April 14, 2016

The SEC announced fraud charges against the town of Ramapo, New York, the town’s local development corporation, and four town officials.  The SEC alleges that Ramapo officials resorted to fraud to hide the strain in the town’s finances caused by the approximately $60 million cost to build a baseball stadium as well as the town’s declining sales and property tax revenues.  They cooked the books of the town’s primary operating fund to falsely depict positive balances of between $1.4 million and $4.2 million during a six-year period when the town had actually accumulated balance deficits as high as nearly $14 million.  In addition, because the stadium bonds issued by the Ramapo Local Development Corp (RLDC) were guaranteed by the town, certain officials masked an operating revenue shortfall at the RLDC such that investors were unaware the town would likely need to subsidize those bond payments and further deplete the general fund.  SEC

Tagged in: Accounting Fraud, Securities Fraud,