Former Sterlington, Louisiana, mayor agrees to pay $35,000 fine

Bonds

Former Sterlington, Louisiana, Mayor Vern Breland has, without admitting or denying the findings, agreed to pay a $35,000 civil penalty in addition to a permanent bar from future municipal securities offerings following his role in providing false projections to the Louisiana State Bond Commission in connection with two offerings worth $5.8 million, the Securities and Exchange Commission said.

Breland agreed to the settlement in July but until now the settlement sum and the terms of his agreement were unknown. His municipal advisor on the two offerings, Aaron Fletcher and his firm Twin Spires Financial, agreed in September 2022 to a final judgment for their role in calculating the false projections and failing to register as a municipal advisor with the Commission. They consented to pay disgorgement of $26,303, prejudgment interest of $6,642.88 and a $200,000 civil penalty.

The SEC generally doesn’t seek monetary penalties from municipalities due to the negative impact on taxpayers, but Sterlington did agree to cease and desist from future violations. 

Bloomberg News

The matter arose when the Town of Sterlington began plans to upgrade its sewer system in 2015 and in accordance with Louisiana state law, wrote to the State Bond Commission for approval of its Series 2017 $4 million utility revenue bonds and its Series 2018 $1.8 million wastewater, water and sewer treatment utilities revenue bonds.

The Commission leveled charges against Breland, Fletcher and his firm Twin Spires in June 2022 for submitting false financial projections, overstating the number of historical and projected sewer customers in order to mislead the Louisiana State Bond Commission as to the town’s ability to cover the debt service, the SEC said.

Investors in the bonds were not informed that Sterlington obtained SBC approval of the bonds based on false projections and did not disclose to investors that the town, at Breland’s direction, misused over $3 million from earlier bond offerings.

Breland, who represented himself in court, fought the charges, laying out the argument that he relied on Twin Spires for professional advice, questioned the role of the SBC, the lack of damages to the investors in the bonds, and his own lack of experience with bond issuances and securities law.

Breland pointed out that the estimates in question, which the Commission argued substantially overstated the number of historical and projected sewer customers in order to mislead the Louisiana State Bond Commission, were prepared by his co-defendants and even though the proceeds weren’t spent on sewer upgrades as promised, they still financed city operations, he argued.

The bonds were sold via private placement and Breland defended the accuracy of the disputed estimates, calling them reasonable estimations “of the future income of the city of Sterlington including its actual operation.”

Breland retired from his post as mayor in 2018 but his issues with the law continue. He was indicted by the State of Louisiana with a charge of malfeasance in office for his role in adding $20 million in debt during his tenure as mayor and for having allegedly spent some $3 million on unlawful expenditures, in addition to flouting public law on major public works. 

He was booked at the Ouachita Correctional Center in August 2020 and released on $25,000 bond. The case remains ongoing.

Articles You May Like

On AI adoption, Columbus takes a page from corporate America
Arizona lawmakers pass bill to ease the sting of Maricopa County tax refunds
Zilch warns it might ‘go somewhere else’ unless UK boosts IPO market
Munis steady, upsized $2.5B JFK deal prices
Chinese tech leads Hong Kong shares higher