“This case highlights the importance of law enforcement’s role in keeping illegal activity out of New Hampshire’s charitable gaming industry,” Formella said in a statement.

“Our obligation to protect the public demands that we take action against any person who is found to have used their regulated casino to enrich themselves with fraudulently obtained taxpayer funds.”

The business and Sanborn have 10 days to request a public hearing to dispute these claims and seek to retain their licenses.

Formella confirmed his office has opened a criminal investigation involving both Sanborns and also has referred the matter to U.S. Attorney Jane Young, because the case could involve federal fraud law violations.

Andy Sanborn denies claims

Andy Sanborn said in a statement he did nothing improper.

“Like so many businesses and organizations, we applied for federal relief to assist in meeting the operational challenges created by the COVID-19 pandemic. Throughout the process, we did our due diligence to ensure compliance with all application requirements and standards,” Sanborn said.

“While I strongly disagree with the (Lottery) Commission’s statements, I welcome the examination ahead as I have full confidence our actions were transparent and in complete accordance of the law.”

According to documents from both agencies, Andy Sanborn and the company deliberately did not identify themselves as being in the casino business when they applied for and received an $844,000 Economic Industry Disaster Loan (EIDL) from the U.S. Small Business Administration in late 2021.

Casinos were ineligible for EIDL loans intended to help businesses cope with losses during the pandemic.

“My office found evidence of a series of monetary transactions using the Licensee’s EIDL proceeds that appear to be acquired through fraud to support extravagant personal spending by Mr. Sanborn and his spouse, State Rep. Laurie Sanborn,” Formella wrote in his report to McIntyre.

SBA loans began in 2021

Starting in October 2021, the SBA began issuing EIDL loans of up to $2 million apiece for eligible companies and farmers to cover regular operating expenses, “including payroll, rent/mortgage, utilities, and other ordinary business expenses.”

These repayable loans carried a fixed 3.75% annual interest rate and 30-year term.

Loan repayments since have been deferred for two years after the date of the award.

Formella and McIntyre said Sanborn and the casino business spent $438,500 — more than half — of the loan proceeds on ineligible expenses. The expenditures allegedly included:

• Race cars: The purchase of three race cars totaling $181,250, including a pair of Porsche 987 Cayman 8 racers and a 2008 Ferrari worth $80,000 allegedly given to Laurie Sanborn;

The two Porsches, a 2006 and a 2011 worth roughly $50,000 apiece, came from Georgia companies.

Andy Sanborn obtained the Ferrari and two sets of used rims ($600) from Taurino Racing, otherwise known as Capristo Exhaust USA of Riviera Beach, Florida.

• Auto parts: The documents allege Andy Sanborn purchased equipment and services for the two Porsches totaling $45,000;

• Cash paid to Andy Sanborn: The regulators charged that $183,500 in cash given to Andy Sanborn was disguised as rent payments to two of his affiliate businesses, the casino at 67 South Main St. in Concord and The Draft, a sports bar at the same address.

The money from the EIDL loan came in eight wire transfers from January to August 2020. All went to The Best Revenge LLC of Bedford, a business Andy Sanborn controlled. Formella said Sanborn used all that cash for his “personal use and benefit.”

• New casino start-up cash: Andy Sanborn paid $14,600 to Geotechnical of Weare and $14,207 to TF Moran Inc. of Bedford for professional services to develop a new, much larger charity casino Sanborn has sought from Concord city officials.

Concord city officials at public meetings have said Laurie Sanborn was a “managing partner” with her husband in this larger casino project envisioned to one day include a convention center and luxury hotel.

The Concord Planning Board has approved a site plan for the larger casino off Loudon Road on Break O’ Day Drive, but an abutter has appealed that decision to Merrimack County Superior Court.

State law requires charity casinos to undergo a “suitability review” every five years to to determine whether they should be permitted to keep their licenses based on how they are doing business.

The same law gives the lottery and AG’s office joint authority to suspend a license based on that review.

Formella wrote to McIntyre on Wednesday that he was seeking this sanction against Sanborn and the Concord Casino.

AG on lookout for ‘bad actors’

“The Legislature has charged us to protect the public and the state’s interests from bad actors, vesting us with the state’s police power to impose the strictest levels of regulation and supervision on all persons associated with charitable gaming in our state,” Formella wrote.

On Thursday, McIntyre delivered the commission’s proposed findings of fact, which seek the same punishment, to Andy Sanborn and advised him he could request a hearing.

Laurie Sanborn is a six-term legislator and the third highest-ranking Republican in the House.

She also chairs the House Ways and Means Committee that makes recommendations on all charity gambling legislation.

Earlier this month, Laurie Sanborn was named to chair a high-powered commission — on which Formella also serves — that will examine the future of the industry and explore whether nonprofits are getting the right amount of net profit from the business.

Andy Sanborn served in the Senate until he ran and lost a GOP primary bid for the 1st Congressional District seat to Eddie Edwards of Dover in 2018.

Charity gambling profits have soared since Gov. Chris Sununu signed legislation in 2021 (HB 626) that legalized gambling on slot machine-like devices that allow patrons to bet on randomly selected “historic” horse (HHR) races.

The first floor of Sanborn’s Draft Bar is lined with machines that do not have HHR gambling, but allow for less-lucrative Lucky Seven betting machines leased to charity casinos by Grover Gaming.

There are nine other charity casinos that either have HHR machines or have sought approval to install them.

Last spring, Sununu vetoed legislation (SB 51) that would have extended charity casinos’ monopoly on these HHR machines for another two years.

In a strongly worded veto message, Sununu said it was wrong for lawmakers to keep “handpicking” who could have these machines, despite “significant demand” from bars and restaurants to try and get their own.

klandrigan@unionleader.com