Salisbury man pleads guilty to conspiring to steal over $1.8 million from local business

SALISBURY, Md. – A Salisbury man has pleaded guilty to a wire fraud conspiracy and aggravated identity theft in connection to the theft of more than $1.8 million from Shore Appliance Connection.

According to the plea agreement, 54-year-old Stephen Franklin was the chief operating officer of Accurate Optical, a chain of optometric shops on the Eastern Shore of Maryland. With the owners of Accurate Option, he also purchased South Carolina optical chain East Coast Optometric. Franklin and co-defendant Duane Larmore met through the Salisbury Chamber of Commerce and became friendly with one another. Larmore was an employee at Shore Appliance Connection and was responsible for maintaining the books and records for the company.

From mid September 2016 through about March 2020, Franklin conspired with others, including Larmore, to steal more than $1.8 million from Shore Appliance. Specifically, the pair stole over $1 million from the business to use for their own purposes, including to make investments and to pay business expenses for Franklin’s businesses without the knowledge and consent of the owners of Shore Appliance. Franklin introduced Larmore to an individual who offered an opportunity to invest in an oil deal that promised quick and substantial returns for an initial investment of $100,000. Franklin did not have the money, but knew that Larmore could obtain the funds from Shore Appliance. Larmore then wire transferred $100,000 of Shore Appliance’s money to an account controlled by Franklin, who then wire transferred the funds to an individual in the United Kingdom to invest in the oil deal. The funds were returned to Shore Appliance because the name on the bank account did not match the named beneficiary on the wire transfer form completed by Franklin. Before the funds were returned, Larmore transferred another $100,000 to T.H., purportedly an attorney for the oil deal.

Franklin also convinced Larmore to invest in several other deals. In 2016, he convinced Larmore to invest $95,000 with GenFinance II, PLC, London, U.K., which then required an additional $300,000, and then additional funds for additional expenses and travel abroad. In 2018, an investment through W.S. of $35,000 and an investment through Gateway Capital of $50,000, and in 2019 to 2020, investments and expenses through I.P. and E.P.-S. to recover assets in the custody of U.S. Customs. No investment paid any return to the schemers.

To conceal how much money had been stolen from Shore Appliance and to obtain cash to invest, Franklin suggested that Larmore enter into factoring contracts, in which businesses can obtain cash quickly by leveraging accounts receivable. With Franklin’s encouragement, Larmore applied for a factoring contract for Shore Appliance without the knowledge or approval of the owners, corporate directors, or officers of Shore Appliance. The factoring contracts 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.

The signatures of the owners were forged, and the fraudulent signatures were witnessed or notarized by Franklin. Larmore and a female employee of Franklin’s then posed as the owners in telephone conversations with representatives of the factoring companies to confirm their approval of the factoring contracts. To conceal Larmore’s embezzlements and the factoring agreements, Larmore caused Shore Appliance to draw on its lines of credit with two separate financial institutions to obtain another $200,000 in cash.

As of March 2020, Shore Appliance still owed $208,394.92 in principal and interest on these lines of credit.

Finally, when Franklin’s business began experiencing financial difficulties, Franklin requested that Larmore provide funds from Shore Appliance for Franklin’s companies. Larmore provided funds to Franklin for his businesses, including to pay rent and employee salaries, as well as rent to a storage facility and hire trucks to move equipment and office furniture when Accurate Optical was evicted from its Salisbury office in July 2019.

In all, Larmore paid a total of $739,295.28 of Shore Appliance’s funds without the officers and owners’ knowledge or consent, to invest in fraudulent schemes that never paid any money back. Of that amount, $395,000 was moved through bank accounts controlled by Franklin, who caused an additional loss of $171,548.67 by having Larmore transfer funds to Franklin or to Franklin’s companies. Shore Appliance also lost an additional $731,250.07 in fees and other payments to factors and factoring brokers. Shore Appliance also paid extra interest in the amount of $208,395 from Larmore drawing on its bank lines of credit. In total, Shore appliance lost $939,645 in actual funds, however, as of March 2020, Shore Appliance still owed the factors almost $270,000. For all of Franklin’s and Larmore’s conduct, actual cash losses to Shore Appliance totaled $1,850,488.94 and intended losses totaled $2,137,674.74.

Franklin faces a maximum sentence of 20 years in federal prison for a wire fraud conspiracy and a mandatory sentence of two years in federal prison, consecutive to any other sentence imposed, for aggravated identity theft. Sentencing is scheduled to take place later this year. As stated in his plea agreement, Franklin will be required to pay restituion in the full amount, which the parties stipulate is $1,850,488.94.

Duane Larmore previously pleaded guilty to his role in the conspiracy and is awaiting sentencing.