SEC Probes Florida Toll Road Agency

BRADENTON, Fla. – The Securities and Exchange Commission is investigating bonds issued in 2013 by a scandal-ridden Florida toll road agency.

An SEC subpoena received by the Central Florida Expressway Authority, dated Jan. 7, refers to offerings by the embattled former Orlando-Orange County Expressway Authority.

The CFX replaced the Orlando-Orange County authority last year and assumed responsibility for its outstanding debt, including the bonds in question.

The SEC investigation, first reported by the Orlando Sentinel, has not been disclosed on the Municipal Securities Rulemaking Board’s EMMA filing system.

“We intend to disclose [the subpoena] in our next official statement,” said CFX spokeswoman Michelle Maikisch. The agency is planning to issue bonds to finance a portion of its work program in the next year or two.

The investigation is “confidential and nonpublic,” and should not be construed as an indication that any law has been violated, said a cover letter signed by Casey P. Cohen, staff attorney in the Miami Division of Enforcement.

The 24-page document demands records and communications relating to the Orlando-Orange County Expressway Authority’s 2013A-B bonds, two of the agency’s committees, its former chief financial officer, and certain people that work at Citi and a lobbying firm once used by the bank.

“The subpoena for documents does not impact CFX’s ability to repay its debt,” said Maikisch.

Maikisch said the authority’s board members have been informed about the subpoena, and there are no plans to discuss it publicly.

The Orlando-Orange County agency issued $242.3 million of 2013A bonds with Citi as the book-runner, and $174.3 million of 2013B bonds with Citi as a member of the syndicate. Proceeds refunded outstanding debt and terminated swaps.

The SEC subpoena sought documents and communications relating to Citi and two of its employees: public finance director Mark Wienberg and managing director Norman Pellegrini. Both work in the bank’s Orlando office.

“We will, of course, cooperate fully with any regulatory inquiries we receive on the matter,” Citi said in a statement.

The SEC also sought information about Ballard Partners, a lobbying firm hired by Citi, and Ballard employee Chris Dorworth.

Wienberg, Pellegrini, and Dorworth’s names surfaced during a multi-year investigation of former Orlando-Orange County Expressway Authority board members Scott Batterson and Marco Pena.

Batterson was found guilty of bribery and sent to jail, while Marco Pena pleaded guilty to breaking Florida’s “sunshine” law prohibiting board members from discussing public business in private.

The Orange County state attorney’s office found evidence of meetings between certain people last year, including those named in the SEC subpoena, which led people knowledgeable about the case to speculate about the appearance of a potential violation of the MSRB’s Rule G-38 concerning the solicitation of municipal securities business.

“There’s always potential that a meeting with a party capable of awarding municipal securities business may draw scrutiny under G-38 as a potential solicitation of municipal securities business,” a former SEC lawyer, now in private practice, said Thursday.

“Under the provisions of G-38, the presence of a party accompanying an underwriter who is not an affiliated person of the underwriter to a meeting with an issuer official that may involve solicitation of municipal securities business, raises a question of whether that party was compensated directly or indirectly for their participation, and G-38 was possibly violated,” the lawyer said.

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Enforcement Transportation industry Florida
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