Christopher St. Lawrence's sentencing delayed as judge weighs investors' losses

WHITE PLAINS - Former Ramapo Supervisor Christopher St. Lawrence's sentencing on corruption-related charges has been delayed for an indefinite period as the judge weighs the extent of financial losses incurred by investors who bought the town's municipal bonds.

U.S. Judge Cathy Seibel will begin taking testimony Wednesday morning from witnesses for the prosecution and defense on the estimated financial loss to investors. How the investors will be repaid and any St. Lawrence restitution remain separate issues for Seibel to decide.

The potential investor loss of $2.3 million allows the prosecution to recommend an enhanced sentence of 14 years in prison for St. Lawrence. Probation officials recommended 24 to 30 months, while St. Lawrence's attorney is advocating probation.

A final prison term, if any, is up to Seibel, a former federal prosecutor who oversaw the trial from late April to May 19 jury conviction.

Seibel said Monday there's no doubt St. Lawrence committed fraud but questioned whether investors knew about the risk they were taking when buying the town's bonds and if that risk led to a loss of profit. She asked would the interest rate on the bonds have increased — and by how much — if the investors knew the true state of the town's failing financial health.

Investors "can't be deprived of information and that's why (St. Lawrence) is guilty." Seibel said. "I am questioning whether (investors) were deprived of cash. They were at a higher risk not to get paid and they didn't know it. The risk never materialized. They did get paid."

Lead federal prosecutor James McMahon argued the exact amount didn't matter, because investors didn't get what they expected. He argued they expected the highest possible interest rate and that rate was fraudulently lowered because St. Lawrence filed phony information on the town's financial health.

"They were deprived of the true risk," he said, adding the $2.3 million loss calculation is credible. The office originally set a $2.9 million loss, but updated its figure, leading St. Lawrence's attorney, Michael Burke, to offer the court his expert on the issue who will testify Wednesday.

Burke agreed with the judge in questioning the prosecutor's theory of how much investors were harmed.

He will get an opportunity on Wednesday to present an expert who analyzed the prosecution's updated estimation of losses suffered by investors who bought Ramapo bonds based on false information from St. Lawrence. The U.S. Attorney's Office opposed a delay, arguing the estimated loss has been properly calculated.

A jury found St. Lawrence lied to investors in Ramapo's and Ramapo Local Development Corp's bond offerings 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 holders of its bonds from its own money. The bonds included $25 million to finance the $58 million baseball stadium.

For example, when the RLDC issued $25 million in bonds to build the stadium building itself in 2011, St. Lawrence inflated the town's general fund by including a false $3.6 million revenue. St. Lawrence inflated budget with another fake receivable for $3.08 million from 2010 through 2015 and added FEMA reimbursement he was told had not been approvded or sought.

The town’s financial condition was important to investors in the RLDC’s bonds because the town and its taxpayer guaranteed the payments of principal and interest on the bonds. Without that fake asset, the General Fund’s balance would have negative in that year.

Burke wanted more time to analyze the prosecution's updated estimation of losses suffered by investors who bought Ramapo bonds based on false information from St. Lawrence. The U.S. Attorney's Office opposed a delay, arguing the estimated loss has been properly calculated.

SENTENCING: St. Lawrence faces prison term for corruption

FRAUD: U.S. prosecutors recommend 14 years for St. Lawrence

ST. LAWRENCE: His sentencing memo seeks probation

Delay frustrates detractors

The delay in sentencing St. Lawrence frustrated his detractors, who blame him for the town's financial state and zoning and building issues. Others in court took the approach that eventually St. Lawrence's case will end.

"This is how the process works," said Robert Romanowski, who attended some of the trial testimony and has been a critic of the town government. "I've been in court a lot. You get a little here, a little there. Eventually this will end."

Another critic, Michael Parietti, said he's disappointed that the prosecution was not pressing the Ramapo taxpayers as victims of the fraudulent scheme, along with investors.

"I find it strange the taxpayers are not consider a victim," he said, outside the federal courthouse Monday.

Both sides offered Seibel their views on St. Lawrence's corruption-related convictions in lengthy sentencing memorandums. Seibel, a former federal prosecutor, oversaw St. Lawrence's jury trial from late April to the middle of May.

The U.S. Attorney's Office's 59-page memorandum recommended Seibel sentence St. Lawrence to 11.25 years to 14 years in prison based on the prosecution's estimated $2.3 million financial loss to investors in a scheme involving municipal bonds.

Federal probation officials have recommended two to 2 1/2 years in prison.

Burke, in his 32-page court memo, suggested Seibel sentence St. Lawrence to probation. Burke argued the prosecution failed to prove its case and called the prosecution's sentencing recommendation disproportionate to the crimes.

A jury sitting at the federal courthouse in White Plains convicted St. Lawrence on May 19 of 20 or 22 counts of securities fraud, wire fraud and conspiracy, acquitting him of two securities fraud counts. The conviction forced the Democrat to resign as supervisor after more than 16 years.

The case is likely the first ever municipal bond-related criminal securities fraud charges against public officials, the U.S. Attorney's Office has said.

The jury accepted the prosecution's evidence St. Lawrence manipulated the financial books of the town and its economic arm, the Ramapo Local Development Corp., by fabricating revenues to get better rates on municipal bonds and short-term borrowing notes to finance its baseball stadium and other bonded projects.

Sales from another RLDC-financed project, the Ramapo Commons condominiums on Elm Street, were supposedly paying off the stadium costs, including a $25 million bond. The housing project was financed by a bank construction loan, not by bonds.

The RLDC couldn't meet the stadium bond payments, leading St. Lawrence and RLDC Executive Director Aaron Troodler to manipulate financial records.

Burke emphasized in his sentencing memo to Seibel that St. Lawrence didn't personally benefit from the fraud and despite manipulations, the town and RLDC paid off all bonds or are paying off the debt.

Burke said all the contractors were paid and no victims had come forward to claim they were economically harmed. The town has not been required to repay money by the U.S. Securities and Exchange Commission, which is conducting a civil prosecution.

Burke also cited the 132-unit Ramapo Commons, which became housing for the town's religious community, but denied St. Lawrence favored the Hasidic Jewish community over other groups, though that community's bloc vote formed the foundation of his election support.

Taking an opposite view, McMahon told Seibel that St. Lawrence's conduct consisted of a wide range of fraudulent conduct over several years and he lacked remorse as he continued to maintain he did good for the town.

"Despite that impact and despite the jury's verdict, the defendant (St. Lawrence) still insists that he really did nothing wrong," McMahon wrote. "To hear him tell it, his crimes were actually good for Ramapo."

INDICTMENT: St. Lawrence and Aaron Troodler charged

US ATTORNEY'S OFFICE: Indictment release

Joint investigation

The charges were brought against St. Lawrence and Troodler in an April 2016 indictment following a joint investigation by the Rockland DIstrict Attorney's Office, the FBI and the U.S. Attorney's Office. The probe became public with a May 2013 raid and seizure of documents from Ramapo Town Hall.

Seibel unheld the jury's conviction of St. Lawrence in September. Burke has vowed to appeal the verdict and judge's trial rulings after sentencing.

PLEA: Troodler pleads guilty

COURT ORDER: Aaron Troodler disabarred

Troodler, a former assistant town attorney who fronted for St. Lawrence as RLDC executive director, broke from St. Lawrence in March when he pleaded guilty to securities fraud and conspiracy.

As part of his plea, Troodler agreed to testify against St. Lawrence with hopes of getting a lesser prison sentence from Seibel on Dec. 12, a date that could be adjourned as prosecutors want St. Lawrence sentenced first. Troodler, who runs a public relations and political consulting business, has been disbarred. He lives in Pennsylvania with his family.

He also admitted lying to the U.S. Securites and Exchange Commission investigating the fraudulent actions by Ramapo. St. Lawrence and several officials, including Town Attorney Michael Klein and Receiver of Taxes Nat Oberman, still face SEC civil accusations.

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