Former Idaho congressman George Hansen, who in October filed for bankruptcy and acknowledged $18 million in debts, was hit with state legal action Friday accusing him of obtaining the $18 million through fraud and deceit.
State Finance Director Belton Patty said Friday his agency filed a civil lawsuit against Hansen and John Scoresby, Idaho Falls, in 7th District Court, Idaho Falls.Also, Seventh District Judge Marvin Smith signed a judgment against Hansen and Scoresby and issued a permanent injunction against them.
In consenting to the judgment, Patty said Hansen agreed to certain of the violations and promised to use his best efforts to repay the 187 investors who loaned him money. The Hansen agreement stipulated that he will try to make repayments either through bankruptcy court or through a plan approved by the district court.
The defendants, Hansen and Scoresby, also agreed not to make any continuation or revival of any similar program or any securities sales not in compliance with the law, the state said. The injunction also contains other restrictions on Hansen's future business activities.
It was the latest setback for Hansen, 60, who won Idaho's 2nd District congressional seat seven times before he was defeated in the 1984 election by Democratic Rep. Richard Stallings. Scoresby, also named in the lawsuit, was Hansen's field representative and remains a regional Republican Party official.
Hansen also was convicted of violating federal personal financial disclosure requirements while a member of Congress and served nearly one year in a federal prison.
Wayne Klein, chief of the Securities Bureau of the Department of Finance, said the legal actions do not involve Hansen's wife, Connie, a former Pocatello City Council member and a candidate for the congressional seat in the 1986 election. Hansen, formerly of Pocatello, listed his address as Arlington, Va.
In a news release Friday, Patty said the legal actions say that since 1985, Hansen and Scoresby raised and lost $18 million. The investors mainly were in eastern Idaho but also reside in at least 12 other states, Patty said.
The four-count complaint alleges:
- That Hansen and Scoresby issued promissory notes not registered with the state.
- That they were not licensed to sell securities.
- The defendants made misrepresentations and omissions in connection with the offer and sale of securities.
- That the defendants "engaged in acts and practices which operated as a fraud or deceit upon investors" in connection with the offer and sale of securities.
The state said the misrepresentations and omissions included failure to advise investors that new loans would be used to repay prior investors and misrepresentations about Hansen's ability to repay the loans.