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Press Release

Ramapo Town Supervisor And Former Executive Director Of Ramapo Local Development Corporation Charged With Securities Fraud In Connection With Ramapo Municipal Bonds

For Immediate Release
U.S. Attorney's Office, Southern District of New York
Believed to Be First Municipal Bond-Related Criminal Securities Fraud Charges Ever Brought

Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Andrew J. Ceresney, Director of the Securities and Exchange Commission’s Division of Enforcement (“SEC”), and Thomas Zugibe, the Rockland County District Attorney, announced the unsealing of an indictment charging CHRISTOPHER ST. LAWRENCE, the elected Supervisor of the Town of Ramapo, New York (the “Town”), and N. AARON TROODLER, the former Executive Director of the Ramapo Local Development Corporation (“RLDC”), with 22 counts of securities fraud, wire fraud, and conspiracy in connection with municipal bonds issued by the Town and by the RLDC. 

U.S. Attorney Preet Bharara said: “Today, this Office has brought what is believed to be the first ever municipal bond-related criminal securities fraud charges against public officials.  As alleged, Christopher St. Lawrence and N. Aaron Troodler kicked truth and transparency to the curb, selling over $150 million of municipal bonds on fabricated financials.  In doing so, they defrauded both the citizens of Ramapo and thousands of municipal bond investors around the country.  The $3.7 trillion municipal bond market is no place for fraud and manipulation; there should be no tolerance for it.  Whether you are a publicly listed company or a municipality, you are not allowed to cook the books, plain and simple.  And whether you are state legislator responsible for enacting laws or a municipal executive responsible for a town’s finances, you must be accountable.  You must be accountable to the public, and you must be accountable to the truth.  Thanks to the outstanding efforts of our partners at the FBI, Rockland County District Attorney’s Office and the SEC, we will now seek to hold St. Lawrence and Troodler accountable for their alleged fraud.”

FBI Assistant Director-in-Charge Diego Rodriguez said:  “St. Lawrence and Troodler allegedly engaged in a complex securities fraud scheme so they could hide public funds being used for the construction of a stadium and other projects. The illegal activity allegedly continued even after they became aware the town and the corporation tasked with development initiatives were subjects of a federal investigation. Public corruption wastes billions in tax dollars every year. Investigating these types of crimes remains among the FBI's top priorities.”

Director Andrew J. Ceresney said:  “Retail investors account for more than 75 percent of the $3.7 trillion municipal bond market, which is critical for our nation’s infrastructure and development.  We won’t stand for public officials and employees who resort to alleged accounting trickery to mislead investors who are investing in their financial futures as well as the future betterment of our communities.”

Rockland County District Attorney Thomas Zugibe said:  “As the Town of Ramapo Supervisor, Christopher St. Lawrence took an oath to honestly and faithfully serve his residents.  But instead, St. Lawrence is accused of shamelessly exploiting his position for a personal agenda. Public officials, whether elected or appointed, are more than mere employees. They are servants of the public interest, and we must insist on absolute honesty, integrity and trustworthiness from every one. The charges announced today are the direct result of the good work of our Public Corruption Task Force, a true collaboration between my office, the U.S. Attorney and the FBI.”

According to the allegations contained in the Indictment[1]:

As of August 2015, the Town had more than $128 million in outstanding bonds that had been issued for various municipal purposes, while the RLDC, a corporation created and owned by the Town under state law, had issued $25 million in bonds to pay for the construction of Provident Bank Park, a minor league baseball stadium in Ramapo.

While the fraud predated the construction of the stadium, the Town’s financial problems were caused largely by the $58 million total cost of the stadium.  The Town paid more than half of that cost, despite the rejection of the Town’s guarantee of bonds to pay for construction of the stadium in a Town-wide referendum in 2010 and ST. LAWRENCE’s public statements that no public money would be used to pay for the stadium.

The Indictment charges that ST. LAWRENCE and TROODLER lied to investors in the Town’s and RLDC’s bonds in order to conceal the deteriorating state of the Town’s finances and the inability of the RLDC to make scheduled payments of principal and interest to its bondholders from its own money.  The defendants lied to investors primarily by making up false assets in the Town’s General Fund. 

The General Fund is the Town’s primary operating fund.  The accumulated difference over time between how much money the Town receives in taxes and fees and how much it spends in a year is the General Fund’s balance.  The General Fund balance is a cushion that can be spent during difficult financial times.  The primary indicators of a town’s financial health are 1) the size of its general fund balance relative to the amount of the fund’s revenue and 2) trends in the size of a town’s general fund balance over time.

When the RLDC issued $25 million in bonds to build the stadium building itself in April 2011, ST. LAWRENCE and TROODLER inflated the size of the Town’s 2010 General Fund balance by including a false $3.6 million receivable in the General Fund.  The Town’s financial condition was important to investors in the RLDC’s bonds because the Town guaranteed the payments of principal and interest on the bonds.  Without that fake asset, the General Fund’s balance would have been negative for 2010.

In addition, ST. LAWRENCE inflated the General Fund with another fake receivable for $3.08 million from 2010 through 2015.  This receivable first went on the Town’s books when the RLDC agreed to buy property known as The Hamlets from the Town for $3.08 million.  That sale never closed because the land was discovered to be a habitat for rattlesnakes.  Rather than take the receivable off the Town’s books – and reduce the size of the General Fund balance by $3.08 million, resulting in a negative balance – ST. LAWRENCE claimed the receivable had to do with the already-completed RLDC purchase from the Town of a different property.  To keep it on the books, ST. LAWRENCE then caused the Town Attorney to tell the Town’s auditors repeatedly over a period of years that the receivable would be paid back within a year, which was required if the receivable was going to stay in the General Fund.  Without this fictitious receivable, the Town’s General Fund would have had a negative balance for years. 

In May 2013, the FBI searched Ramapo Town Hall in connection with this investigation.  Less than 10 days later, ST. LAWRENCE inflated another receivable in the General Fund – this time for money from the Federal Emergency Management Agency (“FEMA”) to reimburse the Town for expenses from Hurricanes Irene and Sandy.  ST. LAWRENCE claimed that the Town was going to receive $3.145 million from FEMA when the Town had yet to submit those claims to FEMA.  Without ST. LAWRENCE’s inflation of this receivable, the projected General Fund balance for 2012 would have been negative when the Town sold bonds in May 2013.

The Indictment alleges that ST. LAWRENCE also inflated the General Fund balance by making more than $12 million in transfers from the Town’s Ambulance Fund to the General Fund from 2009 to 2014.  The group of properties in Ramapo that pays into the Ambulance Fund is different from the group of properties that pays into the General Fund.  Under state law, transfers between funds with different tax bases can only be loans.  To justify the transfers, ST. LAWRENCE told the auditors, members of the Town Board, and others that the two funds had the same tax base.

Finally, the Indictment alleges that ST. LAWRENCE and TROODLER told investors in the Town’s and RLDC’s bonds that the RLDC was making the payments on its bonds from its operating revenue, meaning money it was making from its ordinary business of running the baseball stadium and selling condominiums at a development it had built.  That was important to investors because it led them to believe that the Town would not have to pay off the RLDC’s $25 million bonds.  It also made the RLDC’s bonds look less risky.  The RLDC actually made those payments primarily from money it borrowed from the bank or money it got from the Town.

*                *                *

ST. LAWRENCE, 65, of Wesley Hills, New York, and TROODLER, 42, of Bala Cynwyd, Pennsylvania, are each charged with eight counts of securities fraud, each of which carries a maximum sentence of 20 years in prison; 13 counts of wire fraud, each of which carries a maximum sentence of 20 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison. 

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Bharara thanked the SEC for their investigative work.  He also praised the FBI and the investigators from the United States Attorney's Office for the Southern District of New York.  He also thanked the Rockland County District Attorney’s Office for its assistance in the investigation.  This investigation was conducted by the Office with the Public Corruption Task Force set up between the FBI and the Rockland County District Attorney’s Office. 

In a related case, the Securities & Exchange Commission brought a civil action today against ST. LAWRENCE, TROODLER, and others in U.S. District Court in White Plains.

The criminal case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys James McMahon and Andrew Dember are in charge of the prosecution.


[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Updated April 14, 2016

Press Release Number: 16-085