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U.S. Securities and Exchange Commission


Litigation Release No. 23101 / September 30, 2014

Securities and Exchange Commission v. George B. Franz III, Civil Action No. 1:15-cr-159 (N.D. Oh.)

The Securities and Exchange Commission ("Commission") Announced That On September 24, 2014, George B. Franz III ("Franz") Was Sentenced for His Obstruction of an SEC Investigation and Making False Statements to SEC Staff.

The Securities and Exchange Commission ("Commission") announced that on September 24, 2014, George B. Franz III ("Franz") was sentenced for his obstruction of an SEC investigation and making false statements to SEC staff. Previously, on June 3, 2014, Franz pleaded guilty to one count of obstruction of an official proceeding (18 U.S.C. § 1512(c)(2)), one count of destruction or falsification of records in a federal investigation (18 U.S.C. § 1519), and two counts of providing false statements and documents to an agency of the executive branch (18 U.S.C. § 1001).

These criminal acts took place during the SEC's investigation of Franz and Ruby Corporation, which culminated in an Administrative Proceeding instituted in September 2013. (In the Matter of George B. Franz III and Ruby Corporation, AP No. 3-15526 https://www.sec.gov/litigation/apdocuments/ap-3-15526.xml). In that action, the Division of Enforcement alleged that Franz and Ruby, among other things, lied to Ruby Corporation clients as to thefts by Andrew Franz (Franz's son) from client accounts. Franz and Ruby later consented to a settlement of this proceeding in which they paid a $675,000 civil penalty and $425,000 in disgorgement including prejudgment interest. https://www.sec.gov/litigation/admin/2014/34-72058.pdf The SEC then distributed $364,231 of this total to Ruby clients who had been victims of thefts by Andrew Franz.

On September 24, 2014, the Honorable Christopher A. Boyko sentenced Franz to three years of probation and a $25,000 fine for his criminal conduct in obstructing the SEC's investigation. As a special condition to Franz's supervision, the Court also ordered that Franz make a $250,000 payment to the SEC to compensate the SEC for the diversion of investigative resources caused by Franz's obstructive conduct. The SEC thanks the U.S. Attorney's Office for the Northern District of Ohio for its efforts in bringing this criminal action.



Modified: 09/30/2014