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Suburban N.Y. officials charged in securities fraud case

kens5.com | April 15, 2016

WHITE PLAINS, N.Y. — A suburban New York town supervisor and another town official have been charged in a federal securities fraud case tied to the financing of the town's controversial baseball stadium.

Federal agents and Rockland District Attorney's Office detectives arrested Ramapo Supervisor Christopher St. Lawrence on Thursday morning. Ramapo is a town in Rockland County, N.Y., nearly 40 miles northwest of New York City.

Both St. Lawrence and Aaron Troodler, the former executive director of the Ramapo Local Development Corp. and once an assistant town attorney, face federal securities fraud, wire fraud, and conspiracy charges in connection with the issuance of municipal bonds.

They, along with two other town officials, also face related charges brought by the federal Securities and Exchange Commission.

The U.S. Attorney's Office says the case could be the first municipal bond-related securities fraud prosecution ever.

U.S. Attorney Preet Bharara, at a Manhattan news conference, said the two town leaders "kicked truth and transparency to the curb," defrauding both town residents and municipal bond investors.

"There were other more pressing needs than a shiny, new sports stadium," Bharara declared.

The SEC brought its own fraud charges simultaneously against St. Lawrence and Troodler, as well as against Ramapo, the development corporation and two other town officials.

Ramapo officials "resorted to fraud to hide the strain in the town's finances caused by the approximately $60 million cost to build a baseball stadium as well as the town's declining sales and property tax revenues," the SEC said in its news release on the charges. "They cooked the books of the town's primary operating fund to falsely depict positive balances ... during a six-year period when the town had actually accumulated balance deficits as high as nearly $14 million.

"And because the stadium bonds issued by the Ramapo Local Development Corp. (RLDC) were guaranteed by the town, certain officials also masked an operating revenue shortfall at the RLDC and investors were unaware the town would likely need to subsidize those bond payments and further deplete its general fund."

St. Lawrence and Troodler are expected to appear Thursday afternoon in U.S. District Court in White Plains. Troodler, who has moved to Pennsylvania, is expected to surrender to face the charges.

The dawn arrest of St. Lawrence marked the first time the U.S. Attorney’s Office in Manhattan has charged elected officials with crimes under SEC laws, "but I suspect, it will not be the last," Bharara said at the news conference.

Rockland County District Attorney Thomas Zugibe said the indictments were a prime example of elected officials' hubris. He said St. Lawrence "shamelessly exploited his public position for a personal agenda."

"If a regular homeowner engaged in such conduct it would be called mortgage fraud," he said.

St. Lawrence, who also served as Ramapo Local Development Corp. chairman, is accused of overstating town assets when filing documents to obtain the $25 million in municipal bonds used to build Provident Bank Park in 2012.

Investigators also looked into the movement of money between the local development corporation and town accounts, including possible commingling of funds, and whether the development corporation that oversaw the stadium project generated money and repaid the town.

The criminal complaint states the case involves the approval of municipal bonds from 2012 through 2015 for public improvement projects that contained untrue statements. St. Lawrence signed the official papers and Troodler certified the statements did not contain any untrue statements of material facts or omit any facts.

The arrests came nearly three years after FBI agents and Rockland District Attorney’s Office detectives seized boxes of documents and computer hard drives from Town Hall offices, including records from the finance department and the offices of the supervisor, town attorney and tax departments.

Joseph Poluka, Troodler’s lawyer, wouldn’t comment about the charges Thursday except to say his client would plead not guilty.

It was not immediately clear whether St. Lawrence would continue to try to carry out the duties of his office.

St. Lawrence's critics, including the grassroots political party Preserve Ramapo, have accused him of manipulating financial regulations and laws to get the stadium built. They forced a public vote on the ballpark and filed lawsuits to try to block its construction, claiming the town would lose millions of dollars.

In 2010, voters overwhelmingly rejected at $16.5 million plan to finance the construction of the 4,500-seat baseball stadium for a team in the independent Can-Am League. The stadium initially had a $20 million to $25 million price tag. But the price ballooned to more than $60 million, according to a New York state Comptroller's audit.

St. Lawrence promised not to use town funds for the stadium after the referendum defeat. But he then used the town to guarantee $25 million in bonds over five years issued for the development corporation.

The Town Board eventually refinanced the $25 million debt over 30 years when the town couldn’t meet its yearly obligations.

In a February 2012 audit, the Comptroller's Office said Ramapo taxpayers could end up paying the $60 million and that the town appeared to have "inappropriately mingled its activities" with the development corporation.

"Ramapo officials ignored red flags when the project numbers didn’t add up, which could adversely impact its finances for years to come,” the audit by Comptroller Thomas P. DiNapoli stated.

 

 

 

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