Fresh Corruption Scandal Hits Heavily Jewish Upstate New York Town

THE FORWARD – Two officials in the heavily Jewish upstate New York town of Ramapo have been indicted in what the federal government believes is the first criminal securities fraud prosecution involving municipal bonds.

A 22-count indictment unveiled on Thursday charges Christopher St. Lawrence, the town supervisor, and N. Aaron Troodler, former executive director of the non-profit Ramapo Local Development Corp, with securities fraud, wire fraud and conspiracy.

Municipal bonds issued by the town, which is 28 miles northwest of New York City, have been at the center of a long-running fraud probe into, among other things, a costly minor-league baseball stadium that the corporation built.

According to the indictment, bond investors lost millions of dollars after the defendants misled them about Ramapo’s financial health, concealed the extent to which the town financed the stadium, and hid the corporation’s “illiquidity.”

Ramapo includes the predominantly Hasidic communities of Monsey and New Square. It also encompasses some of the beleaguered East Ramapo school district, which is led by an Orthodox majority and has been accused of starving public schools of funds.

U.S. securities regulators in recent years have brought several civil actions related to misconduct in America’s $3.7 trillion municipal bond market. But according to prosecutors, the Ramapo case is the first to involve criminal securities fraud charges.

The FBI arrested St. Lawrence on Thursday, an agency spokeswoman said. He is expected to appear in federal court in White Plains, New York, later in the day. Troodler is expected to surrender to authorities, a spokesman for U.S. Attorney Preet Bharara said.

A lawyer for St. Lawrence did not immediately respond to requests for comment. Joseph Poluka, Troodler’s lawyer, said his client would plead not guilty but declined to comment further.

The FBI had searched Ramapo’s municipal offices in May 2013 after an audit by New York’s state comptroller faulted the funding of the stadium, potentially leaving taxpayers on the hook for $60 million.

Ramapo’s population was 126,595 as of the 2010 census.

During the May 2013 search, the FBI seized material on the town’s finances since 2009, bonds that were issued, and correspondence with Ramapo’s auditors on the town’s financial statements.

The U.S. Securities and Exchange Commission issued related subpoenas a year later to the town, Ramapo Local Development and St. Lawrence, who has been a director of the non-profit.

In court papers, Bharara’s office indicated that the probe also related to a lawsuit that former Ramapo finance official Melissa Reimer filed against the town and St. Lawrence in 2014.

Reimer said she was subjected to retaliation after objecting to what she believed was a $32 million overstatement by Ramapo Local Development and had been speaking with the FBI since 2012.