BRADENTON, Fla. - The Securities and Exchange Commission has filed a motion for summary judgment in its securities fraud case against two former JPMorgan bankers who were involved in Jefferson County's sewer deals and swaps.
The SEC said in a
Those swaps cost the county higher fees, and cost sewer system customers higher rates, the commission alleged.
LeCroy and MacFaddin also failed to disclose information about payments that would have been material to bond investors even if the payments did not increase the county's costs, the filing said.
"Any reasonable investor would have wanted to know that bonds in which he or she was investing were being offered by an underwriter who had procured the county's business through a corrupt process of paying off friends and associates of [county] commissioners," the SEC said.
The approximately $3.2 billion sewer deals - most at the heart of the ex-banker's case - were a major reason Jefferson County filed for bankruptcy in November 2011.
The SEC also said the bankers had a duty to disclose the improper payments, and that there are numerous undisputed facts upon which the court should also rule affirmatively.
The case is before U.S. District Judge Abdul Kallon and trial is currently set for July 14. Motions in advance of the trial were due to be filed by Jan. 30.
The SEC filed a civil suit against the former bankers in November 2009 alleging that they made more than $8 million in undisclosed payments to close friends of certain county commissioners and broker-dealers to obtain Jefferson County's business for JPMorgan.
The case was delayed several years because the men sought to depose Douglas Goldberg, the senior vice president of CDR Financial Products Inc., and Jefferson County's swap advisor.
Goldberg was charged with conspiracy and wire fraud in a lengthy Department of Justice investigation into muni bid-rigging unrelated to Jefferson County. He was not allowed to give any statements under oath while the case against him was pending.
Goldberg was sentenced in May, and gave a deposition in the SEC's civil suit against MacFaddin and LeCroy in July.
The county exited bankruptcy after two years, selling $1.8 billion of 40-year refunding sewer warrants to write down the $3.2 billion debt.
The bankruptcy case is being appealed.
