City Mayor Settles Muni-Bond Fraud Charges

In this case, the SEC found that investors were materially deceived in three municipal bond offerings by Harvey, Ill. The money was supposed to be used to develop and construct a Holiday Inn, but at least $1.7 million was allegedly diverted to fund the city’s payroll and other operational costs. Defendant, the city’s acting mayor and control person, accordingly was charged with fraud. In addition to the monetary sanction, defendant agreed to be enjoined from future participation in municipal bond offerings, a first-of-its-kind result for an acting mayor.