When Respondent’s office manager advised him of the discrepancy, Respondent
did not withdraw the false Memphis airline and hotel receipts, but rather he withdrew the
$38.01 expense for the drinks at the Atlanta hotel. (Tr. pp. 107, 139). Respondent’s
office manager retrieved the $38.01 expense receipt and reported the discrepancy to the
home office, which then conducted an audit of Respondent’s expenses. (Tr. pp. 109, 112;
JX-4, p. 4).
Effective September 16, 2006, Penn Mutual terminated Respondent for
improperly submitting expenses for a business trip that did not occur. (Tr. p. 35; JX-3, p.
3). HTK terminated Respondent’s registrations on October 13, 2006.2 (JX-1, p. 5).
Respondent admitted that he knowingly created and submitted false receipts for
the Memphis airfare and hotel. (Tr. pp. 161-162). But Respondent stated that he actually
conducted work from the Atlanta hotel and that he had previously incurred legitimate
business expenses that had not been reimbursed, so the reimbursement for the hotel and
the airfare constituted a “wash.” (Tr. p. 186).
In July 2006, Respondent was not having financial difficulties and did not need
the money. (Tr. pp. 109, 187). Respondent stated that his intent in submitting the false
receipts and the false expense report was to show that he had traveled that month because
Penn Mutual monitored his travel through his expense reports. (Tr. pp. 177, 179).
Respondent testified that he was under pressure to complete recruiting trips because of
the significant drop in his production. (Tr. pp. 102-103,156, 179).
2 Respondent remains subject to FINRA jurisdiction for purposes of this proceeding, pursuant to Article V, Section 4 of the FINRA By-Laws, because (1) the Complaint was filed within two years after his registrations through HTK were terminated, and (2) the Complaint charges him with misconduct while he was registered.