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Disgraced financial advisor Thomas Chadwick agreed to pay more than $5 million last year for unethical investment practices that cost his Granite State customers millions.

But more than a year later, the New London-based businessman has yet to pay a penny of the restitution he owes to the victims of his failed investment firm, according to court records.

“As of the date of this filing, Chadwick has made no payment toward the $5,858,346.71 judgment owed per the Consent Order, and the [Secretary of State’s Securities Regulation] Bureau considers Chadwick to be in default,” Brian Linares, senior staff attorney at the Bureau wrote in a new amended complaint filed recently in the Merrimack Superior Court in Concord.

Chadwick agreed to the consent order in April 2024 after he was accused of investor fraud, losing his mostly elderly clients more than $11 million of their retirement savings. Chadwick’s consent order knocked the victim’s restitution down to $4.8 million, with another $1 million to cover state fines and investigation costs.

Secretary of State David Scanlan’s office, through the Securities Regulation Bureau, is now taking Chadwick back to court over the nonpayment.

Chadwick claimed that he had no assets to make payments when he signed the consent order last year. But the order gives Scanlan’s office the right to ask a judge to impose a collection process on Chadwick.

“The only way for the bureau to enforce an administrative order is through the Superior Court. If the bureau obtains an administrative order to pay back restitution, and the target fails to comply with the order, then the only way to enforce collection is through a court order in Superior Court, and that is what the bureau is doing with Mr. Chadwick,” a bureau representative told NHJournal on Tuesday.

But Chadwick’s attorney, Friedrich Moeckel, is opposed to the court’s intervention. In his objection to the bureau, Moeckel stated that going to court would be counterproductive and expensive for all parties concerned.

“Defendant does not quarrel with plaintiff’s right to use this court to register and enforce the parties’ consent decree. Defendant’s concern is that by amending the complaint in this matter, plaintiff effectively restarts this case. Thus, if the court grants plaintiff’s motion to amend, the next step is defendant’s compulsory answer to the amended complaint. And so on and so forth,” Moeckel wrote.

Chadwick reported having investments in real estate and cryptocurrency, among other assets, which were counted by the bureau last year.

Moeckel did not respond to a request for comment. Merrimack Superior Court Judge Daniel St. Hilaire heard from both sides during a hearing last week, but has yet to issue a ruling. 

Chadwick’s business had more than 100 customers in Vermont and New Hampshire when regulators began investigating. In 2019, Chadwick reportedly began moving his clients into a complex, unsecured debt security known as REML, which utilized capital to issue mortgage loans to real estate owners. 

The fund’s bank, Credit Suisse, warned investors that REML was a potentially volatile asset that should only be bought by people who could afford to lose everything they put into the fund. Chadwick, however, told his many clients that REML was a good bet for retirees, giving them a guaranteed income with low risk, according to court records.

“[S]everal clients stated that Chadwick never told them that they could lose all of their money if they invested in REML. They said that, had they been aware of the risk of total loss, they never would have agreed to invest in REML,” the Bureau’s complaint states.

By March 2020, Chadwick had his clients heavily invested in REML, some with more than 70 percent of their savings in the risky fund. When the bottom dropped out during the COVID-19 financial crash, REML’s share price fell to nearly zero. 

Chadwick wasn’t phased by the multimillion-dollar loss for his clients, according to court records. He wanted them to keep investing.

“Chadwick recommended [in an investor memo] his clients buy back into REML and declared that ‘the risk of not owning the shares has[d] become greater than remaining liquidated,’” the complaint states.

In 2021, Chadwick split from his original investment business, Chadwick and D’Amato, and began working with his clients as an unlicensed financial advisor through Fidelity Brokerage Services, according to court records. By the end of the year, Fidelity had cut ties with Chadwick, but he continued to advise clients. 

According to the complaint, Chadwick then used the Fidelity accounts of his clients to make trades and purchases, like buying and selling cryptocurrency and other securities. Fidelity’s system flagged 27 of the accounts as suspicious due to the trading activity and shut them down, according to court records. That left his clients, many of whom were retirees on fixed incomes, locked out of their own accounts and unable to access their money. 

A group of Chadwick’s former investors filed a complaint this year with the federal Financial Industry Regulatory Authority against Fidelity, accusing the firm of ignoring red flags that allowed Chadwick to operate. The state of Vermont has already paid 21 of Chadwick’s victims a total of $339,000 for their losses through the Vermont Department of Financial Regulation’s Victim Restitution Fund.

A Superior Court judge slammed the New Hampshire Attorney General’s Office for prosecutorial misconduct in the Andy Sanborn criminal case, saying its mishandling of privileged communications seized through a warrant amounts to “gross negligence.”

Attorney General Formella’s office, on the other hand, says it’s a “simple mistake.”

“The Court finds that the NHAG exhibited gross negligence at several points throughout its execution of the warrant and subsequent taint review of the seized material that rises to the level of prosecutorial misconduct,” Merrimack Superior Court Judge John Kissinger wrote in an order released Wednesday.

Though Kissinger is not dismissing the charges against Sanborn as defense lawyers asked, the judge is disqualifying Assistant Attorney General David Lovejoy from the case and suppressing any evidence Lovejoy improperly viewed. Kissinger is also booting forensic accountant Don Swanson from the case as he also improperly viewed privileged material.

The documents in question include a confidential memo written by Sanborn’s defense lawyers analyzing the legal issues in the case. Financial documents improperly viewed by prosecutors reportedly lay out core defense strategies, according to Kissinger’s order.   

Michael Garrity, spokesman for the New Hampshire Attorney General’s Office, called Wednesday’s ruling a win since Kissinger did not dismiss the charges or order the state to pay attorney’s fees in the matter, as Sanborn’s team wanted. The fault for the prosecutorial misconduct rests with the software vendor the state used to handle documents, according to Garrity’s statement.

“What actually occurred was a simple mistake, which the New Hampshire DOJ deeply regrets. When the New Hampshire DOJ hired a third-party vendor to duplicate a database of seized materials, the contractor inadvertently included privileged documents. As soon as the NH DOJ became aware of the error, our prosecutors raised the issue in court and informed Mr. Sanborn’s lawyers and the Court, including the fact that one of our prosecutors and a forensic accountant inadvertently had contact with privileged documents.

“As a result, that prosecutor and the forensic accountant will no longer be involved in the case. This was not intentional misconduct, but a single, unintentional mistake that was promptly addressed,” Garrity said.

Zachary Hafer, Sanborn’s attorney, declined to comment when reached on Wednesday.

Sanborn is charged with theft by deception for allegedly filing a fraudulent application for state COVID relief money, taking more than $140,000 he was not entitled to for his Concord Casino. Sanborn’s Win Win Win LLC is also charged with theft by deception for the same alleged crime.

According to Kissinger’s order, parts of which are redacted, prosecutors failed from the start to take appropriate steps when they seized documents during the investigation. When investigators obtained a warrant to seize business documents from Sanborn, they did not tell the judge signing the warrant about the potential for attorney-client records being included, Kissinger found.

The exact date the warrant was issued, as well as the location it was executed, is redacted from the public order. Kissinger does state that both Andy Sanborn and his wife, Rep. Laurie Sanborn (R-Bedford) were present when investigators seized the records.

Instead of having a taint team ready when the warrant was executed, the prosecutorial case team, led by Assistant Attorney General Dan Jiminez, did nothing to protect Sanborn’s rights until his lawyers complained, Kissinger found. The investigators even recorded the fact they were taking a desktop computer that displayed documents on the home screen marked “Zach,” or “Zach Hafer,” according to Kissinger.

Attorney-client communications are protected by law and, generally, cannot be disclosed without the permission of the client. The privilege is in place to safeguard the right to a fair trial. 

In cases where sensitive material, such as attorney-client communications, are potentially part of evidence in a criminal investigation, a taint team is used. Those teams are a separate group of lawyers called in to review all the material to separate out anything that legally ought not be seen or used by investigators and prosecutors.

The state did not act to protect the privileged documents until Sanborn’s lawyers contacted Jimenez on May 24. All investigators were then told not to view any of the documents, and then the taint team was assembled.

But Kissinger faults Jimenez for setting ground rules for the taint team’s disclosure decisions without consulting either a judge or Sanborn’s attorneys about what should be considered privileged before it was released. The taint team finished its work on July 9 and subsequently made the documents available through Everlaw, a legal document software program. 

First, on July 12, David Portal, Senior Infrastructure Technologist for the Attorney General’s Office, went through a document folder in Everlaw marked “clean” and deleted the privileged documents, according to the order. 

Sanborn’s lawyers filed their lawsuit over the privileged documents on July 30, under seal. After a review in August, Sanborn’s lawyers told the court there was a large volume of privileged material in the “clean folder.” On Sept. 19, Portal learned that the investigating case team prosecuting Sanborn made a copy of the “clean” folder before he deleted privileged documents on July 12, Kissinger states.

The dispute over the documents may explain why Sanborn has not been charged over allegations he committed federal COVID fraud.

Much of the privileged material prosecutors took deals with Sanborn’s defense against the New Hampshire Lottery Commission. The commission first accused Sanborn of improperly obtaining more than $840,000 in federal COVID funds and spending it on sports cars and paying himself rent. Before Kissinger made an order in the documents lawsuit, Sanborn was arrested for state-level fraud allegations.

Sanborn continues to fight over his now revoked casino license, claiming the state interfered with his efforts to sell his business. Sanborn was ordered to sell last year after an administrative law judge sided with the Lottery Commission. One of his appeals in the revocation fight is headed to the New Hampshire Supreme Court.