First-of-Its-Kind Bonds Charge in New York

(CN) — The highest-ranking public official of a New York town was charged in what is believed to be the first municipal bond-related securities fraud prosecution.

Manhattan U.S. Attorney Preet Bharara said Thursday morning that Christopher Lawrence, supervisor of the Town of Ramapo, N.Y., and N. Aaron Troodler, former executive director of the Ramapo Local Development Corp. (RLDC), are charged with securities fraud, wire fraud and conspiracy in connection with municipal bonds.

St. Lawrence is the highest ranking public official in Ramapo, Bharara said. Prosecutors believe the case is the first-ever municipal bond-related securities fraud prosecution.

A 30-page indictment against St. Lawrence and Troodler accuses them of orchestrating a "scheme to defraud investors in all bonds issued by the town and by the RLDC that were outstanding" from November 2009 to the present.

Some of the bonds in question were issued by the RLDC to build a minor league baseball stadium, prosecutors say.

"The defendants and others made materially false and misleading statements and omitted material facts regarding the finances of the town and the RLDC," the indictment states. "They did so primarily to inflate the balance of the general fund, partly to conceal both the extent to which the town financed the stadium project and the impact of that financing, and to conceal the RLDC's illiquidity. As a result of the scheme, investors in all town and RLDC bonds outstanding during the relevant time period have, to date, suffered millions of dollars in losses."

St. Lawrence was arrested Thursday morning, according to local news reports.

Bharara will hold a press conference at 11 a.m. Thursday to discuss the charges against St. Lawrence and Troodler.

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