Ponzi Scheme Swiped $12 M from IRAs
The SEC alleged that Franquelin and Pool violated 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 SEC alleged 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.
Franquelin and Pool allegedly 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, Franquelin and Pool allegedly misappropriated investor money for their personal use, to make “interest” payments to earlier investors, and to pay for continuing Elva Group expenses.
Franquelin and Pool violated three sections of the Securities Act of 1933 and two sections the Securities Exchange Act of 1934, the SEC said in its complaint. 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 SEC’s allegations, 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 original complaint can be read here.