Prior to last June, Chelsea’s Gary Martel was a mover and shaker in the City.
He was heavily involved in City functions and served on the City’s Planning Board, while keeping up appearances as a local investment broker. His beautiful Victorian home on Washington Avenue was one of the premiere showpieces in the City, and he hosted many a successful private party.
Less than a year later, Martel’s beautiful home is gone – converted to condos – and has been ordered by the U.S. Securities and Exchange (SEC) to pay $7.2 million in fines and penalties for what turned out to be an investments scam bilking hundreds of people from Massachusetts to Florida.
The fine broke down to $3.26 million in ill-gotten profits, pre-judgement interest of $695,806, and another $3.26 million in Civil Penalties. The judgement was announced by Federal Court in Boston on Jan. 7th.
The SEC charged Martel, who conducted business under the names Martel Financial Group and MFG Funding, with selling fictitious investment products and using the funds raised for purposes other than making the investments he promised. The Court froze Martel’s assets at the time the Commission filed the case in June.
According to the Commission’s complaint, over the course of several years, Martel raised money from investors in Massachusetts, Vermont, New Hampshire, New York and Florida by promising to invest their money in certain “pass through” bonds with favorable interest rates, as well as by promising to make pooled investments in mortgage-related securities or, more recently, Facebook’s initial public offering. The Commission’s complaint alleged that Martel’s bonds and investment pools were fictitious, and instead of investing his clients’ funds on their behalf as he promised, Martel used the funds for other purposes, including to make payments to earlier investors. The complaint charged Martel with violating the antifraud provisions of the federal securities laws.
On December 12, 2012, Martel pled guilty to criminal charges brought by the United States Attorney for the District of Massachusetts, based on the same conduct.
On Jan. 4, the Commission instituted related administrative proceedings against Martel to determine what, if any, remedial action is appropriate and in the public interest. Among the relief that could be imposed in the administrative proceedings is a bar prohibiting Martel from involvement in certain parts of the securities industry.