A FINRA hearing officer has moved to bar a former Citigroup registered rep from the industry for engaging in money laundering and helping a childhood friend and business associate deceive creditors.
James Van Doren worked for Citigroup Global Markets in New York. He pleaded guilty in federal district court to money laundering and was sentenced to 15 months in prison in November 2014.
Van Doren invested in his friend's real estate deals through a company he formed in Arkansas, according to FINRA documents. Within months of making his first investment in May 2007, the investment soured. Despite the fact that Van Doren knew that his friend's company was in trouble, he nevertheless invested additional money in the hope of recovering funds he loaned his friend to pay off subcontractors.
As creditors descended on his friend's failing company, Van Doren on three occasions accepted money from his friend to conceal those assets from his friend's creditors. In total, he accepted $244,000, including $30,000 stashed in a briefcase in cash. Whenever his friend needed money, Van Doren dipped into the briefcase, which he kept in a safety deposit box, according to FINRA.
Van Doren later returned most of the money to his friend and retained some of the money to offset financial losses he suffered. On one occasion, he made false representations to his bank in an effort to obtain additional funds for his friend.
"The respondent's misconduct signifies that he is a grave risk to customers, firms, and other participants in the industry," FINRA's hearing officer, Lucinda McConathy, writes in her decision. "He is unfit to be in the securities industry and should be barred."
Van Doren vehemently refuted the allegations. "I did not hide anything from anyone, I never misled anyone and I did nothing improper," he said in an email. "I was a creditor of my former friend, and I lost money—like his other creditors—due to my investments with him. I was always very open about my business dealing with him and no one, including my employer and FINRA, ever thought I had done anything wrong until I was wrongly accused as a co-conspirator by the U.S. Attorney in Arkansas.
Van Doren explained that his decision not to participate in FINRA's proceeding had to do with his inability to appeal his criminal conviction. He regretted having signed the plea agreement and tried unsuccessfully to have it withdrawn.
"I refused to settle the case with FINRA because I would not admit to facts that were untrue," he said in the email. "My counsel and I determined we would not get a fair hearing from FINRA since they would rely on the conviction and U.S. Attorney's version of the facts."
His friend pleaded guilty to money laundering, conspiracy to commit bank fraud, and conspiracy to commit bankruptcy fraud and was sentenced to 65 months in jail.
Van Doren joined Citigroup in January 2011 and was permitted to resign in April 2013, following criminal charges brought against him in the U.S. Western District Court of Arkansas. On the day he resigned, Citigroup terminated his registration, reporting a "loss of confidence" in Van Doren, FINRA said in its decision.
Prior to Citigroup, Van Doren worked for Barclays Capital and Lehman Brothers, according to his BrokerCheck report. He joined Lehman in October 2005 and Barclays in September 2008.
Unless FINRA's decision is appealed to the regulator's National Adjudicatory Council, or is called for review by the council, the decision becomes final after 45 days, FINRA said.
Robert Julavits, a Citigroup spokesman, declined to comment on the matter.