BRADENTON, Fla. — Former Jefferson County, Ala., commissioner Mary Buckelew will serve no prison time for lying to a grand jury about expensive gifts and spa treatments she received to influence her vote in connection with $3.2 billion of debt and swaps sold for the county’s sewer system.
U.S. District Judge Inge Johnson ordered Buckelew to pay a $20,000 fine, do 200 hours of community service, and spend three years on probation.
Prosecutors had recommended that Buckelew, 63, spend six months in prison and pay a $30,000 fine to address the seriousness of her crime and deter other public officials.
In 2003 and 2004, both years during which Jefferson County refinanced its now-troubled sewer debt, Buckelew accepted $2,619 in shoes, a purse, and other items purchased at New York’s upscale Salvatore Ferragamo by Montgomery bond dealer Bill Blount.
Blount also bought Buckelew $1,400 in services at the Federic Fekkai Spa.
In August 2008, Buckelew lied to a grand jury about receiving the gifts. She changed her story and pleaded guilty after she was shown store receipts.
Buckelew was the first Jefferson County elected official convicted in a pay-to-play scheme involving the debt-ridden sewer system on which the county has now defaulted.
Former Jefferson County Commission President Larry Langford, who master-minded the county’s sewer refinancing, was convicted Oct. 28 on 60 federal charges of bribery, fraud, money laundering, conspiracy, and filing false tax returns.
Langford’s charges related to $236,000 in gifts and money that he received for throwing bond business to Blount, whose firm received $7 million from county deals.
Although they were charged with dozens of counts, Blount, and mutual friend Al LaPierre, both pleaded guilty before trial to a handful of charges. LaPierre, who funneled some money between Blount and Langford, is scheduled to be sentenced next Thursday. Blount will be sentenced Dec. 17.
On Monday, JPMorgan — Jefferson County’s largest creditor in the sewer debacle — disclosed in a quarterly report a settlement that was announced last week with the Securities and Exchange Commission over securities fraud and other charges.
Without admitting or denying the SEC’s charges, JPMorgan agreed to pay a penalty of $25 million to the federal government and $50 million to Jefferson County, as well as to forfeit more than $647 million in swap termination fees it said the county owed.
JPMorgan said Monday that it consented to an administrative order, which related to the firm’s failure “to disclose in confirmations and official deal documents descriptions of payments that had been made to mostly local Alabama businesses at the direction of representatives of the Jefferson County Commission.”
While JPMorgan made a point of saying that it acted at the behest of county officials, some securities law experts said it is a typical settlement and disclosure.
Some SEC actions trigger civil suits by investors seeking damages, and companies would rather pay a fine and avoid the time and cost of litigation, according to Tom Loo, a securities lawyer and co-managing shareholder at Greenberg Traurig LLP.
“To me the settlement was par for the course and the … language is more of a tell-tail of the defense which could be raised in the future actions,” said Loo, who stressed that his comments reflected generally what happens in such cases.
Another muni expert, who asked not to be identified, felt the disclosure was an attempt to “deflect responsibility.”
But in the long run, the SEC alleviated Jefferson County’s debt burden, while JPMorgan kept its “nose clean,” the expert said, adding: “The agreement reached seems to accomplish both … win-win.”
Another industry observer said deals that include unqualified people or firms, or those who do no work, result in higher fees and costs the issuer must bear.
“When the client directs the bankers to do business in a manner inconsistent with industry standards, the outcome is always detrimental to the client,” the observer said.
Jefferson County received the $50 million settlement payment from JPMorgan on Monday. County commissioners on Tuesday voted to spend $2.5 million of the settlement to return county workers to a full 40-hour work week. The work force has been on a 30-hour work week for months largely because a local judge struck down an occupational tax that provided one-third of the revenues for the general fund. The county laid off 1,000 workers for about a month but has since brought all of them back to work.
In addition to resuming a 40-hour work week, the county plans to put $22 million of the settlement into a reserve fund. Another $15 million is expected to be used to repay a portion of the occupational tax that was struck down by the court ruling, and $10.5 million will be deposited into the general fund.
Some county commissioners have also said that they believe the county should sue JPMorgan based on last week’s settlement. One official said the suit might allow the county to “cram down,” or eliminate, up to $2 billion of the $3.2 billion of sewer debt.