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.