U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22740 / July 2, 2013
Securities and Exchange Commission v. Armand R. Franquelin and Martin A. Pool, Civil Action No. 1:13-cv-00096 (USDC Utah, Filed, July 2, 2013)
SEC Charges Armand R. Franquelin and Martin A. Pool with Violations of the Federal Securities Laws
On, July 2, 2013, the Securities and Exchange Commission filed a civil injunctive action against Armand R. Franquelin (Franquelin) and Martin A. Pool (Pool), alleging that Franquelin and Pool violated the federal securities laws in connection with the sale of securities by The Elva Group, LLC (Elva Group). Judith E. Franquelin, wife of Armand R. Franquelin, was named as a relief defendant.
In its Complaint, filed in the U.S. District Court for the District of Utah, the Commission alleges that from at least January 2006 through August 2010, Franquelin and Pool engaged in a Ponzi scheme and acted as unregistered broker-dealers by offering and selling more than $12 million in Elva Group securities to approximately 130 investors. The Complaint alleges Franquelin and Pool encouraged investors to convert funds held in Individual Retirement Accounts (IRAs) into self-directed IRAs through Destiny Funding, LLC, another company owned by Franquelin and Pool, before investing those funds with Elva Group. Franquelin and Pool claimed to use investor funds to develop real estate and guaranteed returns ranging from 10% to 240% per year. Instead of using investor funds as represented, it is alleged that Franquelin and Pool misappropriated investor money for their personal use, to make “interest” payments to earlier investors, and to pay for continuing Elva Group expenses.
The Commission alleges that by engaging in this conduct Franquelin and Pool violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint seeks a permanent injunction as well as disgorgement, prejudgment interest and a civil penalty from Franquelin and Pool. The complaint also seeks disgorgement and prejudgment interest from Judith Franquelin.
Without admitting or denying the allegations in the Commission’s complaint, Pool has consented to the entry of a final judgment permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. Pool has also consented to pay disgorgement of $970,510.00, plus prejudgment interest of $418,935.05, but payment of disgorgement and prejudgment interest will be waived and no civil penalty will be imposed based on Pool’s current financial condition.
The Commission acknowledges the assistance of the Federal Bureau of Investigation and the State of Utah Division of Securities in this matter.