Town officials indicted in landmark securities-fraud case over municipal bonds
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In what prosecutors say is the first criminal case of its kind ever pursued, a municipal official in a New York suburb and a former assistant town attorney have been federally indicted in a securities-fraud case over bond issues.
A parallel civil lawsuit is also being pursued by the U.S. Securities and Exchange Commission against Ramapo, its current town attorney and others, according to the Associated Press, the Journal News, the New City Patch, Reuters and the Wall Street Journal (sub. req.).
While funding a minor-league baseball stadium and other projects, the defendants “repeatedly and brazenly” lied about municipal finances to voters and purchasers of bonds from the town and the nonprofit Ramapo Local Development Corporation (RLDC), claiming assets that didn’t exist, prosecutors said at a Thursday news conference about the White Plains case. In one instance they cited, a phony $3.1 million revenue was marked for a real estate deal which had actually fallen through when timber rattlesnakes were found on the land.
“Christopher St. Lawrence and N. Aaron Troodler kicked truth and transparency to the curb, selling over $150 million of municipal bonds on fabricated financials. In doing so, they defrauded both the citizens of Ramapo and thousands of municipal bond investors around the country,” said Manhattan U.S. Attorney Preet Bharara in a written statement. “Whether you are a publicly listed company or a municipality, you are not allowed to cook the books, plain and simple.”
St. Lawrence is Ramapo’s elected supervisor. Troodler, who once served as assistant town attorney, is a former executive director of the RLDC. In addition to securities fraud, they are charged with conspiracy and wire fraud.
A lawyer for St. Lawrence, 65, declined to comment when contacted by the New York Times (reg. req.) and a lawyer for Troodler, 42, said only that his client would plead not guilty.
In the civil suit, the SEC also names the two as defendants, along with Ramapo itself; the RLDC; town attorney Michael Klein; and Nathan Oberman, who serves as deputy finance director, Reuters reports.
The complaint seeks a court-appointed monitor and required review by outside counsel of any bond issues by the financially troubled town over a five-year period.
