AP Top Stories August 25 A
Here’s the latest on Wednesday, Aug. 25: Biden sticks to Aug. 31 deadline for U.S. withdrawal from Afghanistan; Haiti residents scour rubble for belongings; Japan expands COVID-19 state of emergency; U.S. House votes to advance budget blueprint
The former CEO of a financially troubled Eastern Shore optometry chain is one of the two Salisbury men indicted on federal charges in the theft of hundreds of thousands of dollars from a local appliance store.
A federal grand jury returned 10-count indictments charging Stephen L. Franklin, 53, and Duane G. Larmore, 46, with federal conspiracy, wire fraud and identity theft, according to a Wednesday news release from the Department of Justice.
Larmore worked for Salisbury-based Shore Appliance Connection, a business that sells household appliances, mattresses and bedding. His duties included maintaining the company’s books and records.
The release showed Franklin was the CEO of Accurate Optical, which was headquartered in Salisbury. He was also CEO and part owner of East Coast Optometric, with locations in South Carolina.
The indictment alleged Larmore and Franklin used portions of the more than $900,000 they stole from Shore Appliance Connection to make investments and pay business expenses for Accurate Optical and East Coast Optometric. The scheme lasted from mid-September 2016 through March 2020, per the indictment.
When his companies were dealing with financial problems, Franklin asked Larmore to provide them with money from Shore Appliance Connection, according to the DOJ release.
Accurate Optical was evicted from its Salisbury location in summer 2019.
Court documents obtained by Delmarva Now at the time revealed the company owed its landlord almost $18,000 in rent and had eight failure to pay rent cases in Maryland dating back to 2017.
There were also eight cases in which the government sought federal tax liens against Accurate Optical for that same period, as the company owed hundreds of thousands of dollars in back taxes.
More: Patients left with questions after Accurate Optical’s eviction in Salisbury
More: Accurate Optical settlement will lead to customers getting money back, attorney general said
The sudden eviction left patients with questions and concerns.
Complaints about not receiving purchased eyewear or refunds reached Maryland Attorney General Brian Frosh.
His office announced in December 2020 that its Consumer Protection Division had entered into a settlement with Accurate Optical to resolve an investigation into its owners.
By then, the company had closed its Maryland stores in Berlin, Cambridge, Easton, Ocean City, Salisbury and Kent Island, as well the Delaware stores in Laurel and Millsboro.
The settlement required Accurate Optical’s owners to stop selling goods they couldn’t provide and pay customers back for goods that were not delivered.
Visitors to Accurate Optical’s website now receive a pop-up message that states, “All offices are permanently closed.”
The South Carolina Department of Revenue announced in November 2020 that its agents arrested Franklin on four counts of failing to collect, account for or pay over withholding tax, as well as operating without a retail license.
Those charges were in connection to H. Rubin Vision Center, which was the name East Coast Optometric was doing business under at the time.
State officials said Franklin issued employees W-2’s reflecting tax withheld from their pay, but did not pay the taxes to the state’s Department of Revenue. He failed to pay more than $130,000 in withholding tax to the state from 2015 through 2018.
The vision center’s license was revoked in 2016 because of unpaid business taxes, according to officials, and Franklin received multiple violations for continuing to make retail sales until July 2018.
That November 2020 case is still pending, according to online South Carolina court records.
Federal prosecutors said Franklin and Larmore used the identities of Shore Appliance Connection’s owners to enter into factor contracts.
Factoring lets a business obtain cash quickly by leveraging accounts receivable, which is the balance customers owe the company. The business can sell those accounts to third-party companies known as factors in exchange for upfront cash.
These agreements between Shore Appliance Connection and various factoring companies provided cash deposits to Shore Appliance’s bank accounts and required payments and interest of more than $725,000, according to prosecutors.
The indictment alleged Larmore used his own email address and cellphone number to obtain the factoring contracts, but identified the contact information as belonging to one of Shore Appliance Connection’s owners. He also gave the factor companies details about the owners, like their birth dates, social security numbers and driver’s license information.
The owners’ signatures were forged during the factoring process and Franklin witnessed or notarized the fraudulent signatures, prosecutors said. Larmore and one of Franklin’s female employees impersonated the owners while talking to factoring companies over the phone as well.
More: Multiple members of Gov. Larry Hogan’s staff test positive for COVID after Ocean City conference
More: Maryland Senate leaders call for school mask mandate ahead of state board meeting
Larmore used his position at Shore Appliance Connection to sign over authority of the company’s bank accounts so that he and Franklin could draw on the companies’ lines of credit with two financial institutions, according to prosecutors. This allowed them access to $200,000 in cash to cover up their use of Shore Appliance Connection’s money.
If convicted, Franklin and Larmore each face maximum sentences of 20 years in federal prison on wire fraud conspiracy and seven counts of wire fraud, as well as a mandatory two-year sentence on two counts each of identity theft.
Their final appearance in U.S. District Court in Baltimore has not yet been scheduled.