Fraud in the sale of stocks and private bonds is not uncommon, but before now, no one had been prosecuted for criminal securities fraud involving the sale of municipal bonds. That state of affairs will change dramatically when an elected official of the town of Ramapo, a suburb about 28 miles northwest of New York, will face trial on federal criminal charges involving the sale of municipal bonds.

The defendant is the elected supervisor of Ramapo. Prosecutors allege that the defendant defrauded bond purchasers who helped finance a minor league baseball stadium near Ramapo. The essential allegation claims that the defendant and the former executive director of the Ramapo Local Development Corp. defrauded potential investors by concealing the city’s shaky financial condition while they were actively marketing the bonds. The federal charges include securities fraud, wire fraud and conspiracy. All are felonies.

In 2010, Ramapo voters chose not to use the city’s credit to guarantee bonds that were to be sold to finance the stadium’s construction. In order to sell the bonds, the defendant allegedly falsified the town’s financial records by putting millions of dollars of non-existent receivables on the town’s books. The director of the development corporation pleaded guilty last month.

This case is the result of increased efforts by U.S. regulators to seek criminal penalties against persons accused of misconduct in the sale of municipal bonds. Anyone facing similar charges may wish to consider consulting a criminal defense attorney who is experienced in handling federal crimes. Such a consultation can provide a helpful evaluation of the law and facts that govern the case and an estimate of the likelihood of obtaining a favorable plea agreement or outright acquittal.

Source: US News and World Report, New York Town Official to Face Trial in Landmark Bond Fraud Case