UNITED STATES OF AMERICA
In the Matter of
JOSEPH E. ERWIN
|ORDER MAKING FINDINGS AND IMPOSING SANCTION BY DEFAULT|
The Securities and Exchange Commission (Commission) instituted this proceeding, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act) on May 15, 2002, with an Order Instituting Public Administrative Proceedings (OIP).
On July 3, 2002, the Division of Enforcement (Division) filed a Motion for Entry of Order Making Findings and Imposing Remedial Sanctions By Default Against Respondent Joseph E. Erwin (Motion). The Division requests that Respondent be barred from association with any broker or dealer.
Pursuant to 17 C.F.R. §§ 201.155(a) and .220(f), a respondent who fails to answer, respond to a dispositive motion within the time provided, or otherwise defend the proceeding may be deemed to be in default. The administrative law judge may then determine the proceeding against him upon consideration of the record, including the OIP, the allegations of which may be deemed to be true.
Respondent was served with a copy of the OIP. The return of service received by the Commission's Office of the Secretary reflects that mailroom personnel at the Eglin Federal Prison Camp, where Respondent is incarcerated, signed for the OIP on May 22, 2002. The Division certifies that on June 25, 2002, it was informed that the records at the prison reflect that Respondent signed for the OIP on May 21, 2002, which was apparently misdated from delivery on May 22, 2002. Rule 220(b) of the Commission's Rules of Practice provides that a respondent must file an answer within twenty days after service of the OIP, which in this case was no later than June 11, 2002. Respondent has not filed an answer and at the telephonic prehearing conference held on June 24, 2002, Respondent acknowledged that he had received the OIP and further indicated that he does not intend to file an answer. (June 24, 2002, Prehearing Transcript 2, 6-7.)
Respondent is in default within the meaning of 17 C.F.R. §§ 201.155(a) and .220(f). See 17 C.F.R. §§ 201.155(a) and .220(f). Accordingly, I find that the allegations in the OIP are true.
A. Joseph E. Erwin, age 41, currently is incarcerated at the Eglin Prison Camp in Florida. From May 1997 to September 2000, he was a registered representative with Eisner Securities, Inc. (Eisner), which was then registered with the Commission as a broker-dealer.
B. On January 23, 2001, in the case of United States of America v. Joseph E. Erwin, Case No. CR2-01-012, in the United States District Court for the Southern District of Ohio, Eastern Division, Erwin pled guilty to one count of mail fraud (18 U.S.C. § 1341), and one count of wire fraud (18 U.S.C. § 1343), and was subsequently sentenced to ten years incarceration and ordered to make restitution of $2,013,404.15. The criminal information alleged that, between May 1997 and September 2000, while employed at Eisner, Erwin improperly diverted over $2 million from at least eleven customer accounts to his own bank accounts. As part of the fraud, Erwin changed the customers' addresses in a computer terminal at Eisner to addresses he controlled, requested issuance of checks from those customers' accounts, and forged endorsements on the checks that were sent to the false addresses. Erwin also diverted the affected customers' statements and sent them false monthly statements.
C. Erwin's criminal conviction arose out of his conduct as an associated person of a broker-dealer, and involved misappropriation of funds.
In view of the foregoing, and pursuant to Section 15(b) of the Exchange Act, it is in the public interest and necessary for the protection of investors that Respondent be barred from association with any broker or dealer.
Accordingly, I GRANT the Division's Motion and ORDER that Respondent Joseph E. Erwin be, and hereby is, BARRED from association with any broker or dealer.
Robert G. Mahony
Administrative Law Judge
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