$12M Ponzi Took Victims' IRAs, SEC Says
SALT LAKE CITY (CN) - Two men who ran The Elva Group defrauded investors of $12 million in a Ponzi scheme, much of it drained from victims' IRAs, the SEC claims in court.
The SEC sued Armand R. Franquelin and Martin A. Pool in Federal Court. It also sued Franqueline's wife, Judith E. Franquelin, as a relief defendant.
"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 promissory notes to approximately 130 investors," the complaint states.
"Franquelin and Pool encouraged investors to convert funds held in Individual
Retirement Accounts ('IRAs') into self-directed IRAs through Destiny Funding, LLC ('Destiny Funding'), another company owned by Franquelin and Pool, before investing those funds with Elva Group.
"Franquelin and Pool raised money for the stated purpose of buying, developing, and selling residential real estate. Franquelin and Pool located potential investors by presenting real estate investment opportunities at financial seminars throughout the United States.
"Investors were told that their investment was secure and they would earn a guaranteed return.
"Instead of using investor funds as represented, Franquelin and Pool used investor funds to make interest payments to previous investors, to pay business expenses of Elva Group and to pay compensation to themselves."
Armand Franquelin, 56, of Ogden, Utah, paid himself for his work, the SEC says.
His co-manager and control person, Pool, 43, of Atlanta, also paid himself.
Judith Franquelin, 54, got nearly $400,000 from the Ponzi, the SEC says in the complaint.
It seeks disgorgement, penalties and injunctions.