CONCORD, N.H. — New Hampshire Banking Commissioner Peter Hildreth agreed Thursday to retire Jan. 1 rather than risk being fired for not doing enough to stop a mortgage firm from swindling investors.
The Executive Council voted 4-1 to accept the agreement, reached on the fourth day of Hildreth's removal hearing stemming from the actions of Financial Resources Mortgage. Councilor Debora Pignatelli of Nashua voted against it.
The company swindled investors out of millions of dollars before closing in 2009.
Hildreth has been on paid leave since June after refusing Gov. John Lynch's request to resign. He had been fighting to keep his job so he could retire in September, but under the settlement will step down with the new year, though he won't actually return to work between now and then.
Retiring rather than being removed doesn't change Hildreth's health or retirement benefits, the governor said, adding that he doesn't consider Thursday's outcome a settlement on the state's part.
"He's in the same place monetarily today as if he would have been in if the removal proceedings concluded next week," Lynch said. "He's resigning from his position, which was the goal so we can bring new leadership to the banking department."
Hildreth's lawyer said the agreement preserves his client's good name.
"At least he doesn't have the black mark of resignation under a cloud or firing in disgrace to carry with him when he starts the rest of his life," David Nixon said.
Hildreth had no comment after the announcement. But in testimony Thursday morning, he said he took responsibility for his department's operations while refusing to acknowledge the failings were his fault.
"I hired the people who were there," he said. "I have a responsibility I will accept for the failures of the department, but I did not do anything directly involved in this process."
Nixon argued that his client should not have been singled out for punishment when no other state agency stopped the Ponzi scheme. The head of FRM and an assistant have pleaded guilty to defrauding investors, but the state continues to probe what happened to find ways to prevent future schemes.
Hildreth had recused himself from handling anything about FRM because his brother was an investor who got his money out before the collapse. The removal petition against him alleged that he continued to be involved in discussions about the firm and that he failed to establish a clear line of command on handling complaints and audits indicating problems.
On Tuesday, Associate Attorney General Richard Head testified his office's investigation of how state government responded to the collapse of the firm last year showed that banking audits done as far back as 2001 "identified a financial institution that was not operating with sound financial basis."
Hildreth acknowledged that his department should have held hearings on complaints it received.
"Whether we could've found out (about the scheme) or not, we should've done better," he said.
Referring to the scheme's victims, he said, "These are tough times and when people who were expecting a certain lifestyle aren't able to have that, that's a sad thing."Comment on this story
Those comments riled Al McIlvene of Kittery Point, Maine, who with his wife lost about $800,000 through FRM.
"The human tragedy that has gone on here is more than just an impact to a lifestyle," said McIlvene, who believes Hildreth should have been fired.
"We're talking about people who are losing their homes, declaring bankruptcy, getting divorced, we've had two suicides. This has had dramatic impact on hundreds of people and for him to say it's a lifestyle change is clearly understating the problem."
Associated Press Writer Norma Love contributed to this report.