New York suburb, officials charged in landmark bond fraud case

Thu Apr 14, 2016 6:31pm EDT
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By Nate Raymond and Jonathan Stempel

NEW YORK (Reuters) - An elected official of a New York City suburb was charged on Thursday with defrauding investors who helped finance a controversial minor league baseball stadium, in what authorities called the first criminal securities fraud prosecution involving municipal bonds.

Christopher St. Lawrence, the elected supervisor of Ramapo, New York, was charged in an indictment with securities fraud, wire fraud and conspiracy, as was N. Aaron Troodler, a former executive director of the non-profit Ramapo Local Development Corp.

In addition, the U.S. Securities and Exchange Commission sued Ramapo, the RLDC, St. Lawrence and Troodler, along with Town Attorney Michael Klein and Deputy Finance Director Nathan Oberman.

The case, filed in federal court in White Plains, New York, follows U.S. regulators' push in recent years to bring civil actions against misconduct in the $3.7 trillion U.S. municipal bond market.

At a news conference in Manhattan, U.S. Attorney Preet Bharara called the Ramapo case a "landmark" first to result in criminal securities fraud charges, adding: "I suspect it will not be the last."

St. Lawrence, 65, and Troodler, 42, pleaded not guilty during a court hearing on Thursday. Both were released on a $500,000 bond.

Authorities said bond investors lost millions of dollars because the defendants concealed Ramapo's deteriorating finances, caused in part by the $58 million cost of building the ballpark, which is home to the Rockland Boulders.

The costs to build what is now called Provident Bank Park came even though voters refused by a 70 percent margin to approve guaranteeing bonds to pay for its construction and St. Lawrence said later that private funds would be used, prosecutors said.   Continued...

Preet Bharara, the U.S. Attorney for the Southern District of New York, speaks at a press conference in Manhattan April 14, 2016, to announce a securities fraud case against officials in the town of Ramapo, New York, for defrauding investors. REUTERS/Nate Raymond