Armand R. Franquelin, Securities Fraud and Money Laundering, Salt L…

SALT LAKE CITY – Armand R. Franquelin, 57, of Liberty, Utah, is headed to federal prison for nearly five years after pleading guilty to running a classic investment scam. U.S. District Judge Dale Kimball sentenced Franquelin to 57 months Wednesday for securities fraud and money laundering connected to a failed residential real estate project in Vernal, Utah. The scheme preyed on individuals looking to secure their retirement funds, leaving a trail of financial ruin in its wake.

The court also ordered Franquelin to fork over a hefty $6,566,596.85 in restitution to the victims he swindled. Once released from prison, he’ll be under supervised release for three years. This isn’t a slap on the wrist, but whether it truly compensates those who lost their savings remains to be seen. Franquelin’s co-conspirator, Martin A. Pool, 44, of Atlanta, Georgia, already received a 78-month sentence in September for his role in the same fraud.

From 2006 to 2010, Franquelin and Pool systematically convinced investors to roll over their traditional IRAs into self-directed accounts, promising high returns through their company, The Elva Group. They pitched a development called Haven Estates in Vernal, Utah, dangling notes with annual interest rates ranging from 8 to 20 percent. They swore investors’ funds would directly fund Haven Estates, secured by first lien positions on the property. A complete fabrication, according to prosecutors. No collateral was ever provided, and no investor saw a dime of promised interest.

The truth? Investors’ money didn’t build homes; it lined the pockets of Franquelin, Pool, and their associates. The scheme operated as a Ponzi scheme, using funds from new investors to pay off earlier ones – a desperate attempt to maintain the illusion of success. The Elva Group also failed to disclose existing liens on Haven Estates, and when the project defaulted on its mortgage, investors were kept in the dark. Eventually, the entire project went into foreclosure, leaving investors with nothing.

The investigation was a joint effort involving the FBI, IRS-Criminal Investigation, the Utah Department of Commerce, Division of Securities, and the Alabama Securities Commission, with support from the Baldwin County, Alabama, District Attorney’s office. The scam stretched beyond Utah’s borders, with Alabama victims alone losing over $500,000. Joseph Borg, Director of the Alabama Securities Commission, praised the collaborative effort, stating the outcome “sends a message that this financial crime, and others like it, will not be tolerated.”

Federal investigators are clear: exploiting investor trust for personal gain will be met with serious consequences. While the sentencing of Franquelin and Pool offers some measure of justice, the damage is done. The case serves as a stark warning to those considering similar schemes – the long arm of the law will eventually catch up, and the price for financial deception is steep. The IRS Criminal Investigation emphasized their commitment to uncovering and prosecuting these types of crimes.”