U.S. Attorney’s Office for the District of Utah Collects More than $10 Million in Civil and Criminal Actions in Fiscal Year 2022
SALT LAKE CITY - Martin A. Pool, age 44, of Atlanta, Georgia, who pleaded guilty in May to securities fraud and money laundering in connection with an investment fraud scheme related to a real estate project in Vernal, Utah, will serve 78 months in federal prison. Pool also must pay restitution of $8,066,596.88. U.S. District Judge Dale Kimball imposed the sentence Wednesday afternoon in U.S. District Court in Salt Lake City.
Pool will self-surrender to begin serving his federal sentence on Dec. 1, 2014.
Pool and a co-defendant, Armand R. Franquelin, age 57, of Liberty, Utah, were charged in a three-count felony information filed in April. As a part of a plea agreement reached with federal prosecutors, Pool and Franquelin admitted that from 2006 to 2010, they participated in persuading investors to convert their traditional IRAs to self-directed IRA accounts and invest their funds in a residential real estate project known as Haven Estates in Vernal, Utah. This was accomplished by inducing the investors to direct their funds to their company, The Elva Group, in return for promissory notes from Elva with a promise of monthly interest payments at annual rates between 8 percent and 20 percent. Pool and Franquelin admitted they told investors that their funds would be used to develop Haven Estates and promised to secure their loans with first lien positions in property at Haven Estates. In fact, no investors ever received any collateral or any interest in real property in Haven Estates or anywhere else.
In reality, the plea agreement says, investors’ funds were used for purposes other than the development of Haven Estates. Investors were not told of encumbrances already in place on Haven Estates. When Elva began defaulting on the mortgage loan for Haven Estates, investors were not immediately informed. Eventually, Haven Estates was foreclosed.
Pool and Franquelin admitted that these actions were taken in connection with the investors’ purchase of securities, namely the promissory notes and loan agreements. They also admitted that these representations were made for the purpose of defrauding investors.
According to the plea agreement, investors’ funds were used by Pool and Franquelin and their associates for their personal benefit and to pay interest to earlier investors as Ponzi payments. The Ponzi payments had the effect of lulling the earlier investors, persuading them to leave their funds in the company and inducing them to renew their promissory notes from time to time. The payments also enticed new investors to invest.
Pool and Franquelin each pled guilty to one count of securities fraud and one count of money laundering. Sentencing for Franquelin is set for Sept. 22, 2014, at 2:30 p.m. before Judge Kimball.
As a part of the plea agreement, Pool and Franquelin agreed to pay restitution of $$8,066,596.88 to victims of the fraud, including victims of uncharged relevant conduct. Alabama victims invested more than $500,000 in this scheme.
“The U.S. Attorney’s Office in Utah has a long standing commitment to aggressively prosecuting fraudsters who target residents of our state and others around the country. These successful prosecutions serve as a deterrent to this criminal conduct. Most importantly, however, they vindicate the rights of victims who are harmed by the conduct of those involved in fraudulent schemes,” Acting U.S. Attorney for Utah Carlie Christensen said today.
The case was a multi-jurisdictional investigation by special agents of the FBI and IRS-Criminal Investigation; the Utah Department of Commerce, Division of Securities; and the Alabama Securities Commission with assistance from the office of Baldwin County, Alabama, District Attorney Hallie S. Dixon (28th Judicial Circuit). Alabama victims of the scheme invested more than $500,000.
Alabama Securities Commission Director Joseph Borg, said, "This Commission is proud to have joined the collaborative efforts of the federal and state law enforcement agencies and their professional staff members to see that justice is served for the victims in this important case. The outcome resulted from a team approach between the U.S. Attorney's Office in Utah, the Utah Department of Commerce's Division of Securities, the FBI, the IRS, and the ASC Enforcement and Legal Divisions to send a message that this financial crime, and others like it, will not be tolerated and will be prosecuted to the fullest extent of the law."
“This sentence demonstrates that taking money from investors under false pretenses and using it for your own personal benefit as Pool did won’t be tolerated. IRS Criminal Investigation is proud to bring our forensic accounting skills to this investigation and, working side-by-side with our law enforcement partners and prosecutors, help put a stop to this and other types of white collar crime,” said John Collins, IRS Criminal Investigation Special Agent in Charge of Utah.