Editor's note:
Due to an editing error, when "Nowhere To Hide" first appeared in our December 2005 issue, Andrew Davis Mills was incorrectly said to have used "stolen" credit cards to meet his monthly sales quota while employed at Nordstrom's. In fact, Mills and his colleagues used their own credit cards. The story below has been corrected. Registered Rep. regrets the error.
Andrew Davis Mills was a salesperson and assistant manager in the women's shoe department at Nordstrom's in San Diego. Apparently, Mills and his colleagues were having some difficulty meeting their monthly sales quota the old-fashioned way. So, these enterprising employees came up with a foolproof scheme: Use their own credit cards to purchase enough shoes to meet their monthly quota, then return the purchases for full credit.
Good to Go
In February 1999, Mills was charged in the Superior Court of California, County of San Diego, with one count of grand theft and four counts of embezzlement (all felonies), according to regulatory filings. In March 1999, the felony counts were dismissed when Mills entered a plea of nolo contendere (no contest) to the misdemeanor of “petty theft.” He was placed on three-year probation, during which time he was required to serve one day in custody, pay fines and restitution totaling $400, complete a 15-day public service program, attend and complete a course and agree to violate no other laws (excluding minor traffic offenses).
In March 2000, Mills decided to transfer his shoe-selling skills to the stock market, and he completed an “Employment Application & Statutory Disqualification Disclosure & Certification” with H&R Block Financial Advisors. In the Employment Application, Mills was asked: “Have you ever been convicted of a misdemeanor?” He answered no.
As part of the Wall Street hiring process, H&R Block was required to submit Mills' fingerprints to the United States Department of Justice (DOJ) for verification. Obviously, the DOJ would catch the discrepancy and disclose the prior criminal charges and conviction. Alas, this wouldn't be a good story without a twist, and the DOJ delivers the twist by not disclosing Mills' arrest record. The NYSE tactfully states later in its decision punishing Mills: “The investigative record does not indicate why the DOJ report did not disclose his conviction. Mills' criminal history should have appeared on his fingerprinting report.”
In the absence of any indication of a criminal history, H&R Block hired Mills on April 3, 2000. Subsequently, on or about April 14, 2000, Mills was asked to complete and sign a Form U4, which includes the following two pertinent questions:
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23B(1)(a): Have [you] ever been convicted of or pled guilty or nolo contendere to a misdemeanor involving: investments or an investment-related business or any fraud, false statement or omissions or wrongful taking of property?
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23A(1)(b): have [you] ever been charged with any felony?
Mills answered no to both questions. Based upon having been charged with five felony counts and having pleaded no-contest to one misdemeanor, his answers were false.
Foolproof
Mills became a general-securities representative, and, in January 2003, he applied for a life insurance license with the California Department of Insurance. Mills received the license on May 5, 2003. Once again, despite a record of felony charges and a misdemeanor conviction, the state stamped his application “approved.”
But, some 15 months after granting Mills his insurance license, the Department of Insurance revoked it when it amazingly uncovered what was never hidden: Mills' criminal record. On or about Aug. 5, 2004, Mills notified his employer of the revocation for nondisclosure of his criminal record, and he was terminated on August 13, 2004.
Pursuant to a “Stipulation of Facts and Consent to Penalty,” Mills did not admit or deny any allegation, but merely consented to the sanctions and to the entry of findings. The NYSE imposed a censure and a one-year bar in all capacities. (For more see: Andrew Davis Mills, NYSE Hearing Panel Decision 05-88, August 5, 2005.)
Hopefully, none of you will ever run afoul of the law, but if you do, trust me, it's a frightening and complex system. Unless you're a lawyer (or a career criminal) it's likely that you will misunderstand more than a few stages in the process. Some folks who commit crimes are dishonest and simply lie about their prior criminal history. However, other folks are often sincerely confused. They think that being sentenced to probation means that any convictions or guilty pleas (or no-contests) are always automatically erased when their probation expires without incident. That isn't true. All of which explains why regulators often distinguish between “willfully” making a misstatement and doing so out of ignorance or a good-faith misunderstanding.
Writer's BIO: Bill Singer is a practicing regulatory lawyer and the publisher of RRBDLAW.com
