Secretary of state: Dedham company scammed seniors

A Dedham company accused of fraudulently selling high-risk unregistered securities to seniors says it is cooperating with an investigation by the secretary of state's office.

Secretary of State William Galvin last week charged Economic Development Finance Corp. and Economic Development Funding Corp., both of Dedham, with selling unregistered, high-risk securities to seniors through an unregistered broker, Boston South Financial Inc. of Hingham.

Boston South and its principal, Robert Blaisdell, were also charged with fraud in connection with the sales.

"Nothing in the offering and sale of the Economic Development promissory notes has been anything but reckless, misleading and consists of outright violation of Massachusetts securities laws," Galvin's office wrote in the complaint filed by its Securities Division.

"These were high-risk notes and they were sold as safe investments," said Brian McNiff, spokesman for Galvin. "The secretary will make an effort to get the money back for the seniors, as he does with anyone who's been victimized by this sort of fraud."

The civil complaint says the companies sold the securities "by making fraudulent and misleading statements to investors," with the two Economic Development entities facilitating the actions of Blaisdell.

McNiff said that the case would go before a hearing officer in the Securities Division of the secretary of state's office. McNiff said there is no timetable as of yet for the case to be resolved.

The complaint says the secretary of state wants as a remedy that, among other things, Blaisdell be barred from selling securities in Massachusetts and that restitution be gained for investors who were sold the economic development securities.

Since 2002 a total of about $3.5 million worth of the notes were sold, with $2.5 million going to senior citizens over age 62, according to Galvin. "Economic Development misled investors into thinking their investments (most of which were retirement funds) were guaranteed and secure," the complaint says. The notes promised a 12 percent annual return, it says.

But the securities actually defrauded the seniors of their life savings, with the seniors "now left stuck with their savings in debt instruments that are not redeemable or transferable," the complaint says.

Blaisdell sought out investors at senior centers - selling about $700,000 of promissory notes to one 86-year-old at the Council of Aging in Harwich, and $167,000 of notes to an 80-year-old at the Council of Aging in Hanson, authorities allege.

Blaisdell's lawyer, Thomas Tucker, of Duxbury, said his client firmly believed the notes were "safe investments."

Tucker said Blaisdell and his wife put their own money into them.

"He wasn't taking other people's money and treating it cavalierly. This was something he strongly believed in," Tucker said. He said Blaisdell plans to contest the charges, and that several investors have offered to testify on his behalf.

"So far as we know, no investor has lost a dime in these promissory notes," Tucker said. "So far as we know they've all gotten paid the interest paid that they're supposed to get paid."

Meantime, Economic Development Finance Corp. said in a statement that it is "cooperating fully with the state's Securities Division in the matter," and that neither the company nor any staff members "had any direct contact with the potential investors Mr. Blaisdell solicited."

Economic Development Finance Corp. builds "work force housing" that is affordable for middle-income-earners - such as plumbers, teachers and tradesmen. The company says this group "forms the backbone of our communities."

Its principal address is 858 Washington St.

Economic Development Funding Corp. is incorporated in Delaware, but also has a business address of 859 Washington St. in Dedham. President David Rodriquez-Pinzon owns 65 percent of both companies, while executive Richard Slowey owns 35 percent, according to the complaint.

In its statement, Economic Development Finance Corp. said it checked out Blaisdell's record beforehand and that it "reasonably relied on the services of a licensed professional to market the securities. We are extremely disappointed with the allegations as to how these notes were marketed."

"When we were first informed of this allegation by the state's Securities Division, we refused to accept any new investments offered by Mr. Blaisdell and continued working with his firm for a brief period of time only to ensure that the interests of all EDFC investors were protected," the company added.

Galvin spokesman McNiff said the respondents have 21 days to answer the complaint, McNiff said.

As for Boston South Financial Inc., Tucker said it is "not really functioning" now.

During the investigation, the Securities Division made many calls to Blaisdell's clients, Tucker said, and that "obviously put a huge damper on his clientele and on his business."

Daily News staff writer Edward B. Colby can be reached at 781-433-8336 or ecolby@cnc.com.