← Broker database 2021-11-17
Stacy Leflore Suspended for Reckless Misrepresentations on COVID-19 Relief Loan Application
According to FINRA, Stacy Leflore was suspended from association with any FINRA member in all capacities for six months for making reckless misrepresentations in a loan application and loan agreement submitted to the Small Business Administration to obtain an Economic Injury Disaster Loan. In light of Leflore's financial status, no monetary sanction was imposed.
Leflore misrepresented that she was the owner of a personal shopping business that had earned revenue and incurred costs. In reality, she did not have a disclosed outside business activity with her firm and did not have a business eligible for the Economic Injury Disaster Loan from the Small Business Administration.
Leflore had established a personal shopping business years earlier that she intended to reinstitute as a business after the expected closure of the branch at which she worked. However, the business had never earned any money and was completely inactive at the time she applied for the loan. Despite knowing her business was inactive and had never generated revenue, Leflore represented on the application that it had earned revenue and incurred costs.
Based on Leflore's misrepresentations, the Small Business Administration approved her loan application. Leflore then signed a loan agreement with the Small Business Administration while affirming that the representations in her applications were correct, even though she knew they were false. Subsequently, the Small Business Administration provided Leflore with a $2,000 loan.
By signing the loan agreement while affirming false representations, Leflore compounded her initial misrepresentations on the application. She had an opportunity to correct the false information before accepting the loan but instead affirmed its accuracy and accepted the money.
The Economic Injury Disaster Loan program was designed to help businesses that were suffering economic injury due to the COVID-19 pandemic. By misrepresenting that her inactive business had earned revenue and incurred costs, Leflore fraudulently obtained money intended for legitimate businesses that genuinely needed assistance.
This case is similar to other Economic Injury Disaster Loan fraud cases FINRA has prosecuted, involving representatives who made false statements to obtain relatively small amounts of money from the program. While $2,000 may seem modest compared to larger frauds, the principle is the same—making false statements to obtain government benefits reflects dishonesty that creates concerns about fitness for the securities industry.
FINRA sanctions individuals for misconduct that reflects on their character and honesty, even when it does not directly involve securities transactions. Representatives who are willing to lie on government loan applications may also be willing to engage in dishonesty with customers.
The six-month suspension is longer than some other Economic Injury Disaster Loan cases, possibly because Leflore signed the loan agreement while affirming the false information, adding another layer of misrepresentation.