The pay phone deal looked so tempting that an elderly Pinellas County woman cashed in all her earlier investments and even took out a reverse mortgage on her house to come up with $126,000 to invest. But not long after she handed over the money, the pay phone company went bankrupt. State officials said Tuesday that the agent she dealt with has been charged with selling unregistered securities.
Jason Franklin, 30, of Redington Shores was arrested earlier this month in Birch Tree, Mo., and will be brought back to Pinellas County to face the charge, which is a third-degree felony.
The woman, whose name was not released by state officials, is one of 10,000 investors nationwide who invested $300-million in ETS Payphones. The Securities and Exchange Commission brought fraud charges against the company and won a judgment two years ago ordering ETS to pay back $190-million plus interest. However, the order was waived because ETS had no money.
Few cases were ever brought against agents who sold ETS investments, partly because investigators were hampered by litigation over whether the pay phone investments were legally securities. ETS and similar pay phone companies say they sell the phones to investors, who lease them back to the company. The company then makes payments to investors, supposedly based on the revenue the phones generate. At ETS, money from new investors was used to make payments to earlier investors, according to the commission.
Franklin worked as a sales agent under Charles Glenn & Associates in Lutz, which was not charged in the case. State investigators said he met the woman at a party and told her that he could help her earn a higher return on her money with a guaranteed investment.
The Pinellas County State Attorney's Office and the state Office of Financial Regulation worked on the case.
Helen Huntley can be reached at huntleysptimes.com or (727) 893-8230.