FINRA Files Complaint Against Ex-Rep Who Didn’t Testify Against BD

FINRA was investigating a BD that Franco was conducting business with over allegedly fraudulent wire transfers of customers’ funds to a shell company that Franco was also affiliated with, according to the FINRA complaint. The BD was also dealing with two advisors affiliated with Franco that were allegedly falsifying customers’ documents and engaging in “suspicious trading activity,” FINRA said.

Although FINRA did not identify the BD or shell company by name, Franco, at his plea hearing before U.S. Magistrate Judge Sanket J. Bulsara on April 4, 2019, identified the financial services firm as Biscayne Capital, where Franco said he worked from 2006 to 2008, and the shell company as Madison Assets, according to a transcript.

Between 2015 and 2017, Franco “agreed with others to defraud clients” of Biscayne Capital, he admitted, adding clients “were told that the funds they were investing would be used for real estate development.” Their funds were instead used for other purposes, he admitted, adding he “created false bank statements to show Biscayne Capital clients in order for them to falsely believe their money was still in their accounts.”

Also, around Nov. 23, 2016, Franco said he “processed wires adding up to $353,000 of Biscayne Capital clients’ funds” from a bank account he controlled on behalf of Biscayne Capital owners to an account in the name of Jose Arrea to pay Ramira Luca. Between 2015 and 2017, Franco agreed with others to transfer money he said he knew came from criminal activity “to hide the ownership of the money and to promote the bribery,” he said. In 2016 and 2017, Franco and the others involved in the scam “caused six wire transfers totaling $974,000 to be sent to an account owned by Jose Arrea,” Franco said, adding he understood those transfers were for Luca “even though we were sending them to an account in someone else’s name to hide the true ownership of those funds.”

Global Strategic Investments was the only BD that Franco was registered with FINRA through up until the time he ceased being a registered broker, according to BrokerCheck.