A federal grand jury on Aug. 24 returned an indictment against two Salisbury men, charging them with federal conspiracy, wire fraud, and identity theft charges in connection with the theft of at least $900,000 from Shore Appliance Connection.
Stephen L. Franklin, 53, and Duane G. Larmore, 46, are expected to have an initial appearance in U.S. District Court in Baltimore, although no date has yet been scheduled, according to Jonathan F. Lenzner, the acting U.S. Attorney for Maryland.
Larmore worked at Shore Appliance at the Twilley Center, where he maintained the company’s books and records.
Franklin was the Chief Executive Officer and part owner of East Coast Optometric in South Carolina and CEO of Accurate Optical based in Salisbury, which abruptly closed its doors last year.
Accurate Optical’s owners -- Drs. Steven M. Zeidman, John F. Lynch Jr. and Charles I. McDonald -- have since entered into an agreement with the Maryland Attorney General’s Office to pay restitution to customers who never received their eyewear.
The indictment alleges that the defendants stole in excess of $900,000 from Shore Appliance to use for their own purposes, including to make investments and to pay business expenses for Accurate Optical and East Coast Optometric, without the knowledge and consent of the owners of Shore Appliance.
According to the 10-count indictment, from mid-September 2016 through about March 2020, Franklin and Larmore invested money and used wire transfers from Shore Appliance’s account to East Coast Optometric and from there to banks in the United Kingdom and Hong Kong. The indictment alleges that no investment paid any return to the co-schemers.
To conceal how much money had been removed from Shore Appliance and to obtain cash, the defendants allegedly used the identities of the owners to enter into factoring contracts. Factoring is a means by which businesses, like Shore Appliance, can 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 of trust 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 one of Shore Appliance’s owners. Larmore also allegedly provided the factors with details of the owners’ identities, including dates of birth, Social Security numbers and Maryland drivers' licenses without their permission.
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, at Franklin’s request Larmore provided funds from Shore Appliance for Franklin's companies.
If convicted, they each face a maximum sentence of 20 years in federal prison for a wire fraud conspiracy and for 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.