FINRA has expelled Phoenix-based Lawson Financial and barred LFC’s CEO and President Robert Lawson from the securities industry to settle charges they committed securities fraud for misusing customer funds and breached fiduciary duties as a co-trustee of a customer trust account. Robert’s wife Pamela Lawson, the firm’s COO, agreed to a 2-year suspension and a $30,000 fine.

The problem centered around millions of dollars of municipal revenue bonds that LFC underwrote and related to an Arizona charter school and 2 assisted living facilities in Alabama. Robert Lawson and LFC transferred millions of dollars from a deceased customer’s trust account to the borrowers and associated parties, even though they were aware that each borrower faced financial difficulties. Fact is, the borrowers were not able to pay their operating expenses or required interest payments on the bonds.

Since Robert and Pamela Lawson were co-trustees of the trust account, they violated FINRA rules by breaching their fiduciary duties as trustees and engaging in self-dealing with the trust account.