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Legal papers show Oyster Bay strategy for Singh loan guarantees

The indirect guarantees led to civil lawsuits and criminal charges related to the town’s work with indicted concessionaire Harendra Singh.

Harendra Singh is led out of the FBI

Harendra Singh is led out of the FBI office in Melville, Sept. 9, 2015. The Long Island restaurateur was arrested on charges of bribery of a public official, failing to pay millions of dollars in taxes and obstruction of justice, sources said. Photo Credit: James Carbone

The loan guarantees that led to federal securities fraud charges being made against former Oyster Bay Town Supervisor John Venditto last month started with a legal structure conceived of by the law firm where Nassau County Executive Edward Mangano previously worked, recent legal filings show.

Federal prosecutors in legal filings named Uniondale-based Rivkin Radler LLP as the firm that was hired to find a way the town could indirectly guarantee the first line of credit issued to a town concessionaire. Federal prosecutors allege that from 2010 to 2012, the town guaranteed four loans totaling $25 million. The Securities and Exchange Commission’s civil complaint against Venditto and Oyster Bay last month doesn’t refer to the law firm by name.

“Rivkin Radler . . . was hired to find a way around the New York State Constitution so the TOB [Town of Oyster Bay] could issue the loan guarantees,” federal prosecutors said in a Nov. 14 memorandum of opposition to the defendants’ pretrial motions filed in U.S. Eastern District Court in Central Islip in the criminal corruption case against Venditto and Mangano. Both men were charged with conspiracy to commit bribery, fraud and obstruction of justice. Mangano was also charged with extortion and Venditto was also charged with securities fraud. They have pleaded not guilty.

Last month the SEC filed a civil lawsuit against Oyster Bay and Venditto alleging they defrauded investors in the town’s securities by omitting information about the loan guarantees. Federal prosecutors then added criminal securities fraud charges to its case against Venditto.

In 2010 Mangano “directed a law firm where he previously worked . . . to find a solution” to the state constitutional problem, the SEC complaint states. Newsday reported on Dec. 8, 2009, that Mangano was leaving Rivkin Radler, where he had worked since 2001.

The recent filings, which describe what prosecutors called “the TOB loan scheme,” offer details about events beginning in 2010 that led to civil lawsuits and criminal charges related to the town’s work with indicted restaurateur Harendra Singh, who held concession agreements with Oyster Bay.

“Our attorneys were retained by the town of Oyster Bay to identify a solution to a business transaction question that would be consistent with the letter and the spirit of the law,” Rivkin Radler spokeswoman Laurie Bloom said in a statement. “We did so ethically, professionally and in accordance with all applicable legal principles.”

Rivkin Radler has not been accused of any wrongdoing, or named as a defendant in any lawsuits related to the loan guarantees.

Later, another law firm, Harris Beach PLLC of Melville, was hired and wrote opinions for additional guarantees that the SEC said in its complaint were “substantially similar” to those in the original loan guaranty.

Harris Beach’s attorneys said in court filings in a related civil suit brought by a Singh creditor in Connecticut in 2016 that the town “authorized and consented to Harris Beach’s retention as counsel” on two indirect loan guarantees. In June, Oyster Bay sued Harris Beach, Singh, former Deputy Attorney Frederick Mei and others alleging among other things that Harris Beach had not been properly hired and thus did not represent the town on those guarantees.

Harris Beach representatives did not respond to a request for comment on this story, but have said previously the firm “acted legally and ethically throughout our limited involvement with this matter in all respects.”

Oyster Bay’s indirect loan guarantees were structured so that if Singh’s company defaulted on its loan, the town would be forced to terminate its agreement with the company. That action would force the town to make a payment large enough to repay the loan.

Under Article VIII, Section 1 of the New York State Constitution, a municipality cannot loan its credit to a private company: “No county, city, town, village or school district . . . shall give or loan its credit to or in aid of any individual, or public or private corporation or association, or private undertaking.”

Prosecutors, the SEC and creditors allege the town guaranteed more than $20 million in debt. Those loans were supposed to finance capital projects at town-owned facilities, but prosecutors and town officials have said Singh didn’t make all the capital improvements he was supposed to make. The town has acknowledged in an August filing with the SEC that in 2010 it had amended an existing concessions agreement so that the town would pay a $1.5 million termination fee if the town canceled the agreement for any reason and that this termination fee had been assigned to lender Madison National Bank. Federal prosecutors and the SEC call this agreement and amendment an “indirect loan guaranty.” The first agreement expired in 2015.

E.J. McMahon, research director of the Empire Center for Public Policy, an Albany-based conservative think tank, said the loan guarantee, whether legal or not, was “indefensible.”

“The concessionaire should be capable of running the concession without your loan guarantee,” McMahon said. “The purpose of a concession, of any kind of commercial arrangement with a private contractor, is for the private contractor to be competent and capable of holding up his end of the bargain without your assistance.”

McMahon said he has not heard of other municipalities making indirect loan guarantees.

Federal prosecutors in their Nov. 14 filing said Oyster Bay had paid for Rivkin Radler’s legal fees “despite that Rivkin Radler was clearly working for the exclusive benefit of Co-Conspirator #1.”

In early 2010, Singh, who had concessions agreements to operate town facilities at the town golf course and Tobay Beach, was unable to obtain financing for the capital improvements to those facilities required by his concession contract with the town, according to the town’s SEC filing. In January 2010, the concessionaire sought the help of the newly elected Mangano, according to the SEC complaint. Prosecutors allege Mangano received bribes and kickbacks in return for helping the concessionaire with whom, prosecutors wrote in their Nov. 14 memorandum, the county executive “had been friends for over 25 years.” Mangano’s wife, Linda, was charged with conspiracy, extortion, obstruction of justice, and making false statements to federal investigators on three separate occasions regarding what the SEC complaint called a “no show job that she held between approximately April 2010 and approximately August 2014, for which the Concessionaire paid her a total of approximately $450,000.”

Their trial, originally scheduled for Jan. 16, is now to start March 12. In court documents filed Dec. 11, Venditto’s attorney did not provide additional information about the loan guarantees.

Ed Mangano approached Venditto about Singh’s financing problem, according to the SEC complaint. The Oyster Bay Town Board on March 23, 2010, adopted a resolution authorizing Venditto to enter into an agreement with Singh’s creditor, identified in several documents as Madison National Bank.

“I’m not going to have a comment on the trial evidence; this is all matters for trial,” Mangano’s criminal defense attorney, Kevin Keating of Garden City, said last month.

Venditto’s criminal defense attorney, Marc Agnifilo of Manhattan-based Brafman & Associates, did not respond to requests for comment.

Newsday reported on Aug. 23, 2015, that the town’s outside attorney, Jonathan Sinnreich of Central Islip-based Sinnreich, Kosakoff & Messina LLP, said in an April 7, 2010, email to town officials that the town couldn’t back the debt under state law.

“The town can simply not guaranty an all-purpose line-of-credit to support H’s business,” Sinnreich wrote, referring to Singh by his nickname “H.”

A memorandum that federal prosecutors filed on Nov. 14 in the criminal case states that “Mangano’s former law firm, Rivkin Radler LLP began working on how the TOB could guarantee co-conspirator #1’s loan.” Federal prosecutors haven’t identified Singh in their case, but Venditto’s court filings identify Singh as the alleged co-conspirator who sought loan guarantees.

Agnifilo also wrote in a Sept. 5, 2017, court filing about an April 28, 2010, meeting with Mangano, Singh, Sinnreich and attorneys from Rivkin Radler but does not describe the substance of the meeting. The SEC complaint said the meeting took place in Venditto’s office and that Mangano’s attendance at a small meeting of town officials was “unusual.”

A firm that the SEC identified as where Mangano formerly worked “began working on” a way for the town to guarantee a private loan and “concluded” it could do so indirectly, according to the SEC court filing.

Former Deputy Town Attorney Frederick Mei, in an April 29, 2010, email to Singh obtained from the town through a FOIL request, said Rivkin Radler attorney William Cornachio had “suggested we amend the agreement to provide for a limited payment for a limited time, say $1,500,000 through 2015.” Oyster Bay alleged in its lawsuit against Singh, Mei and others that Mei had been charged under a sealed federal indictment in 2015. No charges or disposition in the case regarding Mei have been made public. Mei’s attorney, Gary Schoer of Syosset, did not return a call seeking comment.

Oyster Bay, in an Aug. 16 filing with the SEC, stated the town entered into the original 2010 loan guarantee “after consulting with experienced counsel at Rivkin Radler LLP” and that the agreements that allowed it “were lawfully structured and subsequently authorized by the Town.”

Venditto’s attorney in a Sept. 5, 2017, filing and Mangano’s attorney in an Aug. 25, 2017, filing in their criminal case and current Oyster Bay Town Supervisor Joseph Saladino’s administration in its June lawsuit against Singh, Harris Beach, Mei and others, alleged that those parties concealed the subsequent loan guarantees from Venditto and other town officials. The SEC and federal prosecutors allege Venditto and others in his administration knew about those indirect guarantees and concealed them from the public.

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