Download SEC Subpoenas (PDF’s)
On April 22, 2016 the United States Security and Exchange Commission (SEC) issued Subpoenas to the City of Beaumont, the Beaumont Financing Authority, and the City of Beaumont Community Facilities District No. 93-1.
The terms of the Subpoena required the City to produce all documents requested by May 13, 2016.
On May 17, 2016 the City of Beaumont voted to acquire another illegal Bond for $16 Million.
On May 18th the City released a Press Release stating that the SEC issued the Subpoenas on April 22nd, but failed to mention the deadline to comply with the Subpoena has expired a week earlier.
The Subpoenas were hand delivered to Kathleen M. Marcus from the Law Firm of Stadling Yocca Carlson & Rauth in Newport Beach.
The Subpoenas are 32 pages long with the following requests:
Please provide narrative description of what was done to identify and collect documents responsive to the subpoena. At a minimum, the narrative should describe:
- Who search for documents;
- Who reviewed documents found to determine whether they were responsive;
- Which custodians were searched;
- What sources were searched (e.g., computer fileds, CD’s, DVD’s, thumb drives, flash drives, online storage media, hard copy files, diaries, datebooks, planners, filing cabinets, storage facilities, home offices, work offices, voice mails, home email, webmail, work email, backup tapes, or other media);
- What search terms, if any, were employed to identify responsive documents;
- What firms and/or persons, if any, assisted in analyzing the data collected;
- What third parties, if any, were contacted to obtain responsive documents (e.g., phone companies for phone records, brokerage firms for brokerage records:; and Where the original electronic and hard copy documents are maintained and by whom.
Definitions:
As used in this document request, the words and phrases listed below shall have the following meanings:
“Authority” means the Beaumont Financing Authority and all of its offices, departments, divisions, commissions, committees, affiliates, predecessors, successors, officials, officers, directors, board members, employees, agents, administrators, partners, and independent contractors, as well as aliases, code names, trade names or business names used by, or formerly used by, any of the foregoing.
“District” means the City of Beaumont Community Facilities District No. 93-1 and all of its improvement areas, divisions, subdivisions, etc.
“City” means the City of Beaumont, California, and all of its offices, departments, divisions, commissions, affiliates, etc.
“Union Bank” means MUFG Union Bank N.A.
“O’Conner” means O’ Connor & Company Securities
“Willdan” means entities doing business under Willdan Group and Willdan Financial Services.
“Moss Levy & Hartzheim”
“Macias, Gini, & O’Connnell”
“MGO”
“Urban Futures”
“MCDC” means the Securities and Exchange Commission’s Municipalities Continuing Disclosure Cooperation Initiative.
“Beaumont Bonds” means all municipal securities issued by the Beaumont Financing Authority and the City of Beaumont CFD No. 93-1.
“2013 Series A Bond”
“2012 Series c Bond”
“2012 Series B Bond”
“2012 Series A Bond”
“2011 Series A Bond”
“2009 Series B Bond”
“2009 Series A Bond”
“2008 Series A Bond”
“Person” means a natural person, firm, association, organization, partnership, business, trust, corporation, bank, or any other private or public entity.
“Representative” of a person means any present or former FAMILY MEMBERS, officers, executives, partners, joint-ventures, directors, trustees employees, consultants, accountants, attorneys, agents, or any other representative acting or purporting to act on behalf of the person.
“Document” means ALL materials in the possession or custody of the City, or SUBJECT TO THE CITY’S CONTROL, written, printed, or typed matter, whether drafts, unfinished, or annotated versions, originals, or nonconforming copies thereof, however created, produced, or stored, and by whomever prepared, produced, sent, dated, received, or used, including without limitation: Communications, books, charts, papers, files, lists, checklists, chronologies, outlines, exhibits, schedules, notes, minutes, summaries, records, analyses, correspondence, memoranda, interoffice communications, slips, tickets, records, worksheets, work papers, financial records, financial information, accounting material, bookkeeping material, reconciliations, income statements, cash flow statements, balance sheets, reconciliations, estimates, budgets, invoices, receipts, requisitions, registers, spreadsheets, ledgers, and ledger sheets, instructions, reports, manuals, spreadsheets, confirmations, invoices, account statements, reports, wires, telegrams, facsimiles, policies, procedures, telephone records, telephone logs, message slips, schedules, transcriptions, file folder markings, notes, or records of conversations or meetings, photographs, drawings, graphs, images, charts, sound recordings, contracts, agreements, calendars, diaries, date books, bills, records of payment, magnetic tapes, disks, diskettes, disk packs, and other electronic media, microfilm, microfiche, electronic mail, electronic data, and daw compilations.
“Communication”
“Concerning” means directly or indirectly, in whole or in part, describing, constituting, evidencing, recording, evaluating, substantiating, concerning, referring to, alluding to, in connection with, commenting on, relating to, regarding, discussing, showing, describing, analyzing, or reflecting.
“Agreement” means any actual or contemplated (i) written or oral agreement; (ii) term or provision of such agreement; or (iii) amendment of any nature or termination of such agreement.
“Reviewed” means examined, assessed, considered, analyzed, or evaluated.
“You” and “Your” means the person or entity to whom this request was issued.
C. Documents to be Produced
Please produce all of the following Documents, Communications, and Agreements within the City’s possession or custody or subject to the City’s control
A complete set of Authority, District, and City meeting minutes, agendas, recordings, notices, memoranda, petitions, resolutions, authorizations, reports, and Agreements concerning the Beaumont Bonds, from January 1, 2008 to the present.
All Documentation, including all Communications, from January 1, 2008 to the present, that concern the following statements made in the City’s Annual Budget FY 2015/2016:
After conferring with our independent financial advisors, our Interim Finance Director and viewing the data myself, I can say that our General Fund is insolvent from a budget and cash basis. We are cash insolvent due to the City’s General Fund cash averaging a $10 Million dollar deficit.
The General Fund has effectively been borrowing from various restricted funds that are pooled in the City’s general bank account. The General Fund’s cash balance is in a negative position throughout the entire year.
In the June 30, 2014 audited financial statements, the General Fund showed an inter-fund borrowing of $10 Million from the CFD Fund and reflected a new $27,000 in cash for a $29 Million dollar annual budget…. At fiscal year end June 30, 2013, the General Fund required over $9 million from the same funding source and slightly less than $9 million at fiscal year end June 30, 2012.
This did not happen overnight. The City has been budget insolvent for years. Instead of reducing the budget to live within current resources, the City has been transferring one-time monies to pay ongoing expenses and using other creative approaches.
This request for Documents includes, but is not limited to:
- All Documents concerning the statements that the City is “cash insolvent due to the City’s General Fund cash averaging a $10 million dollar deficit.”
- All Documents concerning the City’s borrowing from “restricted funds” referenced in these statements.
- All Documents concerning the City’s inter-fund borrowing from the CFD fund:
- All Documents concerning the City’s borrowing or use of any special taxes imposed for the payment of the Beaumont Bonds, for any period of time;
- All Documents concerning the City’s borrowing or use of any Beaumont Bond proceeds to fund City operations or general government purposes, for any period of time;
- All Communications concerning these statements, including but not limited to, Communications to or from independent financial advisors, consultants, auditors, accountants, attorneys, city council members, current and former city managers, and current and former finance directors;
- All reports or analyses prepared by or for the City, the Authority, or the District, concerning these statements;
- All lists of Persons or Documents that show all Persons who were aware of the City’s insolvency, deficits, borrowing, negative cash positions, and inter-fund loans;
- All Documents that show when the City posted its budgets, audits, financial statements, and control reports on its website or otherwise first made this information available to the public;
- all lists of Documents that show all Persons that participated in the preparation of the City’s budgets, audits, financial statements, and control reports and their respective roles;
- All Documents concerning the administration leave and separations of employment of Alan Kapanicas;
- All Documents concerning the separation of employment of William Aylward; and
- All Documents concerning MCDC
3. All Documents that show how each dollar financed with the Beaumont Bonds has been spent and any and all remaining balances of such funds.
Such Documentation include, but are not limited to chronologies, notes, bank statements, reconciliations, memoranda, journals, balance sheets, income statements, cash flow statements, logs, worksheets, spreadsheets, reports, registers, analyses, invoices, estimates, profit and loss reports, expense tracking spreadsheets and reports, budgets, requisitions, tax records, and receipts.