Miami facing SEC investigation
MIAMI (WSVN) -- City of Miami financial managers have been accused of misrepresenting funds to investors before issuing bonds, and the Securities and Exchange Commission is now investigating.
The investigation started in 2009. The City of Miami received a notice warning of multiple SEC violations, and the possible consequences could cost taxpayers.
In March 2010, City of Miami Budget Director Michael Boudreaux was unceremoniously fired, accused of questionable money moves made to balance the city's books in 2007 and 2008. Over $25 million wound up funneled from the capital projects fund to the general fund, misleading investors buying city-issued bonds.
Boudreaux is now on notice from the SEC, much like the City, which received a letter Monday accusing it of four SEC violations. Published reports said it is all related to the same bonds.
Then-commissioner Tomas Regalado, now the city's mayor, said the City Commission was unaware. "We were told that those funds were part of the general fund and the budget was whole and the budget was OK," Regalado said.
But ignorance seems no excuse. The SEC, which does not comment on open investigations, said in the letter that they may "seek permanent injunction, a civil penalty, and an order commanding the City of Miami to comply with the Commission's prior cease-and-desist order."
That's right: This is round two between Miami and the SEC. The Commission was issued a cease and desist order in 2003 after similar allegations rose in the mid-1990s.
This time around, the city hopes to settle. "We don't know what they would accept," Regalado said, "but we hope that at least there is no fine because the taxpayers will be paying for the wrong things of the past."
But will the city do this dance a third time following the controversial financing of a ballpark? A third investigation is already underway to look into bonds issued for the Marlins ballpark. Asked of what investigators may find there, Regalado said, "Well, I hope that nothing wrong, but to me it was a very bad deal."
The Miami Marlins refused to comment on the issue. The City has until Aug. 6 to respond to the SEC.
(Copyright 2012 by Sunbeam Television Corp. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)