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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22396 / June 20, 2012

SEC v. Gary J. Martel, d/b/a Martel Financial Group, and MFG Funding 12-CV-11095 -FDS (D. Mass.)

SEC CHARGES MASSACHUSETTS INVESTMENT ADVISER WITH FRAUD AND OBTAINS ASSET FREEZE

The Securities and Exchange Commission announced today that it has charged Gary J. Martel, a resident of Chelsea, Massachusetts, with defrauding investors. The Commission’s complaint, filed in federal district court on June 19, 2012, alleges that, from at least 2006 to the present, Martel, who conducted business under multiple names including Martel Financial Group and MFG Funding, defrauded at least 12 investors in Massachusetts, Vermont and Florida of at least $1.6 million, and likely obtained significantly more from other investors. Today, with Martel’s consent, a federal judge entered an order freezing Martel’s assets and prohibiting him from continuing to violate the antifraud provisions of the federal securities laws.

According to the complaint, Martel told investors, many of whom were retirees looking for a safe investment earning reliable income, that he would place their money in “pass-through bonds” or other purported fixed income or pooled investment products, which he assured investors were safe. The complaint alleges that Martel gave investors purported account statements showing interest earned and sometimes made small distributions of supposed interest, which encouraged investors to give Martel more money to invest. Martel also allegedly offered other fraudulent investments. In March 2012, according to the complaint, Martel solicited investments in a Facebook investment pool, claiming it would allow small investors to “own a piece” of the Facebook IPO. In fact, however, the complaint alleges that the investments Martel offered were fictitious and/or no longer exist, and that he transferred funds out of the bank account where investor funds were deposited to bank accounts he maintained for his businesses.

The Commission’s complaint alleges that Martel violated Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In its action, the Commission seeks the entry of a permanent injunction against Martel, disgorgement of ill-gotten gains plus pre-judgment interest thereon, and the imposition of civil monetary penalties. In addition to freezing Martel’s assets and prohibiting him from violations of antifraud provisions of the federal securities laws, the order entered by the court today further prohibits Martel from soliciting, accepting, or depositing any money from investors and from altering or destroying any relevant documents and also requires him to provide an accounting of their assets and uses of investor funds.

The Commission appreciates the assistance of Secretary of the Commonwealth of Massachusetts William F. Galvin and the Massachusetts Securities Division, which notified the Commission of Martel’s conduct and investor losses and last week filed an action against Martel based on the same conduct.

 

 

http://www.sec.gov/litigation/litreleases/2012/lr22396.htm


Modified: 06/20/2012