PHOENIX - The Securities and Exchange Commission has reached an agreement in principle with most of the defendants in the SEC's enforcement case against Ramapo, N.Y.
The proposed settlement agreements with Nachman “Aaron” Troodler, Nathan Oberman, and Michael Klein were disclosed but not described in a letter to federal Judge Cathy Seibel from attorneys representing the SEC and the defendants.
All three were charged as players in what the SEC said was an effort to conceal the town's financial troubles in bond documents for 16 muni offerings made between September 2010 and September 2015.
The alleged mastermind of the scheme, Ramapo supervisor and director of finance and president of the Ramapo Local Development Corp. Christopher St. Lawrence, was convicted in a criminal trial last year and in December was sentenced to 30 months in prison and a $75,000 fine.
The letter to Seibel indicates that the SEC has not reached terms with St. Lawrence in the civil lawsuit, and that SEC lawyers plan to continue their case against him. Troodler was executive director of the RLDC and an assistant town attorney, Oberman was the town's deputy finance director, and Klein was the town's attorney.
Together, government lawyers said, the group “cooked the books” of the town’s primary operating fund to falsely depict positive balances of between $1.4 million and $4.2 million during a six-year period when the town had actually accumulated deficits as high as nearly $14 million related to the financing of a $60 million baseball stadium.
All of the defendants initially maintained their innocence, asking the court to throw out the SEC’s charges because, they said, nobody was hurt by their conduct.
Though the SEC brought its charges against Ramapo, the RLDC, Troodler, Oberman, and Klein in April 2016, the case had been slow-moving because the commission agreed to await the outcome of the Justice Department’s criminal proceedings against St. Lawrence and Troodler.
Troodler cooperated with DOJ in the criminal case against St. Lawrence, and pleaded guilty. He avoided jail time but was ordered to pay a $20,000 fine and lost his license to practice law. Oberman and Klein weren't charged by DOJ.
Ramapo and the RLDC previously reached settlements with the SEC, and agreed to hire an independent disclosure counsel as well as a financial consultant and auditing firm before again tapping the municipal bond market.
“I write to apprise the court that the commission staff and defendants Klein, Oberman and Troodler have reached settlements in principle and those defendants have signed consents to proposed final judgments,” SEC lawyer Alexander Vasilescu wrote in the letter filed in the U.S. District Court for the Southern District of New York in Manhattan, where Seibel presides. “The commission staff is now seeking authorization from the commission for the staff to submit the proposed final judgments and consents to the court for Your Honors’ consideration.”
The letter goes on to say that the SEC will promptly file the proposed settlements with the court once they receive commission approval, or will notify the court if the commission does not approve the settlements. SEC lawyers plan to file a motion for summary judgment against St. Lawrence Feb. 28, Vasilescu wrote.
The SEC declined to comment on the status of the case, and various attorneys representing the defendants did not respond to requests for more information about the pending settlements.