Mark Singer vs. Commerce and Insurance

Transcription

1 University of Tennessee, Knoxville Trace: Tennessee Research and Creative Exchange Tennessee Department of State, Opinions from the Administrative Procedures Division Law February 2015 Mark Singer vs. Commerce and Insurance Follow this and additional works at: This Initial Order by the Administrative Judges of the Administrative Procedures Division, Tennessee Department of State, is a public document made available by the College of Law Library, and the Tennessee Department of State, Administrative Procedures Division. For more information about this public document, please contact administrative.procedures@tn.gov

2 BEFORE THE TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE IN THE MATTER OF: ) Tennessee Securities Division ) MARK SINGER, ) DOCKET NO J ) ) Judge Sitting Alone Respondent. ) INITIAL ORDER This matter came on to be heard on February 12, 2015, before Joyce Grimes Safley, Administrative Judge, sitting for the Commissioner of the Tennessee Department of Commerce and Insurance. Mr. Charles S. Herrell, Assistant General Counsel, Department of Commerce and Insurance, represented the Tennessee Securities Division or the State. Mr. Stanley Kweller, Attorney, of the Nashville Bar, represented Respondent Singer, who participated in the hearing via telephone conference. 1 Issue Presented The subject of this hearing was whether the undersigned, sitting on behalf of the Commissioner of Commerce and Insurance, should take disciplinary action against the Respondent for alleged violations of THE TENNESSEE SECURITIES ACT OF 1980, TENN. CODE ANN , et seq.,. Specifically, the State asks that Petitioner s Broker-Dealer License with the Tennessee Securities Division be revoked, and that Respondent be permanently barred from any further conduct in the State of Tennessee as a brokerdealer, agent of a broker-dealer, investment adviser, or investment adviser 1 Respondent had sought permission to appear by teleconference. The State did not object to such appearance, and the undersigned granted Respondent s request to appear telephonically. 1

3 representative. The State also asks the undersigned to impose civil penalties totaling $40, (Forty thousand dollars). 2 Respondent does not contest the Revocation of his broker-dealer license, nor does he contest any Order barring him from acting as a broker-dealer, agent of a brokerdealer, investment adviser, or investment adviser representative in the State of Tennessee. Rather, Respondent contests the imposition of $40, (Forty thousand dollars) in civil penalties. Respondent argues that all of the acts to which Respondent pled guilty comprise a common scheme or plan resulting in one (1) act of conspiracy which subsumes all other convictions of the Respondent, such that Respondent should be assessed only one (1) civil penalty, if any, for his one (1) act of conspiracy. The State argues that Respondent must be assessed $5, (Five thousand dollars) for each of eight (8) violations of the THE TENNESSEE SECURITIES ACT OF 1980, TENN. CODE ANN , et seq., which consist of the seven (7) felony guilty pleas/convictions entered in Criminal Court, Shelby County, Tennessee, and the federal Securities and Exchange Commission (SEC) s initial suspension and the SEC s later Order permanently barring Respondent from participation in federal securities activities. Summary of Decision For the reasons discussed below, Respondent s Tennessee broker-dealer agent registration is REVOKED pursuant to TENN. CODE. ANN (a). Respondent is BARRED, now and in the future, from acting as a broker-dealer, agent of a brokerdealer, investment adviser, or investment adviser representative in the State of Tennessee, pursuant to TENN. CODE. ANN Respondent is ADDITIONALLY 2 The State argues that Respondent should be assessed $5000 for each guilty plea entered for violations of Tennessee criminal statutes (7 felony guilty pleas), with an additional $5000 civil penalty assessed for federal or Securities Exchange Commission violations set forth in a SEC Administrative Order. 2

4 BARRED from association or any business dealings with any broker-dealer, agent of a broker-dealer, investment adviser, or investment adviser representative in the State of Tennessee. Finally, pursuant to TENN. CODE. ANN (d), Respondent is assessed a civil penalty of $5,000 for each of the seven (7) felony convictions entered in Criminal Court, Shelby County, Tennessee, for a total of $35, in civil penalties. Charges. FINDINGS OF FACT 1. Respondent does not deny the facts asserted by the State in its Notice of 2. During the relevant times, September 3, 2004 through February 28, 2007, Respondent was registered as a securities broker-dealer agent with the Tennessee Securities Division. He was registered with the federal Financial Industry Regulatory Authority (FINRA) as a broker-dealer agent and investment adviser from April, 2001 through September Respondent was registered as a broker-dealer agent and investment adviser with through Deutsche Bank Securities, Inc. from April, 2001 through September, 2004, and through Citigroup Global Markets, Inc. from 2004 through February 28, In February, 2007, Respondent was under investigation by Tennessee, Indiana, and Michigan law enforcement agencies for Respondent s unauthorized control and misuse of certain cemetery trust funds. Specifically, there were complaints of breach of fiduciary duty, fraud and misrepresentation, and aiding and abetting embezzlement, based transfers of funds of certain cemetery endowment care funds or cemetery trusts. 3

5 FINRA entered an order of suspension (for two years) against Respondent, and fined Respondent $25,000 (Twenty-five thousand dollars.) 3 5. On December 7, 2010, Respondent was convicted in Marion County Superior Court, Criminal Division, Marion County, Indiana, of five counts of Felony Theft (theft greater than $100,000.00) for knowingly exerting unauthorized control over perpetual care trust funds and/or pre-need trust funds belonging to Memory Gardens Management Corp. ( Memory Gardens ) with the intent to deprive Memory Gardens of any part of its value of said trust funds. 6. As a result of Respondent s convictions in Indiana, Respondent was incarcerated for one (1) year in the Indiana Department of Corrections, and has been placed on probation for ten (10) years. 7. On December 13, 2012, Respondent pled guilty to seven (7) felony counts in Tennessee. A certified copy of Respondent s criminal convictions entered in the Criminal Court of Shelby County, Tennessee was entered into evidence at the hearing of this matter, and reflect Respondent pled guilty to the following felonies: One (1) count of Conspiracy to commit Theft of Property greater than $60,000 (Sixty thousand dollars); One (1) count of Theft greater than $60,000 (Sixty thousand dollars); and Five (5) counts of Money Laundering in violation of Tennessee s Criminal Statutes. 8. Respondent, and certain co-conspirators, diverted millions of dollars to make high risk investments. 9. Respondent Singer testified, via telephone, that he has not paid the $25,000 fine assessed by FINRA. 3 Respondent testified that he has not paid the $25, fine assessed by FINRA. Such fine is due and payable prior to any application by Respondent for re-association or reinstatement of Respondent s federal broker-dealer agent registration. 4

6 10. Respondent Singer further testified that he works in operations and construction for a hamburger franchise and made a salary of $32, for the year 2013, and a salary of $50, for Respondent does not own a home, but rents a home. Respondent pays child support in the amount of $1400 per month. Respondent lives with his girlfriend who works in real estate and contributes to their rent and living expenses. 12. Respondent paid eight or nine million dollars as a result of a $20 million dollar verdict and civil judgment in Shelby County. 13. Respondent expressed no remorse for his actions during his testimony. CONCLUSIONS OF LAW 1. THE TENNESSEE SECURITIES ACT OF 1980, TENN. CODE ANN , et seq., and TENN. COMP. R. & REG. CH , et seq., govern this matter. 2. TENN. CODE ANN (a)(1)-(2)(C) provides, in relevant part: The commissioner may by order deny, suspend, or revoke any registration under this part if the commissioner finds that: (1) The order is in the public interest and necessary for the protection of investors; and (2) The applicant or registrant, or in the case of a broker dealer or investment adviser, any affiliate, partner, officer, director, or any person occupying a similar status or preforming similar functions: *** (C) Has been convicted of any felony, or within the previous ten (10) years has been convicted of a misdemeanor involving a security or any aspect of the securities business or any investment-related business. *** (F) (i)(a) Is the subject of any order entered within the past ten (10) years by the securities administrator of any other jurisdiction or by 5

7 the securities and exchange commission or any other federal or state agency having jurisdiction over investment-related businesses: (1) Denying or revoking any registration as a brokerdealer, agent, investment adviser, or investment adviser representative, or the substantial equivalent of those terms as defined in this part; or (2) Ordering such person to cease and desist from any conduct or practice involving any aspect of the securities business or any investment-related business based on findings of fraud, deceit, or misrepresentations or violations of laws similar to (a) or (b). 3. Respondent s actions have violated TENN. CODE ANN (a)(1)-(2)(C) and (F), as set forth above. Further, the evidence preponderates that the disciplinary acts taken in this order, infra, are in the public s interest and are necessary for the protection of investors. 4. TENN. CODE ANN (d) provides: In any case in which the commissioner is authorized to deny, revoke, or suspend the registration of a broker-dealer, agent, investment adviser, investment adviser representative, or applicant for broker-dealer, agent, investment adviser, or investment adviser representative registration, the commissioner may, in lieu of or in addition to such disciplinary action, impose a civil penalty in an amount not to exceed five thousand dollars ($5,000) for all violations for any single transaction. 5. A review of THE TENNESSEE SECURITIES ACT OF 1980, TENN. CODE ANN , et seq., and TENN. COMP. R. & REG. CH , et seq. do not set forth specific factors to be considered when assessing a civil penalty against a Respondent in accord with TENN. CODE ANN (d). Nor does TENN. CODE ANN (d) specify which situations or facts support the imposition of civil penalties against a Respondent. 6. Rather, TENN. CODE ANN (d) leaves it to the discretion of the court (or the Commissioner) whether to impose civil penalties. It limits the imposition of such civil penalties to $ or less for all violations for any single transaction. 6

8 7. The Respondent s acts of theft and money laundering were egregious. Although Respondent has paid eight or nine million dollars as a result of a $20 million dollar verdict and civil judgment in Shelby County. Respondent has not paid any other administrative fines or civil penalties as a result of his wrongful acts. 8. By applicable statute, the imposition of a civil penalty is limited to a single transaction. In other words, as an example, if Respondent had committed fifty (50) wrongful underlying transactions, the State could have pursued fifty (50) separate civil penalties. Rather than enumerating all the wrongful underlying transactions committed by Petitioner, the State simply bases its request for the imposition of civil penalties upon the number of felony convictions entered against Petitioner in Tennessee, and additionally asks that Petitioner be assessed a civil penalty for the federal FINRA action against Petitioner s federal registration. 9. Because the federal FINRA action is based upon many of the same underlying transactions which constitute the basis for Respondent s felony convictions in Tennessee, in the undersigned s discretion, it is not appropriate to impose a civil penalty against Petitioner on basis of the FINRA action. Accordingly, the undersigned declines to impose a civil penalty based upon the FINRA action. 10. However, in light of Respondent s egregious acts or transactions in stealing from trust funds and money laundering, it is determined, in the court s discretion, that a civil penalty should be assessed for each of the seven (7) felony convictions entered in Tennessee. The following is hereby ORDERED: Respondent s Tennessee broker-dealer agent registration is REVOKED pursuant to TENN. CODE. ANN (a). Respondent is BARRED, now and in the future, from acting as a broker-dealer, agent of a broker- 7

9 dealer, investment adviser, or investment adviser representative in the State of Tennessee, pursuant to TENN. CODE. ANN Respondent is ADDITIONALLY BARRED from association or any business dealings with any broker-dealer, agent of a broker-dealer, investment adviser, or investment adviser representative in the State of Tennessee. Finally, pursuant to TENN. CODE. ANN (d), Respondent is ASSESSED a civil penalty of $5,000 for each of the seven (7) felony convictions entered in Criminal Court, Shelby County, Tennessee, for a total of $35, in civil penalties. Such civil penalties must be paid within thirty (30) days of the entry of this order, unless the State agrees to a payment plan. Respondent s egregious acts support such an assessment of civil penalties. It is so ordered. This order entered and effective this day of February, Joyce Grimes Safley Administrative Judge 8

10 Filed in the Administrative Procedures Division, Office of the Secretary of State, this day of J. Richard Collier, Director Administrative Procedures Division 9