The U.S. Securities and Exchange Commission has subpoenaed Nassau for records relating to a $12 million county contract that is central to federal corruption charges against former State Senate Majority Leader Dean Skelos (R-Rockville Centre) and his son Adam, county officials confirmed Thursday.
A federal grand jury last month indicted Skelos and his son on charges of conspiracy, bribery and extortion. The indictment alleges the senator pressured companies, including Arizona-based AbTech Industries, to pay more than $200,000 to his son and influenced Nassau to award the $12 million contract to AbTech. The charges echoed a May 4 federal complaint filed by Manhattan U.S. Attorney Preet Bharara and FBI officials.
Dean Skelos, who stepped down from his leadership position, and his son have pleaded not guilty. AbTech, a publicly traded company, has not been accused of any wrongdoing.ColumnJanison: Feds' Skelos charges outline multi-sided scandalSee alsoRead the complaint vs. SkelosMore coverageSenate Majority Leader Dean Skelos, Adam Skelos face corruption charges
This is the first time officials have acknowledged that the SEC, which oversees publicly traded companies, is involved in the case.
"The county attorney's office was contacted by the SEC and informed that they would be seeking records relating to the AbTech contract and, to that end, would be sending a subpoena specifying the records they need to that office," County Attorney Carnell Foskey said in statement responding to a Newsday inquiry. "The county attorney's office has received the subpoena and is in the process of gathering the requested documents."
Neither the county nor the SEC would comment on why the federal securities agency was interested. However, sources say it is not unusual for the SEC to open a file whenever a public corporation becomes embroiled in a public scandal.
"It is the logical progression in a case involving a public company," said a county official who has dealt with the SEC in the past. "It's sort of standard operating procedure." Usually the SEC starts with a phone call and then progresses to issuing a subpoena if more information is needed, the source said.
Two sources said the SEC is trying to determine if there was any intentional manipulation of the company's stock price by AbTech's announcements of the contract's award and execution in 2013 or by Nassau's suspension of the contract last month.
The agency also would be looking to see if any insiders unduly profited by buying or selling AbTech stock before the announcements, they said.
AbTech spokeswoman Lisa Linden said Thursday that "We do not comment on matters relating to the SEC."
Records show that AbTech, represented by Adam Skelos, first contacted the county about using its product -- a sponge to filter bacteria and other hazardous material from storm-water runoff -- after superstorm Sandy hit in October 2012. At Dean Skelos' suggestion, federal prosecutors allege, AbTech late that year or in early 2013 submitted an unsolicited proposal to Nassau for a storm-water filtration contract. The county issued a request for proposals for storm-water treatment on Feb. 21, 2013, and received three responses on April 3.
Although AbTech was not the lowest bidder, the county's public works commissioner on May 30, 2013, recommended AbTech as "the best value to the county." The county legislature's Rules Committee on July 1, 2013, unanimously approved the deal with no questions asked and a day later AbTech's parent company, ABTech Holdings Inc., issued a news release announcing the contract award.
The contract was automatically approved by the Nassau Interim Finance Authority, the county's financial control board, without a vote, on July 30, 2013. County Executive Edward Mangano signed the contract on Oct. 8, and on Oct. 10, 2013, AbTech issued a news release announcing the contract's execution.