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A 12-member jury found Town of Ramapo Supervisor Christopher St. Lawrence guilty on Friday of 20 of 22 federal charges of rigging the town's financial books in order to receive lower rates on bonds to finance a baseball stadium in Pomona and other town projects.
The jury returned guilty verdicts on 12 wire fraud counts and eight counts of securities fraud. The 65-year-old St. Lawrence, who lives in Wesley Hills, was acquitted of one count of securities fraud and one count of wire fraud.
The verdict, which came after a four-week trial in federal court in White Plains, marks the first conviction for securities fraud in connection with municipal bonds.
The 11 counts of wire fraud each carry a maximum sentence of 20 years in prison; eight counts of securities fraud, each of which carries a maximum sentence of 20 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.
“As the jury found today after trial, Christopher St. Lawrence lied repeatedly to the investing public about the state of Ramapo’s finances," Joon H. Kim, the Acting United States Attorney for the Southern District of New York, said. "The integrity of the $3.7 trillion municipal bond market is of critical importance to both investors and municipalities that rely on this market. The verdict today in a case of public corruption meets securities fraud, stands as a victory for both honest government and fair financial markets.”
Rockland County Executive Ed Day quickly responded to the guilty verdict by saying: “Holding public office is a privilege. Any public official found guilty of breaking the law has violated that sacred public trust," Day said. "The conclusion of this jury that the Ramapo Supervisor broke the law is a stain on the town and all of Rockland County. We support every effort to restore integrity to Ramapo.”
The Indictment charged that St. Lawrence lied to investors in the town’s and Ramapo Local Development Corporation's (RLDC) bonds in order to conceal the deteriorating state of the Town’s finances and the inability of the RLDC to make scheduled payments of principal and interest to holders of its bonds from its own money. St. Lawrence lied to investors primarily by making up false assets in the town’s General Fund, Kim said.
The General Fund is the town’s primary operating fund. The accumulated difference over time between how much money the town receives in taxes and fees and how much it spends in a year is the fund’s balance. The fund balance is a cushion that can be spent during difficult financial times. The size of the fund balance relative to the amount of the fund’s revenue and trends in a town’s general fund balance over time are the primary indicators of the town’s financial health.
According to the Indictment and the evidence, St. Lawrence lied to the RLDC’s bond rating service in January 2013 when he told them in a telephone call that the 2012 fund balance would remain unchanged from the 2011 balance. Immediately after that call ended, St. Lawrence told Town employees “to do [an upcoming] refinancing of the short-term debt as fast as possible because . . . we’re going to have to all be magicians to get to some of those numbers.”
When the RLDC issued $25 million in bonds to build the stadium building itself in 2011, St. Lawrence inflated the size of the Town’s general fund by including a false $3.6 million receivable, Kim said.
In addition, St. Lawrence inflated the general fund with another fake receivable for $3.08 million from 2010 through 2015, Kim said.
Kim praised the investigative work of the FBI and the Rockland County District Attorney's Office. He also thanked the Securities & Exchange Commission for its substantial assistance in the investigation and trial.
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