FINRA

Schwartz was named a respondent in a FINRA complaint alleging that he converted $32,400 from his member firm by submitting falsified expense reports to the firm seeking reimbursement for expenses he never incurred. The complaint alleges that Schwartz entered into two agreements with a local sports team to pay $16,000 per season (or $32,000 total) for the use of a suite at a certain number of games each season. Instead of submitting for reimbursement only the $32,000 he paid for tickets for those two seasons, Schwartz requested and obtained false invoices inflating the expense and misrepresenting that he had paid the expenses. Using the false invoices, Schwartz requested and received a total of $64,400 in reimbursements from the firm. He retained and converted the $32,400 the firm paid him in excess of his actual expenses, returning only part after his misconduct was discovered. The complaint also alleges that Schwartz provided false information to his firm by intentionally submitting or causing the submission of false reports to the firm. To conceal his misconduct, Schwartz lied to his manager about his payment for these purported expenses. Specifically, while his manager was reviewing one of Schwartz's false requests for reimbursement, the manager requested that Schwartz use his corporate credit card for all further entertainment expenses. In response, Schwartz falsely told his manager, "I had to pay for these prior to season." The complaint further alleges that Schwartz caused the firm to maintain inaccurate books and records by submitting or causing the submission of expense reports supported by false invoices. In addition, the complaint alleges that Schwartz provided false and misleading responses to FINRA. During his on-the-record testimony pursuant to a Rule 8210 request issued by FINRA staff, Schwartz gave false testimony regarding cash payments made to the sports team, and why the sports team invoices sent to him were marked "Paid," even though Schwartz had not paid such expenses. Schwartz first testified that he never paid the sports team in cash. When confronted with his prior statements to firm investigators that he had paid the sports team in cash for certain game tickets, Schwartz then falsely testified that he paid the sports team $15,600 for season games in $500 to $600 cash payments prior to games. Schwartz did not, however, pay the sports team in cash for any game tickets for which he sought reimbursement. Schwartz also falsely testified that he did not know why invoices sent to him from the sports team were marked "PAID," claiming that the sports team just sent them that way at the beginning of the year. The sports team sent him invoices marked "PAID" when he had not yet paid for the tickets in those invoices because, as Schwartz knew, he asked the team to do so.

Decision & Order of Offer of Settlement

Bar (Permanent)

All capacities

indefinite

4/27/2021

Without admitting or denying the allegations, Schwartz consented to the sanction and to the entry of findings that he converted $32,400 from his member firm by submitting falsified expense reports to the firm seeking reimbursement for expenses he never incurred. The findings stated that Schwartz entered into agreements with a local sports team to pay $16,000 per season (or $32,000 total) for the use of a suite at a certain number of games each season. Instead of submitting for reimbursement only the $32,000 he paid for tickets for those seasons, Schwartz requested and obtained false invoices inflating the expense and misrepresenting that he had paid the expenses. Using the false invoices, Schwartz requested and received a total of $64,400 in reimbursements from the firm. He retained and converted the $32,400 the firm paid him in excess of his actual expenses, returning only part after his misconduct was discovered. The findings also stated that Schwartz provided false information to his firm by intentionally submitted or causing the submission of false reports seeking reimbursement of expenses that he had purportedly incurred. In addition, to conceal his misconduct, Schwartz lied to his manager about his payment for these purported expenses. The findings also included that Schwartz caused his firm to maintain inaccurate books and records by submitting or causing the submission of the expense reports supported by the false invoices. FINRA found that, during his on-the-record testimony, Schwartz gave false testimony regarding cash payments made to the sports team, and why the sports team invoices sent to him were marked paid, even though Schwartz had not paid such expenses. Schwartz first testified that he never paid the sports team in cash. When confronted with prior statements to the firm that he had paid the sports team in cash for certain game tickets, Schwartz then falsely testified that he paid the sports team $15,600 for season games in $500 to $600 cash payments prior to games. Schwartz did not, however, pay the sports team in cash for any game tickets for which he sought reimbursement. Schwartz also falsely testified that he did not know why invoices sent to him from the sports team were marked paid, claiming that the sports team just sent them that way at the beginning of the year. The sports team sent him invoices marked paid when he had not yet paid for the tickets in those invoices because, as Schwartz knew, he asked the team to do so.