A federal grand jury in Baltimore has returned an indictment charging Stephen L. Franklin, 53, and Duane G. Larmore, 46, both of Salisbury, MD, in connection with a complicated international investment scheme involving theft of $900,000 from Shore Appliance.
According to prosecutors from the U.S. Attorney’s Office in Baltimore, some of the funds were diverted into an optical business owned by Franklin.
Shore Appliance has stores in Frankford, DE, Salisbury, and Ocean City.
According to the 10-count indictment, from mid-September 2016 through about March 2020, Franklin and Larmore conspired to steal at least $900,000 from Shore Appliance, a retailer of household appliances as well as mattresses and bedding.
Larmore was an employee at Shore Appliance whose duties included maintaining the books and records for the company.
Franklin was CEO of Accurate Optical, headquartered in Salisbury, which had locations on the Eastern Shore of Maryland, and was the CEO and part-owner of East Coast Optometric, with locations in South Carolina.
The indictment alleges that the defendants stole more than $900,000 from Shore Appliance to use for their own purposes, including making investments and paying business expenses for Accurate Optical and East Coast Optometric, without the knowledge and consent of the owners of Shore Appliance.
The indictment alleges that Franklin and Larmore invested in the following: in 2016, a $100,000 investment with T.H.; a $95,000 investment with GenFinance II, PLC, London, U.K., which then required an additional $300,000; and then additional funds for a surety bond and travel abroad; in 2018, an investment through W.S. of $35,000 and an investment through J.B. of $50,000; and in 2019 – 2020, investments and expenses through I.P. and E. P.-S. to obtain U.S. currency purportedly returned to the United States from humanitarian relief projects abroad, and other similar investments. The charges include wire transfers from Shore Appliance’s account to East Coast Optometric and from there to banks in the U.K. and Hong Kong. The indictment alleges that no investment paid returns.
To conceal money removed from Shore Appliance and obtain cash, the defendants allegedly used the owners’ identities to enter into high-interest-rate factoring contracts.
Factoring allows businesses like Shore Appliance to obtain cash quickly by leveraging accounts receivable. The factoring contracts purportedly between Shore Appliance and various factoring companies provided cash deposits to Shore Appliance’s bank accounts but encumbered the accounts receivable of Shore Appliance and required payments and interest of more than $725,000.
In addition, the defendants allegedly used Larmore’s position with Shore Appliance and signature authority over its bank accounts to draw on Shore Appliance’s lines of credit with two separate financial institutions to obtain another $200,000 in cash to conceal their use of Shore Appliance’s funds.
To obtain contracts with factoring companies for Shore Appliance, Larmore allegedly used his own email address and cell phone number with factors but identified that email address and cell phone number as belonging to a Shore Appliance owner. Also, without their permission, Larmore allegedly provided the factors with details of the owners’ identities, including dates of birth, Social Security numbers, and Maryland drivers’ licenses.
To conceal the fact that the owners were not aware of and had not approved the factoring contracts, the indictment alleges that: the signatures of the owners were forged and Franklin witnessed or notarized the fraudulent signatures; and that Larmore and a female employee of Franklin’s posed as the owners in telephone conversations with representatives of the factoring companies.
Finally, the indictment alleges that when Franklin’s companies had financial problems, Larmore provided funds from Shore Appliance for Franklin’s companies at Franklin’s request.
If convicted, the defendants each face a maximum sentence of 20 years in federal prison for a wire fraud conspiracy and each of seven counts of wire fraud; and a mandatory sentence of two years in federal prison, consecutive to any other sentence imposed, for each of two counts of identity theft.
Actual sentences for federal crimes are typically less than the maximum penalties.