an illegal search had been conducted by the Banking Department by the misrepresentation of facts to a judge. Judge Kinghorn later in the fall, after a brief hearing, dismissed all charges against me. From testimony, evidence presented, and letters from the Banking Department in my possession I believe misrepresentations were made to Judge Kinghorn, in his court, during those two hearings in 2010 in Merrimack District Court.

On June 29th, 2010 in Merrimack County Superior Court, Judge Richard McNamara found that the AG's office had no jurisdiction, never had it, and had indeed tried to apply a new law retroactively and unconstitutionally. Since that time the Attorney General and the Banking Department have engaged in short, unrealistic and ultimately fruitless settlement negotiations with us.

According to Judge McNamara, under the circumstances of this case, it would be justified to award legal costs to the petitioner Mr. Frost, if it were not for the fact that the State of New Hampshire is immune under the doctrine of prosecutorial immunity. (He never considered limited immunity during the investigative stage which is a liability for the State — the U.S. Supreme Court has already ruled there is limited immunity during the investigative stage of a case that comes to trial by the same prosecutor who acted both in the investigative stage and in the prosecutorial stage.) For this reason, the Legislature's Redress of Grievance process is the constitutional avenue for justice and restitution based on the benefit my actions have produced for the citizens of New Hampshire, protecting their rights to private contract mortgages and sanctions on those who would violate their rights.

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After the March 16, 2012 Supreme Court ruling, and after an April 5, 2012 Redress committee hearing, Mr. Frost provided the following additional statement:



Chairman of the NH Redress of Grievance Committee

Please make this letter part of the record of my Grievance # 18, 2011 and distribute it to those who were present at yesterday's hearing.

I am appalled that the Attorney General's office is offering the excuse that they: often times make a mistake and find that a law must be interpreted by filing criminal and civil charges, when the NH House of Representatives and the Senate have a service within their body that reviews laws for constitutionality and meaning.

If my case is an interpretation case, then I expect payment for that service, all be it totally wasteful and expensive, for this normally legislative duty paid for within the normal spending of budgets by appropriations.The AG and Banking offices had a department within, and or, the House and Senate to go to get a clarification of the old law and they did not, they came in, broke into my house, and filed charges that no one else had ever used while the law existed, all they claim, so they could decide how to interpret the law???

That— after a law, RSA 397-A, had been in existence for decades and multiple courts, department heads at AG and Banking, and all the common law acceptance throughout NH during those decades, it is now the burden of one NH citizen to pay for the retroactive interpretation?

Even if you believe this premise and ignore the fact that within the old law "person" was defined as individual or legal businesses, once the new law SB-28 (1 July 2011), as Attorney Richard Head described, did remove any ambiguity from what the intent and meaning of—who and how many of the exemptions were allowed, then why did they continue the case to the Supreme Court on 10 November 2011?

I do not believe there was any question of the intent of the House and Senate when they passed the old RSA 397-A to allow people and businesses legal minimum exemptions, nor do I believe the and AG Office had this as their Banking Department interpreting intent when they arrested me. But since the AG Office says they often make mistakes this way and I conveyed a service to the House and Senate in interpreting a law they left in the first ambiguous place and, which,is longer ambiguous, appropriation by statute for doing what is normally paid for by state money for all laws, and paid for by my considerable property taxes, already, in the first place so that "mistakes" and "ambiguity within the law" are not made

Respectfully,

Jeffrey Frost

On April 12, 2012, the committee took what was (at the time) the somewhat rare step of actually voting on the petition.  The majority recommended that the state should pay Mr. Frost's legal fees. I was in the minority.  Oddly, the only person in the room who seemed to have any idea how to go about implementing that recommendation was me— even though I was the person who wrote the minority opinion, which said he shouldn't have his fees paid.  My idea for paying his fees was simply to have the House add a non-germane amendment to a Senate bill, before a deadline on May 17, 2012.  I don't know if I necessarily agree with my fellow Democrats who say that paying his fees would be unconstitutional, although I tend to think that that paying his fees is a bad idea:



MAJORITY REPORT

Grievance Founded with Recommendation.

Committee Majority Findings:

      The committee finds, following several public hearings and review of extensive documentation, including three court decisions:

  1. that the New Hampshire Banking Department pursued criminal and civil complaints against the Petitioner despite having had ample notice from his attorneys that its assertion of authority over him was wrongful, illegal, and contrary to public policy, and that in any event he had acted pursuant to advice of competent legal counsel and thus lacked the requisite intent;

  2. that as asserted by the Petitioner and confirmed by Merrimack District Court Judge Clifford Kinghorn, an investigator for the New Hampshire Banking Department recklessly or intentionally made a materially false representation in an affidavit supporting search warrants for the Petitioner's business records, leading to unlawful searches of the Petitioner's home and his attorneys' files;

  3. that as asserted by the Petitioner, confirmed by Merrimack County Superior Court Judge Richard B. McNamara, and affirmed by the New Hampshire Supreme Court, the Banking Department had and should have known it had no authority over the Petitioner or over Chrétien/Tillinghast LLC or Frost Family LLC (limited liability companies of which the Petitioner was a member) under RSA 397-A in that none was engaged in the business of making or brokering mortgage loans secured by real estate, each of the two mortgage financing transactions in question clearly having been an isolated private one outside the normal scope of the business of the limited liability company concerned;

  4. that the Banking Department knew or should have known that its attempted imposition of $525,000 in civil penalties against the Petitioner by applying 2009 amendments to RSA 397-A:4 retrospectively violated NH Const., Pt 1, Art 23; and

  5. that the Office of the Attorney General

    1. knew or should have known that the Banking Department's affidavit supporting issuance of its search warrant contained a materially false assertion of fact;

    2. knew or should have known that the Banking Department's assertion of authority over the Petitioner and his limited liability companies was wrongful and illegal;

    3. should have exercised its authority to bring about immediate termination of the Banking Department's proceedings against the Petitioner; and

    4. should have exercised its prosecutorial discretion to decline to defend in the Supreme Court the Banking Department's cross-appeal from Judge McNamara's decision. 


      The Committee recommends that a bill be introduced and passed providing

  1. that full restitution be made to the Petitioner, Chrétien/Tillinghast LLC and/or Frost Family LLC of the expenses, including reasonable attorney's fees, incurred in their defense against the wrongful application of RSA 397-A against them;

  2. that such restitution be made in the form of a line item reduction in the appropriations for each of the Banking Department and Department of Justice in such proportion as deemed appropriate by the Finance Committee; and (

  3. that a performance audit review be made of the Banking Department and the Department of Justice by the Legislative Budget Office for the purposes of

    1. recommending such structural and organizational reforms within and between the two Departments determined to be necessary to ensure a chain of supervision and authority able to recognize, impede and prevent future such unlawful and oppressive enforcement actions; and

    2. determining whether cause may exist for disciplinary action, including impeachment as one possible such action, against any one or more individuals within either department.


Vote 7-3.

Rep. Gregory M. Sorg for the Majority of the Committee

MINORITY REPORT

Grievance Unfounded.

Committee Minority Findings:

The minority agrees with the Supreme Court's March 16, 2012 decision, which concluded that the Banking Department acted in good faith.  The minority also saw no grounds for awarding Mr. Frost his attorney's fees.


Rep. Timothy Horrigan for the Minority of the Committee



Jeff Frost in happier times

 On August 12, 2012, the New Hampshire Sunday News ran a story by Nancy West, which basically said that Frost had filed a civil lawsuit in the Hillsborough County Superior Court, seeking $180,000 for his legal fees, plus additional damages for the damage to his reputation and emotional stress. He has a good law firm on his side, Devine, Millimet & Branch. I sent in the following letter to the editor on August 13, 2012, leaving out a lot of detail because I was keeping to a 200-word limit. As far as I know, the paper never chose to run it:

To the Editor:

On August 12, Nancy West reported that Manchester businessman (and state representative candidate) Jeffrey Frost is suing the attorney general and a former banking commissioner. He is demanding $180,000 compensation for legal fees he ran up defending himself against some fairly dubious charges. Mr. Frost's demand has already been before the Supreme Court once: he was denied.

Mr. Frost has also petitioned the New Hampshire House. He appeared earlier this year before the Redress of Grievances Committee, on which I sit. I had mixed feelings about his petition. I finally voted "No" primarily because I concluded that his suggested remedies were unconstitutional. The majority of the committee voted "Yes." In April 2012, they recommended that he be paid $180,000, to be funded out of the Banking and Justice departments' budgets. I was surprised to find that I was one of only two members of the committee who had looked into the question of how the legislature might implement our recommendations. One other member did bring in a list of precedents— all from the 1700s, unfortunately.

The Redress Committee has been working in almost total isolation from the legislature as a whole. Its recommendations in this and other cases have been basically meaningless.



Rep. Timothy Horrigan (D-Durham)
7A Faculty Road; Durham, NH 03824
ph: 603-868-3342
email: TimothyHorrigan@me.com

Dan Itse was the colleague who went to the state archives to look for possible precedents. He apparently spent hours looking at spools of microfilm, and everyone on the committee should be grateful for his efforts. He came back with a stack of precedents, all of which were from the 18th century. I personally would have needed a precedent or two from the 19th or 20th centuries before I could have changed my "No" vote to "Yes."

Mr. Frost cited few if any relevant precedents during the Petition #18 hearings (aside from Ayotte vs. Planned Parenthood, which was a federal case rather than a state case, and which was not very similar to his case.)

Looking back at the legislative docket for this petition, I see that Frost made significant efforts to have it fast-tracked. He went before the Rules Committee (and presumably pulled some strings behind the scenes) to have this petition formally introduced on October 20, 2011.  If we had disposed of this petition in a timely fashion, someone could easily have put in an actual bill on his behalf at the beginning of the 2012 session. As it was, this petition hung around until April 27, 2012. Even at that late date, there were still a few ways we could have bent the rules to arrive at a legislative solution: e.g., by amending an existing bill.
Itse did eventually file " House Joint Resolution 2: A Resolution making restitution to Jeffrey Frost for inappropriate prosecution. "  For whatever reason, Mr. Frost did not show up for the hearings. His absence may or may not have been related to the fact that he filed a lawsuit in July 2012 against the Attorney general and many other defendants. HJR 2 was killed on March 6, 2013 on a voice vote with no floor debate.

   

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