While the most frequently asked question seems to be, “When are the indictments coming and who will be on the receiving end?” there are very nasty secondary repercussions as well, and they are already emerging.

Last Thursday, the Town of Ramapo was supposed to offer for competitive sale $39.2 million in general obligation bonds. They pulled that sale from the market at the last minute and said they would replace the bonds with short-term loans called BANs (bond anticipation notes) the next week. The 157-page document detailing this new offering included specific information about the FBI raid (May 15) and additional new information on the actions of a number of grand jury requests.

Under the Market and Risk Factors surrounding these proposed loans there’s a section titled “Federal Investigation.” Listed there are specifics about what was taken in the initial raid on May 15:
The items to be seized from the Finance Department and Supervisor’s office under the search warrant include documents and electronic data relating to (i) the finances of the Town for the period from

2009 to the present and to bonds and other securities issued by the Town and the Corporation for the period from 2009 to the present, and (ii) bank deposits of funds held by the Town or the Corporation for the period from January 2013 to the present. Items to be seized from the Town Attorney’s office pursuant to the search warrant include documents and electronic data relating to (i) correspondence with the Town’s auditors concerning the Town’s 2009, 2010, 2011 and 2012 financial statements, and (ii) the transfer of funds held by the Town or the Corporation to or from Provident Bank between March 2013 and May 15, 2013.

Town Attorney Michael Klein, two days after the raid, requested a copy of the affidavit in support of the search warrant, but he was told that the matter was sealed. We are told that he already had an inventory of what was taken, but he also wanted a look at the information used to convince US Magistrate Judge Lisa Margaret Smith that there was a sound legal reason for going in after these documents. The court’s response–No dice.

The BAN offering document also provides new information on subpoenas from the Grand Jury of the Southern District of the State of New York. There were five entities served with these demands for records: the Ramapo Local Development Corporation, Jefferies LLC (placement agent for the BANs); Provident Bank; the Auditor from the Comptroller’s Office; and the financial advisor for the town. The US Attorney’s office said that the Jefferies Corp is not a target of the investigation.

GRAND JURY SUBPOENAS:

The Corporation (RLDC—St. Lawrence’s Local Development Corp) has also received a subpoena requiring that it provide to the Grand Jury of the Southern District of New York documents relating to the finances of the Corporation for the period from January 1, 2009 to the present and documents relating to bonds and other securities issued by the Corporation for the period from January 1, 2009 to the present.

The Town also understands that Provident Bank and the Auditor have received subpoenas seeking the production of various documents. The Town has not been provided copies of the subpoenas served on Provident Bank or the Auditor, although it understands that such subpoenas seek the production of documents similar to those sought in the above-described search warrant received by the Town and above-described subpoena received by the Corporation.

Jefferies LLC, the Placement Agent for the Notes (“Jefferies”), has informed the Town that it received a subpoena requiring that it provide to the Grand Jury of the Southern District of the State of New York documents relating to bond financings by the Town and the Corporation for the period from January 1, 2009 to the present. Jefferies has further advised the Town that the United States Attorney’s office said that Jefferies is not a target of the investigation to which such subpoena relates.

The Financial Advisor (Environmental Capital LLC) has advised the Town that the FBI contacted it on May 17, 2013 and told it that they were likely to ask it for information and documents relating to the investigation. The Financial Advisor was advised that it was being contacted as a potential witness. The Financial Advisor has agreed to provide whatever documents or information is requested of it.

From Bonds to BANs

Last week when Ramapo still had its $39.2 million bond offering, we were contacted by a reporter from BondBuying.com. His group provides information about bond and note offerings for institutional investors and others. What they wanted from Preserve Ramapo was our thoughts on the FBI raid and the consequences of that raid. When the reporter’s piece was posted later that day, it primarily dealt with the investigation and the problem of the recent downgrades by Moody’s. So it seems reasonable to assume that the withdrawal of the bond offering had to do with: a) The risks created by the ongoing FBI investigation; b) Moody’s bad mood over recent Ramapo developments with the law and the comptroller.

This week, the 157-page report for prospective investors has a section on the recent federal investigation and a section of equal length on the NY State Comptroller’s report that ripped the town for its “improper” mixing of revenues between the Town and St. Lawrence’s RLDC. The board members, incidentally, were presented in that audit as clueless and complicit.

This week, St. Lawrence and his board now have reduced the appeal for a loan of $31.2 million, not in long-term bonds, but in Bond Anticipation Notes. These are one-year loans with a weighty interest rate of 4.7%. These will have to be paid back on May 28, 2014, and along with the principal, the taxpayers are going to have to come up with an additional $1,466,400 in interest.

This $1.5 million, unfortunately, might be just the beginning of the scorching of the Ramapo taxpayers by what has developed into a reckless, debt-addicted Supervisor/Town Board/RLDC troika of fools. For now, the taxpayers will be looking at interest rates that could even get worse if Moody’s does what it has been apparently threatening to do to the town bond rating.

Democrats in Limbo

Last night at the Democratic Committee meeting in New City, a sparse showing of the Rockland Democratic Committee members nominated their candidates for County Executive. Upstairs, a few hours earlier, an even smaller representation of the Ramapo Democratic Committee sat on their hands and looked at each other as Mona Montal apologized for the inconvenient scheduling (5:30 pm), said hello to her grandchildren, said we need to have more frequent meetings, and then said goodnight. No nominations—no decisions.

Here’s the mess the Ramapo Democrats find themselves in. The Supervisor is the incumbent but he might soon be the incarcerated. The two board members were excoriated by the State Comptroller for their complicity in RLDC shenanigans/felonies, and you’re going to hear all that again as first a Grand Jury considers their part and then ditto with a federal court. So, if you were to endorse the incumbents as those you consider the best of the rest, and then they get indicted, well, then so do you.

Don’t endorse or nominate them and the guy at the center of this mess, St. Lawrence, who is a major gear in the local Democratic machine, and who has created a long history of vindictive behavior, he’s likely to warn you, through narrowed eyes, not to abandon the principle of “presumed innocent until found guilty.” Looks like the captain and his chief mates have set the ship on fire and capsized the lifeboats. Holy moly!

The town attorney tried to sort some of this out ahead of time when he asked the investigators for the names of the targets of the investigation. The answer is included in the BAN notes:

The United States Attorney’s office also would not confirm or deny that the Town or any of its officers were the target of the investigation.

So how long can the Committee continue to sit on their hands about this? Maybe someone should remind them that hiding is actually choosing. And no matter how one chooses, one is responsible.

(Source: Preserve Ramapo)