U.S. Securities and Exchange Commission
Litigation Release No. 19475 / November 29, 2005
Securities and Exchange Commission v. James A. Franklin, et al., Case No. 8:00-CV-383-T-26B
JAMES A. FRANKLIN, JR., FORMER IN-HOUSE COUNSEL TO PROFESSIONAL SPORTS AGENT WILLIAM “TANK” BLACK, SETTLES SEC ACTION
The Securities and Exchange Commission today announced that on November 23, 2005, the United States District Court for the Middle District of Florida entered a final judgment against James A. Franklin, Jr., the former in-house counsel to former professional sports agent William “Tank” Black. The final judgment enjoined Franklin from violating the anti-fraud and broker-dealer registration provisions of the federal securities laws, and ordered Franklin to disgorge $214,310.34 (including prejudgment interest). Franklin consented to entry of the final judgment without admitting or denying the allegations in the Commission's complaint. In addition, the Commission entered an order on November 29, 2005, upon Franklin’s consent, permanently barring him from association with a broker-dealer or investment adviser.
The judgment ends the Commission’s litigation against Black and Franklin, who were accused of defrauding dozens of their athlete-clients, most of whom were professional football players.
The Commission's complaint, filed in February 2000, alleged that Black and Franklin acted as investment advisers and unregistered broker-dealers, made materially false or misleading statements and omissions to clients concerning the purchase and sale of securities, and misappropriated or diverted client funds for non-investment purposes. The complaint alleged that both men, among other things, advised clients to invest in high-yield promissory notes that purportedly funded a car title loan company. In reality, these notes were part of a Cayman Islands-based Ponzi scheme. The complaint further alleged Black and Franklin skimmed some of clients’ supposed profits for themselves. The Commission's complaint charged Black and Franklin with multiple violations of Section 17(a) of the Securities Act of 1933; Sections 10(b), 15(a), and 15(c) of the Securities Exchange Act of 1934, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and Rules 10b-5 and 15c1-2 thereunder.
Black and Franklin were convicted on criminal charges stemming from the same underlying conduct that formed the basis for the Commission’s civil complaint. Franklin pleaded guilty and was sentenced in July 2002 to serve 54 months in prison and ordered to pay $5.8 million in restitution. The 54-month sentence reflected a downward departure from federal sentencing guidelines that resulted, in part, because of Franklin’s cooperation with federal prosecutors and the Commission.
For further information about the Commission's action against Black and Franklin, see Litigation Release No. 16455 (February 25, 2000); Litigation Release No. 17358 (February 11, 2002); Litigation Release No. 17511 (May 8, 2002); and Litigation Release No. 17604 (July 9, 2002).