The allegations read: Without admitting or denying the findings, gendlek consented to the sanction and to the entry of findings that he willfully violated section 10(b) of the securities exchange act of 1934 and rule 10b-5 thereunder, and violated nasd rule 2120 and finra rule 2020 by making material misrepresentations and omissions in connection with the sale of securities. The findings stated that gendlek formed a company to solicit investors for real estate development projects. In august 2005, gendlek solicited six investors, five of whom were customers of his member firm, to invest in promissory notes in a total amount of $543,000 to fund the purchase of a rental property in new jersey by his friends. During march 2006, the gendlek's friends advised him that they wanted to refinance their mortgage with the company and obtain a mortgage from a bank. Gendlek, on behalf of the company, executed a mortgage discharge that stated that the mortgage had been paid in full or otherwise satisfied or discharged. However, gendlek's friends never fully repaid the company. In april 2006, gendlek's friends paid the company only $355,000, leaving a shortfall of $188,000 that was never secured by another mortgage. Gendlek did not inform the investors that his friends had failed to pay the full amount of the debt, that gendlek had released the mortgage on the rental property or that only certain of the investors could receive their principal payments. Rather, during 2006, gendlek solicited three of the investors who had invested a total of $355,000 in the rental property, to "roll over" their investments into a new investment, rather than receiving repayment of their principal investment in cash. Gendlek recommended that they instead agree to accept new promissory notes that gendlek issued through the company to develop property that the company owned in tennessee. Through the company, gendlek executed, and arranged for the three investors to execute agreements in which gendlek falsely stated that the company had a mortgage interest in the tennessee property. In addition, gendlek executed, and arranged for two of the three investors, a married couple, to execute, agreements that contained several false statements. In addition, during three years, two other investors requested that the company repay a total of $133,000 of their principal investments. Gendlek asked his friends to provide funds for the repayment and they informed him that they were experiencing financial difficulties and consequently did not have funds to repay those investors. As a result, to obtain funds for the repayment, gendlek solicited the married investors to make additional investments in three new promissory notes. Gendlek did not inform the married couple that his friends were having financial difficulties or that he needed funds from them to repay other investors because his friends had insufficient funds to do so. In addition, gendlek executed, and arranged for the married couple to execute agreements that falsely stated that the company's interest in the new jersey property was secured by a mortgage. In september 2013, after the tennessee project failed, gendlek caused the firm to file for bankruptcy. Gendlek did not make any further payments to investors after the bankruptcy. Collectively, those investors lost approximately $620,000. The findings also stated that gendlek did not inform his firm of his participation in these private securities transactions or obtain approval for them at any time. The findings also included that gendlek failed to disclose an outside business activity to his firm in which he provided elder care planning and related consulting services. Through this activity, gendlek provided document assistance to elder care attorneys and filed medicaid applications on behalf of individuals, including the married couple. Gendlek received compensation for these services.
