Trial Date Jan. 9 for Ramapo, N.Y. Officials in Criminal Case

bharara-preet-bl092214-357.jpg

WASHINGTON – A criminal case alleging two Ramapo, N.Y. officials misled investors and credit rating agencies in connection with municipal bonds would go to trial on Jan. 9 under the timeline the federal judge has put forth for the proceedings.

Christopher St. Lawrence, supervisor and director of finance for the town, as well as president of the Ramapo Local Development Corp., and Aaron Troodler, the former executive director of the RLDC, are facing 22 counts of wire fraud, securities fraud, and conspiracy stemming from an indictment obtained in April by U.S. attorney for the Southern District of New York Preet Bharara.

The criminal case against the two individuals is pending in the U.S. District Court for the Southern District of New York in Manhattan and has been assigned to Judge Cathy Seibel.

The criminal charges were a first-of-a-kind for the Department of Justice. Before this case, the DOJ's involvement in the muni market had mostly centered on antitrust cases over bid-rigging of investments.

Under the timeline Seibel established for the case, any motions from the parties must be filed by Sept. 12 and any opposition to the motions would have to be filed by Sept. 25 with subsequent replies to the opposition due by Oct. 3. Filings to prepare for trial, like trial exhibits, will be due either in November or December.

The trial is expected to take four to five weeks, according to Seibel's timeline.

In addition to the criminal charges, St. Lawrence and Troodler are facing civil charges in a parallel action brought by the Securities and Exchange Commission in April. The SEC case also names the town of Ramapo, the RLDC, and two other town officials: Michael Klein, the town's attorney, and Nathan Oberman, its deputy finance director.

The civil and criminal complaints largely mirror each other. They argue that the former and current officials used fraud to hide the strain on Ramapo's finances related to 16 muni securities offerings made between September 2010 and September 2015 and to prevent further political fallout over a baseball stadium project. Fourteen of the offerings were from the town. The other two were from the RLDC but were guaranteed by the town and were related to the baseball stadium, which the town pursued despite a referendum in August 2010 where 70% of voters disapproved of issuing bonds to finance its construction.

Most of the fraudulent activity was designed to conceal the town's deteriorating general fund, which faced deficits ranging between $250,000 and $14 million between the town's fiscal years 2009 and 2014, according to the SEC. The defendants, through a series of fabricated receivables over that period, were able to make it look like the fund actually had positive balances of between $1.4 million and $4.1 million.

Ramapo and Klein, which dispute the SEC's complaint, are the only two defendants to have done so in either case to date.

For reprint and licensing requests for this article, click here.
Enforcement Law and regulation Bankruptcy
MORE FROM BOND BUYER