|Thursday, February 14, 2008
Nancy Condon (202) 728-8379
Brendan Intindola (646) 315-7277
See Amended Complaint, withdrawing the $375k conversion charge against John Mullins.
FINRA Charges Broker for Misappropriating Almost $400,000 from 97-Year-Old Widow and Her Charitable Foundation
Washington, D.C. — The Financial Industry Regulatory Authority (FINRA) today announced it has charged registered representative John Edward Mullins, of Margate, NJ, with misappropriating almost $400,000 from a 97-year-old nursing home resident who was a Mullins' client for more than 20 years, as well as from her charitable foundation. The customer has recently passed away. Broker Kathleen Maria Mullins, John Mullins' wife, was also charged with wrongdoing.
In addition to the misappropriation, FINRA charged John Mullins with attempting to misappropriate funds from his employer relating to improper expense submissions, accepting an unauthorized $100,000 loan from the client, and making misstatements on his firm's annual compliance questionnaires and Form U4 in an apparent effort to conceal his officer and trustee status with the charitable foundation. Kathleen Mullins was charged with accepting a loan from the customer and making misstatements on her Form U4 and annual compliance questionnaires. In addition, both were charged with failure to adhere to high standards of commercial honor and just and equitable principles of trade.
"Seniors are among the most vulnerable to financial wrongdoing," said Susan Merrill, FINRA Executive Vice President and Chief of Enforcement. "In this instance, an unprincipled broker took advantage of a trusting, elderly customer and her charitable foundation at a time when she was hospitalized and her health was failing. We will seek the strongest possible sanctions for this reprehensible, deceitful conduct."
In its complaint, FINRA alleges that shortly after the customer's husband died in December 1999, the customer established a charitable foundation to receive and administer funds for the benefit of charities devoted to the promotion of musical arts in Philadelphia and the New Jersey Shore. From its creation, the Mullins both served as trustees and officers of the foundation. When the customer initially entered a nursing home in 2000, the Mullins were provided power of attorney over the customer's assets, including the ability to conduct banking transactions and withdraw funds.
FINRA further alleges that from about April 2006 through July 2006 - when the customer became ill and was hospitalized - Mr. Mullins misappropriated almost $400,000 from his longstanding client. With the elderly customer's health deteriorating, he took advantage of her condition by using her checking account and debit cards to pay for his and his wife's personal expenses, including paying down $375,000 in their joint mortgage credit-line account.
The complaint charges that beyond paying off the mortgage credit-line, Mr. Mullins began to use the customer's checks and debit cards largely to make purchases for himself and his wife. These purchases and debits included: $14,120 in ATM cash withdrawals, $11,264 for meals at restaurants, delicatessens and purchases at confectionary shops, $4,653 for groceries and $1,046 for gasoline. John Mullins signed either the customer's name, or his own name, to debit card receipts.
In addition to the customer's personal assets, the complaint charges, funds were also misappropriated from the charitable foundation account, set up by the customer at the brokerage firm that employed the Mullins'. For example, John Mullins used the customer's foundation account debit card to purchase approximately $16,500 in gift certificates. He then redeemed $5,500 in gift certificates to pay down a retail store account bill, and redeemed $4,000 in Four Seasons Hotel gift certificates during a vacation to London that he took with his wife.
Under FINRA rules, a firm or individual named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible remedies include a fine, censure, suspension, or bar from the securities industry, disgorgement of gains associated with the violations, and payment of restitution. The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA in which findings as to the allegations in the complaint have not been made and does not represent a decision as to any of the allegations contained in the complaint. Because this complaint is unadjudicated, interested persons may wish to contact the respondent before drawing any conclusions regarding the allegations in the complaint.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2007, members of the public used this service to conduct 6.7 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business with the U.S. public. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business - from registering and educating industry participants to examining securities firms; writing rules; enforcing those rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at www.finra.org.