Manhattan U.S. Attorney Preet Bharara on Thursday unveiled his latest assault on public corruption, charging a Ramapo supervisor with cooking the town’s books to deceive investors in bonds for a controversial minor league baseball stadium and other projects.
Christopher St. Lawrence, supervisor of the Rockland County community, allegedly disguised deficits up to $14 million as surpluses from $1.4 million to $4.2 million for six years, and told town officials they had to be “magicians” to keep fooling rating agencies.
Bharara said the case was believed to be the first municipal-bond-related securities and accounting fraud prosecution ever, and sent a warning shot over the bow of a massive industry by warning that he “suspected” it would not be the last.
“The $3.7 trillion municipal bond market is no place for fraud and manipulation,” he said at a news conference in Manhattan. “There should be no tolerance for it.”
The 4,500-seat, $58 million stadium at the heart of the charges, Provident Bank Park, was rejected in 2010 by voters, but Bharara said St. Lawrence used town funds in an “end run” to support half the cost of its construction by a nonprofit private local development company he also headed.
St. Lawrence made repeated false statements and phony transfers with the nonprofit to hide financial problems, prosecutors said — carrying a $3 million price on a development site as a receivable after it was declared off-limits as a rattlesnake habitat, and later inflating estimated federal aid for damage from superstorm Sandy and Hurricane Irene.
“The town was in the red, not in the black as the cooked books were showing,” Bharara said.
Issues about the town’s stressed finances and questionable accounting were raised as long ago as 2012 in audits by state Comptroller Tom DiNapoli, and in subsequent news media coverage of an FBI raid on town offices in 2013.
Some news reports traced issues in the town to a pact between St. Lawrence and a powerful bloc of Orthodox Jewish voters to trade unified political support for backing of the bloc’s development projects, leaving other voters out in the cold.
In addition to St. Lawrence, the government named the nonprofit’s former executive director, N. Aaron Troodler, in its 22-count fraud indictment in White Plains federal court. The Securities and Exchange Commission, in a civil complaint, also charged town attorney Michael Klein and deputy finance director Nathan Oberman with being part of the scam.
The SEC said phony information about the town’s finances was used in 16 different bond offerings by Ramapo or the local development corporation, and overall raised more than $300 million from bond investors on the basis of false information.
Bharara said the case was aided by a whistleblower, who recorded St. Lawrence’s “magicians” comment. A former Ramapo bookkeeper filed a 2014 lawsuit alleging that she had spoken to the comptroller and the FBI and faced retaliation for reporting irregularities.
A lawyer for St. Lawrence, 65, of Suffern, did not return a call for comment. A lawyer for Troodler, 42, of Bala Cynwyd, Pennsylvania, said his client would plead not guilty, and declined further comment.