Wait. There are corrupt public officials? SEC enjoins a municipal bond offering.

Posted by on Jun 26, 2014 in Marc's Blog | Comments(0)

This is unbelievable. The city of Harvey (named after the invisible rabbit?), Illinois, is the subject of an injunction order obtained by the SEC which alleges that its offering documents are fraudulent. I don’t even know where to begin.

Let’s see — according to the SEC press release a prior offering was to fund a Holiday Inn. Huh? Even worse, the funds were diverted from the Holiday Inn just so the town could pay its bills. From the press release – “According to news reports, the proposed Holiday Inn hotel and conference center stands as a decrepit shell. The hotel’s façade has many holes in it, and the interior of the hotel appears gutted in places with dangling wires and exposed studs.” Yeah, but in season I’ll bet they get at least $100 a night for a room. Is there even a “season” in Harvey?

I tried to locate said Holiday Inn, which was to be a refurbished Ramada Inn, and I couldn’t find it on Google Maps.  But Harvey, at least near the Interstate, looks like a depressing place.  A Holiday Inn might have been a step up.  The Chicago Tribune writes “The Tribune revealed in July the failed deal to redevelop the aging former Ramada Inn off Halsted Street, which sits near Interstate 80 adjacent to a strip club.”

After I read the article, I found the hotel — the giveaway was that it was next to a strip club.  You can see the depressing picture here and click on Street View.

But there’s more. The comptroller of the town allegedly pocketed $269,000 derived from the $1.7 million in bond proceeds. A corrupt politician? Can’t be.

So the SEC decided that enough was enough. They swooped in and stopped the offering, alleging that the current offering contained misstatements about the use of the proceeds. The city didn’t include that the comptroller was going to take 15% for himself? I guess that might have hurt the offering’s prospects. The comptroller, by the way, has agreed not to make any “extraordinary” expenditures. At least he wasn’t using the funds for a nooner at the Holiday Inn given its state of affairs.

You can’t make this stuff up.

That’s the view of one bemused Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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