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Nassau Democrats complain about "misrepresentation" in bond sale
Nassau Democrats late Friday warned County Executive Edward Mangano’s administration that Nassau had misled investors in Tuesday's short-term bond sale by claiming the county has $198 million in unused authorization to borrow to pay tax refunds.
But County Attorney John Ciampoli responded Monday that Democrats are wrong, accusing them of trying to "sink the ship so they can be captain."
Peter Clines, counsel to the Democratic legislative minority, was referring to Ciampoli's controversial interpretation of past votes by the Nassau legislature that were used by the Nassau Interim Finance Authority as authorization to borrow millions of dollars on the county's behalf. Ciampoli maintains the authorizations are still valid because the county itself did not borrow the money.
Clines wrote in a letter to Acting County Treasurer Beaumont Jefferson, “The county may not legally ‘double dip’ on these extinguished bond ordinances and any attempt to do so would constitute an unlawful unauthorized borrowing....In the event that the administration attempts to undertake any such illegitimate borrowing, the Minority Caucus fully intends to bring a legal challenge.”
Clines also contends that including the old authorizations in the official offering statement used to sell $218 million in short-term cash-flow notes could constitute “a material misrepresentation” under federal securities law. The bonds were priced Thursday and the sale should close Tuesday, officials said.
In the June 1 offering statement available to investors, the county said it has $196,674,000 in bonds authorized but unissued to pay property tax refunds and other judgments and settlements.
The county’s April 25 offering statement to sell both long-term and short-term bonds said Nassau had $38,645 million in authorized but unissued authority to borrow for property tax refunds.
The increase in stated authorization came after Ciampoli determined the county had $192 million in unused authorizations approved by the legislature in 2004 and 2005 even though NIFA had borrowed the money. Nassau's outside bond counsel Thomas Myers, of the Manhattan law firm, Orrick, Herrington & Sutlciffe, agreed with Ciampoli in a March 13 letter saying, "There is $192,844,054.63 remaining to be borrowed by the County."
Ciampoli said, "The county's position has been consistent and transparent throughout. We went and did a study of the borrowing that had been done in the past. We located available authority for borrowing and everything we have said and done about that available authority for borrowing has been transparent."
He said the offering statement has been updated prior to the closing.
"The letter is at best inaccurate, is irresponsible and is an intolerable attempt to fiscally shipwreck the county," Ciampoli said. "It is consistent with what the minority in the legislature has been doing in trying to scuttle the multi-year plan, refusing to see that bonding is done so taxpayers can receive the refunds that they are entitled to. These are people who are willing to sink the ship so they can be captain."