Dusenberry borrowed $742,500 from his customers and, in several instances, Dusenberry used the proceeds of one loan to repay an earlier loan from a different customer. Dusenberry failed to repay a total of approximately $500,000 to his customers.
The firm prohibited borrowing money from customers unless the borrowing arrangement fell within certain enumerated exceptions, such as a loan from an immediately family member; regardless of the circumstances, however, employees were required to obtain the firm’s written pre-approval for all loans, and Dusenberry neither requested nor received the firm’s written pre-approval for any of his loans.
In order to effect one of the loans, Dusenberry signed the customer’s name to a Letter of Authorization (LOA) and submitted it to the firm, which caused the firm to transfer $30,000 from the customer’s account to another customer’s account. In order to effect a loan from a different customer, Dusenberry signed that customer’s name to an LOA without her knowledge, authorization or consent, and submitted it to the firm, which caused the firm to transfer $32,000 from the customer’s account to another customer’s account.