This week, it was announced that the Securities and Exchange Commission had charged Oyster Bay, New York and its former top elected official with defrauding investors in the town’s municipal securities offerings. The defendants are accused of hiding the existence and potential financial impact of side deals with a business owner, who owned and operated restaurants and concession stands at a few town facilities.
The SEC’s complaint explains that Oyster Bay agreed to indirectly guarantee four separate private loans to vendors for more than $20 million several years ago. It is alleged that the agreement to indirectly guarantee the debts stemmed from the concessionaire’s long relationship with the town’s then supervisor, John Venditto. It is also alleged that other officials were involved and gifts, bribes, political support and kickbacks exchanged hands.
The Securities and Exchange Commission alleges that Oyster Bay and Venditto intentionally hide the indirect loan guarantees when they should have been disclosed in relation to the town’s 26 securities offerings between August 2010 and December 2015. The United States Attorney’s Office for the Eastern District of New York has also filed a superseding indictment against Venditto. Additional details about the charges can be found here.