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Victim count soars in Chelsea man’s alleged $1m fraud

William Galvin requested a freeze on Martel’s assets.

Pat Greenhouse/Globe Staff/file

William Galvin requested a freeze on Martel’s assets.

An investigation by Massachusetts authorities into the business dealings of Gary J. Martel, a former Chelsea Planning Committee member accused this week of stealing at least $1 million from more than 40 investors, is rapidly widening as more victims have come forward from other states.

Secretary of State William F. Galvin said his office has received complaints from Martel clients in Massachusetts, Vermont, and Florida in what he now suspects could be a Ponzi scheme, where Martel passed money from one client to the next, and perhaps spent some of the money himself.

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“It certainly seems as if this was an extensive scheme,’’ Galvin said in an interview. “Needless to say, we are very concerned about assets.”

Galvin’s Securities Division this week brought civil charges against Martel, alleging that he failed to register with the state as an investment adviser and sold unregistered securities. Galvin said he asked federal regulators at the Securities and Exchange Commission to freeze Martel’s assets. The agency’s Boston office declined to comment.

Meanwhile, a more complex picture of Martel, 55, has emerged over the past few days — that of a Chelsea public official who lives in a grand Victorian house, on which he has been doing costly renovations, even as he was allegedly taking money from clients and promising to invest it in high-interest bonds.

“Everyone is devastated,’’ said Kelly Fenclau, a Florida resident whose brother has been a friend of Martel’s for some 30 years. Three Fenclau brothers were among Martel’s victims, he said, as were other members of the Chelsea man’s extended family. “I never really knew what ‘violated’ means until now,’’ Fenclau said. “Ten thousand dollars is a lot of money to me.”

Public records show that Martel has had several tax liens filed against him over the years, most recently one for $7,549 in Massachusetts. He owes more than $19,000 to a Canton firm that was doing renovations on his property at 295 Washington Ave., a sprawling Victorian home with a carriage house that Martel had converted from condominiums for use as a bed and breakfast. A Vermont family filed an attachment on the Chelsea house in the amount of $500,000.

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Jay Ash, the city manager for Chelsea, said he was “shocked” to learn of the allegations against Martel, whom he had appointed to the planning board in 2007. Like others who know Martel, Ash described him as smart, articulate, and polite, and able to navigate thorny public meetings with diplomacy.

“He appeared to be a guy who had a good head on his shoulders,’’ Ash said. But others would come to see him as a phony who didn’t pay his bills and made endless excuses for failing to send interest checks to investors.

Among Martel’s alleged victims who contacted the Globe was an 85-year-old from Vermont, where Martel has had business addresses and owned property over the years.

A message left on one of Martel’s numbers at his house in Chelsea went unreturned. His other voice mailboxes were full. His lawyer, Carol Starkey, was not available for comment Friday. Earlier in the week, she said Martel denied wrongdoing and was “distressed” at having to shutter his firms and that there were no assets readily available for customers.

The state said Martel used three entities to conduct business, none of which was registered to sell securities, or even as a company. They are Martel Financial Services and MFG Funding, both of Chelsea, and Martel Financial Group of Woburn and Chelsea. Public records also associate Martel with two mortgage offices in recent years: Mass Mortgage Capital Group and Allied Home Mortgage Capital.

Beth Healy can be reached at bhealy@globe.com.

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