Broken bond: Miami is only municipality the SEC has sued twice
In September, a federal jury found that the city of Miami and its former budget director, Michael Boudreaux, committed securities fraud by misleading investors about its finances in the course of making bond offerings in 2009. In a civil case brought by the Securities and Exchange Commission, the jury found that the city made its finances appear healthier than they were by moving money from a fund where the money was earmarked for specific uses into its general fund — without properly disclosing the action to investors.
The verdict was the first by a federal jury in a case brought by the SEC against a municipality for securities violations.
Miami earlier had lost a similar case involving disclosures before an administrative judge and had agreed to cease and desist. The federal court now can consider violation of that previous order in assessing penalties. “No other municipality in the country has been sued twice by the SEC,” says Eric I. Bustillo, director of the SEC’s Miami regional office.
The SEC has been cracking down on municipalities for securities violations in recent years, but most cities settle before reaching trial — to avoid the time and expense of a trial or because they feel they will lose. Municipalities are active in issuing bonds and have more flexibility than publicly traded companies and other entities in their disclosures, securities specialists say.
Miami City Attorney Victoria Mendez says the city agreed to a $1-million penalty to end all appeals.
A $1-million penalty would be far more than the legal fees usually paid for an appeal, says Jan Douglas Atlas, a lawyer with Kopelowitz Ostrow Ferguson Weiselberg Gilbert who has extensive experience with securities cases and the SEC. He called the SEC court action against Miami “very unusual,” noting the SEC usually litigates against broker-dealers, venture capitalists and other entities, not municipalities.
KEY WEST — The city will raise its parking rates to $3 per hour; 40% of the increase will go into the city’s Affordable Housing Trust Fund. Approximately 25% of the increase will go to alternative transportation programs.
MIAMI — The city agreed to contribute 40% of the money needed to finance the Underline, a publicprivate project that will develop a linear park on a 10-mile trail of land under the Metrorail elevated train line. Construction on the $120-million project is set to begin next year.
Ashkenazy Acquisition and General Growth Properties began a renovation of downtown’s open-air Bayside Marketplace.
The city commission gave final approval to the 25-acre, mixed-use Mana Wynwood. Also, developer Moishe Mana made a $10-million donation to Florida International University’s College of Architecture + the Arts for a Bauhaus education and art program. An affiliate of New York-based ASG Equities plans a two-story retail building called Wynwood Park on property it bought in Wynwood for $53.5 million. Midtown Miami’s first apartment tower, the 400- unit Midtown Five, will open in January.
MIAMI BEACH — Boston based Rock point Group purchased Aloft South Beach from developer JMH Development for $105 million. It immediately rebranded the 235-room hotel Gates Hotel South Beach (a Hilton brand).
MIAMI-DADE — The county commission approved a trust fund for affordable housing, starting with $10 million from general funds. International Port launched the prepaid Club Malecon card, which Americans visiting Cuba can use at ATMs, money exchange stores and many retail outlets. Lloyd Boggio, a former CEO of Carlisle Development Group, was the last of seven defendants to plead guilty for his role in a $36-million affordable housing fraud.
MEDLEY — SeaVee Boats plans to build a 150,000-sq.-ft. sport fishing boat manufacturing plant on a 9.1-acre former Superfund site it purchased for $5.3 million.
MONROE COUNTY — Florida Power & Light has begun drawing back a plume of saltwater from the freshwater Biscayne Aquifer. The utility’s Turkey Point nuclear power plant’s cooling canals generated the plume of ultra-salty water, which threatens the Florida Keys Aqueduct Authority’s well field. An infestation of New World screwworms has been infecting and killing Key deer and other animals.
The U.S. Department of Agriculture released radiated, sterile flies to help kill the screwworms, which are fly larvae.
» The Beacon Council named Sheldon Anderson, a former leader of Northern Trust in Florida and a former Beacon Council chairman, as interim president and CEO.
» Alfred Sanchez is the new president and CEO of the Greater Miami Chamber of Commerce. Sanchez had been CEO of American Red Cross South Florida. He replaces Barry Johnson, who is now president of the chamber’s South Florida Progress Foundation.
» Anna Rossie-Alvarez now runs ONE Sotheby’s International Realty’s new Miami-based commercial real estate company, ONE Commercial. She had been a director with ONE Sotheby’s.
» Gibraltar Private Bank & Trust promoted President Angel Medina to president and CEO. He replaced Adolfo Henriques, who remains the bank’s chairman.
Art Basel Miami Beach, the show that put Miami- Dade on the international art map, takes over Miami Beach — and extends into Miami with Art Week — Dec. 1-4. The Miami Beach show began in 2002 and last year attracted more than 70,000 visitors to the Miami Beach Convention Center and various nearby venues. This year, 269 galleries from around the world will display and sell work.