Sign of the Financial Industry Regulatory Authority

Francis Joseph Gendlek of East Brunswick New Jersey is a stockbroker formerly registered with IFS Securities who has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity by consenting to findings that he made fraudulent omissions and misrepresentations relating to his private securities transactions. Letter of Acceptance Waiver and Consent No. 2016049989801 (Feb. 1 2018).

According to the AWC, PMP Enterprises, LLC was created by Gendlek to take on real estate development projects funded by investors that Gendlek solicited. Apparently, Gendlek was the firm’s managing member from August of 2005 to September of 2013.

The AWC stated that five customers of IFS Securities and one non-firm customer had been solicited by Gendlek in August of 2005 to make a collective $543,000.00 investment in promissory notes so that a New Jersey rental property could be purchased by Gendlek’s friends. In return, the purchasers of the New Jersey rental property offered to pay PMP 6.25 percent. Apparently, all but ¼ percent of that amount was supposed to be provided to investors, with the remainder to be retained by PMP. The AWC stated that a mortgage interest was obtained by Gendlek on behalf of PMP as part of the deal.

Apparently, the purchasers sought to refinance in March of 2006. Consequently, a mortgage discharge was executed by Gendlek on PMP’s behalf, wherein Gendlek represented that the mortgage had been fully paid or otherwise discharged or satisfied. Evidently; however, PMP had never been paid in full by the purchasers. Apparently, the purchasers then notified Gendlek that they lacked the necessary funds to pay PMP in full, and that only some of the investors would be repaid. The AWC stated that the purchasers were short by $188,000.00; PMP was only provided $355,000.00.

The AWC revealed that Gendlek failed to notify the investors that PMP was never provided full payment to satisfy the mortgage, that the mortgage on the New Jersey rental property had actually been released by Gendlek, or that only a portion of the principal would be returned to investors. Investors were solicited by Gendlek in 2006 to roll over their funds into another investment rather than be repaid. Gendlek evidently encouraged those investors to acquiesce to new promissory notes that would be issued by Gendlek on PMP’s behalf for a Tennessee property that PMP owned. Those investors were reportedly told that they would earn seven percent in the first year of investing and earn no less than six percent in subsequent years.

Apparently, Gendlek falsely stated to the Tennessee investors that PMP maintained a mortgage interest on the Tennessee real estate, that there was a mortgage that secured the purchasers’ debts relating to the New Jersey rental property, that the loan had since been repaid, and that the customers’ principal investment in the New Jersey rental property was held by PMP in escrow.

The AWC stated that between 2007 and 2009, additional investors in the New Jersey rental property sought repayment of $133,000.00 in principal. The purchasers; however, declined to pay based upon having financial difficulties. Rather than communicate this information to investors, he solicited the investors to enter into three new promissory note arrangements. During this time, he reportedly failed to tell those customers that their funds were actually needed to pay other investors off because of the purchaser’s dire financial condition.

Ultimately, the Tennessee real estate project was a failure, causing PMP to have to file for bankruptcy. Thereafter, no payments were made by Gendlek to investors in the New Jersey or Tennessee projects. Investors sustained $620,000.00 in losses. FINRA found that Gendlek’s private securities transactions were never made known by Gendlek to the firm, nor were they approved. Consequently, FINRA found that Gendlek’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, FINRA Rules 2010 and 2020, as well as NASD Rules 2120, 2110 and 3040.

On July 20, 2016, Gendlek was fired from IFS Securities, Inc. supported by accusations that he made misrepresentations to customers and stole their funds.

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