WASHINGTON – A federal judge has denied former Miami budget director Michael Boudreaux's motion for a new trial after a jury found him guilty of securities fraud for misleading municipal bond investors, but he is still exploring options for appeal, his lawyer said.
Judge Cecelia Altonaga, who sits on the U.S. District Court for the Southern District of Florida in Miami, agreed with the Securities and Exchange Commission that Boudreaux's motion to vacate the Sept. 14 jury verdict and hold a new trial does not present any new arguments or reasons to change the court's ruling.
The jury found Boudreaux guilty of SEC charges that he misled investors about interfund transfers that were designed to cover up a growing general fund deficit during Miami's fiscal years 2007 and 2008. Altonaga ordered him to pay a $15,000 penalty after the verdict. Miami, which settled for $1 million, was under a cease-and-desist order stemming from a 2003 fraud case at the time it and Boudreaux were charged with securities fraud.
Benedict Kuehne, Boudreaux's lawyer, said that he and Boudreaux are reviewing the court's order and determining what to pursue.
"He has the opportunity to file an appeal within 30 days and we are evaluating the appellate remedies," Kuehne said. "Mr. Boudreaux continues to appreciate the good work done by Judge Altonaga but intends to continue to fight for his vindication."
The U.S. Court of Appeals for the Eleventh Circuit, which is headquartered in Atlanta but has an office in Miami, has jurisdiction over appeals from the federal district court where the case was decided.
Altonaga rejected each of the arguments Boudreaux made in his motion when coming to her decision to deny the request for a new trial or relief from the verdict.
Boudreaux had argued that there was insufficient evidence at trial of misrepresentations or omissions, negligence, and severe recklessness. Altonaga agreed with the SEC that, despite Boudreaux's arguments, personally making a misrepresentation or omission is not needed for the guilty finding against Boudreaux and is also not needed for the finding that he aided and abetted Miami's violations. She also found that "legally sufficient evidence was presented at trial to support the jury's verdict as to all claims" and that "the jury's verdict is not against the great weight of the evidence."
Altonaga also disagreed with Boudreaux's argument that allowing Miami's prior cease-and-desist order and reports from the city's independent auditor to be entered as evidence were errors. The former budget official also said the court gave erroneous jury instructions about the test for a reliance-on-professional-advice defense, arguing that the four-part test the court used should have been replaced with a "truncated" two-part test used in an unrelated case decided after the verdict.
Altonaga noted that the jury did not find Boudreaux met any of the four elements in the test that was relayed to jurors and held in her order that there was no error in the instruction and no prejudice that Boudreaux experienced because two more elements were included.
The alleged omissions and misrepresentations Boudreaux and Miami made were contained in: offering documents for three bond transactions in 2009 that totaled $153.5 million; presentations to bond rating agencies; and the city's comprehensive annual financial reports (CAFRs) for fiscal years 2007 and 2008, the SEC found.
The city disclosed the interfund transfers in each of its CAFRs and official statements but, according to the SEC, said the transfers contained money that was not expended and was returned to the general fund. In reality, that money had already been pledged to several ongoing capital projects and some of it was restricted by city law for designated purposes and not the general fund, the SEC said. Thus, the funds that were transferred should not have been considered unallocated, according to the SEC.