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STATE OF MAINE
OFFICE OF SECURITIES
121 STATE HOUSE STATION
AUGUSTA, ME 04333
Robert Kenneth Lindell, Jr.
Notice of Intent to Revoke
a Sales Representative Licence,
to Bar from Association and to
Impose a Civil Penalty
- Robert Kenneth Lindell, Jr. ("Lindell") is a resident of Maine, living in
Frankfort, Maine. He is a sales representative (CRD #2550012) of Edward D.
Jones & Co., L.P. ("Edward Jones") and worked out of the Edward Jones’
office located at 171 High Street in Belfast, Maine from October, 1996 to
October 10, 2001.
- In or about January 1999, Linda and Robert Demers ("the Demers"), both Maine
residents, met Lindall at the Edward Jones’ offices in Belfast, Maine and
instructed Lindell to invest their portfolio of $114,000 of cash and securities.
At this time, Lindell represented to the Demers that he would be able to invest
their monies in such a way as to provide them with a monthly income of $1,400
while, at the same time, preserving their principal for at least the first
year. The Demers accordingly instructed Lindell to invest their monies in
such a way as to preserve the principal of $114,000 and to provide them with
a monthly income of only $1,200 so as to ensure that the Demers’ principal
was not put at risk. Lindell further represented that if there were any changes
to the investment strategies they had discussed, he would notify the Demers
- At their meeting, the Demers also informed Lindell that a portion of their
investment monies had come from a settlement emanating from a work-related
injury that Mr. Demers had suffered. The Demers accordingly instructed Lindell
that he should invest these monies in such a way that the Demers would not
have to pay any unnecessary taxes. Lindell accordingly represented to the
Demers that he would invest these monies in a way that would afford the Demers
favorable tax treatment.
- In or about March 1999, the Demers also instructed Lindell to invest Mrs.
Demers’ savings of $6,400 into another account that was safe and would yield
a more favorable interest rate than the rate currently being yielded at the
Demers’ bank. The Demers specifically instructed Lindell that these monies
were to be held in an account separate from their other investments. Lindell
represented to the Demers that he would keep these monies separate from those
he had already invested on their behalf and, further, that he would invest
these monies in a money market account that would yield an interest rate of
over 4 percent.
- In or about February 2000, Mrs. Demers reviewed her account statements and
could not determine from them into which account her $6,400 had been invested.
The Demers accordingly asked Lindell where he had invested Mrs. Demers’ savings
of $6,400. Lindell informed the Demers that he had not created a separate
account for Mrs. Demers but rather had put these monies into Mr. Demers’ account.
He further stated that he had been using Mrs. Demers’ savings of $6,400 as
a "slush fund, as a way of moving their money around." The Demers objected,
reminding Lindall of their previous instructions to him. Lindell said that
he would immediately put these monies into a money market account as the Demers
had originally instructed him to do.
- Lindell then proceeded to transfer some of Mr. Demers’ securities and cash
into a separate account for Mrs. Demers. In an effort to raise $6,400 for
Mrs. Demers’ account, Lindell also created a margin account for Mr. Demers.
The proceeds from this margin account were then deposited into Mrs. Demers’
account by Lindell. However, Lindell’s actions in this regard resulted in
the Demers having to pay interest on a margin loan in the amount of $3,900.
Accordingly, Lindell’s failure to follow the Demers’ instructions resulted
in the Demers having to pay interest on the margin loan.
- In or about February, 2000, the Demers were informed by their accountant
that they owed taxes on their investments in excess of $3,000. When the Demers
confronted Lindell about their taxes, Lindell responded that it was not his
fault, but rather the fault of Putnam Funds ("Putnam"), where much of the
Demers’ monies had been invested. Lindell then advised the Demers to transfer
all of their monies away from Putnam and into Edward Jones’ account which,
Lindell represented, would thereby give him better control over the Demers’
- In or about July, 2000, Lindell advised the Demers that their monthly income
ought to be reduced from $1,200 to $1,000 in order to preserve their principal
because the market was not performing well. The Demers accepted Lindell’s
advice in this regard.
- Also in or about July 2000, the Demers received an Edward Jones’ portfolio
statement showing that their principal had diminished from $114,000 to $104,383.
Lindell misrepresented to the Demers at this time that there was a mistake
in the Edward Jones’ portfolio statement. In furtherance of this misrepresentation,
Lindell produced and provided to the Demers a fictitious portfolio statement
created by Lindell purporting to value the Demers’ investments at approximately
- In or about August 2000, the Demers, anxious that they not lose any more
of their principal, instructed Lindell to "put a lock" on their investments
should they fall below $102,000 at which time the Demers and Lindell would
discuss investing their monies in a different manner.
- In or about September 2000, the Demers received another portfolio statement
from Edward Jones showing that their principal had further diminished to approximately
$98,850. When the Demers asked Lindell about Edward Jones’ September portfolio
statement, Lindell again misrepresented to them that the Edward Jones’ portfolio
statement was inaccurate. In furtherance of this misrepresentation, Lindell
produced and provided to the Demers a second fictitious portfolio statement
purporting to value the Demers’ investments at approximately $112,400.
- At or about this time, the Demers contacted the customer relations department
at Edward Jones’ main office to inquire as to why they had received two different
statements for each of the months of August and September. The Demers were
informed that the Edward Jones’ portfolio statements were correct and that
they should speak to Lindell directly regarding this matter.
- In or about January 2001, the Demers confronted Lindell about the discrepancy
between the statements that they had received from him and Edward Jones. Once
again, Lindell misrepresented to the Demers the value of their investments.
In furtherance of this misrepresentation, Lindell produced and provided to
the Demers a third fictitious portfolio statement purporting to value the
Demers’ investments at $119,470.00.
- In or about the early part of 2001, Lindell advised the Demers that they
should reduce their monthly income further to $900 in order to reduce the
margin account that Lindell had established on Mr. Demers’ behalf. The Demers
accepted Lindell’s advice in this regard.
- On or about February 1, 2001, the Demers visited the Edward Jones’ office
in Belfast to inquire further about the discrepancies in the portfolio statements
they had been receiving. At this time, Lindell was not in the office and the
Demers were advised by Lindell’s administrative assistant that their investments
were worth approximately $89,200 only. When the Demers informed Lindell’s
administrative assistant that they had been receiving different statements
from Lindell, she was unable to provide them with a satisfactory explanation.
- On or about February 16, 2001, the Demers confronted Lindell about the discrepancies
in the portfolio statements they had been receiving. Lindell again misrepresented
to the Demers the value of their investments by producing and providing to
them a fictitious portfolio statement purporting to value the Demers’ investments
at approximately $113,450.
- In or about early March, 2001, the Demers contacted Lindell again on several
occasions to confront him about the discrepancies in their portfolio statements.
Lindell insisted yet again that his statements were accurate, even after the
Demers had informed him that they had checked their investment accounts themselves.
- Finally, on or about March 12, 2001, Lindell admitted to the Demers that
he had found a mistake that he had made and that their investments were worth
approximately $82,435 only.
- Even after this time, Lindell attempted to placate the Demers by representing
that he would purchase term life insurance on their behalf and at no cost
to them. Lindell further represented to the Demers that he would also reimburse
all commissions that he had thus far received in respect of their investments.
Furthermore, Lindell represented to the Demers that, by doing so, he would
continue to be able to provide them with a monthly income of $1,000.
- In or about April 2001, Lindell also attempted to placate the Demers by
advising them to buy 1,000 shares of High Yield Plus FD Inc. Lindell recommended
this investment as a way of paying off the Demers’ margin account. He further
represented that the return in this investment would yield over 12 percent.
The Demers accepted Lindall’s advice in this regard. However, in doing so
and without informing the Demers, Lindell purchased these shares using the
Demers’ margin account, thereby increasing the Demers’ margin account by approximately
$6,000. Lindell’s actions in this regard were inappropriate given that the
intent of this transaction was to pay off the Demers’ margin account.
- In or about August 2001, Lindell again attempted to persuade the Demers
that they should sell all of their investments held by Putnam and put $45,000
of their monies into Lord Abbott with the remainder to be put in Hartford.
Lindell represented that, by doing so, he would be able to provide the Demers
with a monthly income of $800 in August and $550 in September, to be reviewed
regularly by Lindell and the Demers thereafter.
- The Demers declined Lindell’s advice and, further told him that they no
longer had any faith in him. Shortly thereafter, the Demers obtained the services
of another broker at a different firm to invest on their behalf.
- By giving the Demers fictitious statements and misrepresenting the value
of their portfolio, Lindell has committed fraud in violation of 32 M.R.S.A.
- Pursuant to 32 M.R.S.A. § 10313(G), the Securities Administrator may, after
notice and opportunity for hearing, by order, revoke any license and bar any
applicant or licensee from association with an issuer, licensed broker-dealer
or investment adviser, if the Securities Administrator finds that the order
is in the public interest and the applicant or licensee has engaged in any
unlawful, unethical or dishonest conduct or practice in the securities business.
- The activities of Lindell described above constitute unlawful, unethical
and dishonest conduct and practice in the securities business in violation
of 32 M.R.S.A. § 10313(1)(G) and are contrary to the public interest. They
are therefore grounds for a revocation of license and bar pursuant to 32 M.R.S.A.
- Pursuant to 32 M.R.S.A. §§ 10602(1)(C) and (E), if the Securities Administrator
reasonably believes that a person has engaged, is engaging or is about to
engage in any act or practice constituting a violation of any provision of
the Act, the Securities Administrator may bar that person from association
with any issuer, broker-dealer or investment adviser in the State of Maine
and, further, may impose a civil penalty of up to $1,500 per violation.
- As set out above, Lindell has made untrue statements of a material fact
and, further, has committed fraud and deceit in connection with the offer,
sale and purchase of securities in violation of 32 M.R.S.A. § 10201, both
of which constitute grounds for revocation, bar and civil penalty pursuant
to 32 M.R.S.A. § 10602.
Pursuant to 32 M.R.S.A. §10708, notice is hereby given that the Securities
Administrator intends to issue an Order pursuant to 32 M.R.S.A. §§ 10313 and
10602 against Lindell to revoke his sales representative license, bar him from
association with any issuer, broker-dealer or investment adviser in the State
of Maine, and impose a civil penalty upon him in the amount of $6,000, to prohibit
further violations of the Revised Maine Securities Act.
Pursuant to 32 M.R.S.A. § 10708(2), Lindell has thirty (30) calendar days from
the entry of this notice of Intent to file a written request for a hearing.
Christine A. Bruenn
Christine A. Bruenn