LOS ANGELES — The finance director for the Association of Bay Area Governments is a suspect in the theft of $1.3 million in bond proceeds intended for public parks and street improvements in a San Francisco neighborhood, the San Francisco
A probe was launched last month after a routine audit of the South of Market Community Stabilization Fund, a pool of bond money and developer contributions used for neighborhood improvements, showed the account had been cleaned out; San Francisco City Attorney Dennis Herrera and law enforcement officials quickly focused on ABAG's finance director, Clarke Howatt, the Chronicle reported, citing multiple unnamed sources.
A spokesman for the city attorney's office told The Bond Buyer Friday it is working cooperatively with ABAG and law enforcement officials to investigate the missing $1.3 million.
Herrera and City Controller Ben Rosenfield
According to the letter, the ABAG Finance Authority, without the city's knowledge, entered into a first supplemental indenture of trust in July 2014 that unlawfully divested the city of its authority to approve disbursements from the accounts funded through the authority's Series 2006A special tax bond issue for Community Facilities District No. 2006-1.
Subsequently, the city attorney's letter said, under terms of the revised indenture the ABAG Finance Authority, via letter, requested the wire transfer of $1,296,340.66 to the account of an entity at a Citibank branch in La Jolla, Calif.
A call to Ezra Rapport, ABAG's chief executive, was not immediately returned.
ABAG is a regional planning agency that also serves as a conduit bond issuer, handling more than $6.7 billion of bonds in 273 issues since 1990, according to Thomson Reuters data.
Prior to joining ABAG in 1995, Howatt was a public finance banker for Rauscher Pierce Refsnes and Kidder, Peabody & Co., according to the Chronicle.
A fake name was apparently used as a contact for the recipient of the wire transfer, the developer's attorney told the Chronicle.
Howatt reportedly didn't show up for work Thursday, nor has he responded to emails or phone calls.
A spokesman in the San Francisco district attorney's office said it has no information and is not involved in the investigation at this point.
