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With respect to the cell phone expense, Respondent purchased the cell phone for a

woman, MM, who was starting in the insurance business at AFLAC. (Tr. pp. 55, 125).

Respondent characterized the purchase as a legitimate business expense because it was an

opportunity to assist a potential independent agent and gain an introduction to sell Penn

Mutual products to one of the top AFLAC offices. (Id.). Respondent admitted that he

thought the expense of a cell phone for an independent agent might be questioned

because his production was low and therefore he falsely reported the expense as a

replacement for his cell phone. (Tr. pp. 130-131; JX-4, pp. 6-7). When Respondent

submitted the cell phone bill for reimbursement, MM’s name was blacked out on the

receipt. (JX-4, p. 6). Respondent testified that he had purchased business equipment for

other independent agents, but he provided no corroborating documents or witnesses. (Tr.

pp. 126-127, 144-145). In the absence of corroborating evidence, and having observed

Respondent’s demeanor while testifying, the Hearing Panel did not find Respondent’s

claim that this purchase was consistent with previously approved business equipment

purchases credible. In any event, the Hearing Panel did not find Respondent’s prior

equipment purchases material to the charge of submitting a false expense report and

receipts to his employer.


Respondent Violated Conduct Rule 2110

The Complaint alleges that Respondent converted Penn Mutual’s funds, in

violation of NASD Conduct Rule 2110, when he obtained funds from Penn Mutual by

submitting a false expense report and false receipts.


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