A Louisiana town and its former mayor are among those facing fraud charges over two municipal bond deals, the Securities and Exchange Commission announced.
The SEC filed a complaint against the town of Sterlington, former mayor Vern A. Breland, Sterlington’s unregistered municipal advisor Twin Spires Financial LLC and its owner, Aaron B. Fletcher.
The SEC said the defendants misled investors over the sale of $5.8 million in municipal bonds across two offerings in 2017 and 2018 to finance development of a water system and improvements to the town’s existing sewer system. Sterlington issued the revenue bonds and applied to the Louisiana State Bond Commission (SBC) for approval.
The complaint states that Fletcher and Twin Spires, with the active participation and approval of Breland, submitted false financial projections that substantially inflated the number of historical and projected sewer customers. Their intent was to mislead the SBC about the town’s ability to cover the debt service for the proposed bonds, the SEC alleged.
In addition, Breland and the town allegedly did not tell investors that approval of the bonds would be based on false projections. Fletcher and Twin Spires were also accused of providing municipal advisory services to Sterlington without Twin Spires being registered as a municipal advisor with the SEC.
“Investors in Sterlington’s bonds had a right to know that the town had obtained approval of the bond offerings based on false projections and had misused proceeds from prior offerings.” said LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit. “Further, it is long past time for financial advisors to municipal issuers to comply with the requirement that they must be registered with the Commission before they provide municipal advice, and we will vigorously pursue advisors who continue to flout those requirements.”
Sterlington, Breland, Twin Spires, and Fletcher were charged with violating the antifraud provisions of the Exchange Act and the Securities Act. Fletcher and Twin Spires also were charged with failing to register as municipal advisors and with violating fiduciary duty and fair dealing rules.
Sterlington did not admit or deny the SEC’s findings but did consent to a cease-and-desist order against future violations. Fletcher and Twin Spires agreed to pay disgorgement, prejudgment interest and civil penalties, and consented to judgments enjoining them from future violations. The SEC said Breland is litigating the allegations against him.
Lewitas Hyman routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. We bring a unique level of knowledge and experience when representing the rights of investors, including resolving cases through arbitration and litigation when necessary. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (312) 291-4600 or through our online contact form for a no-cost evaluation of your matter.