Below is a breakdown of the Order, Definition of SEC Regulations Cited, and the City’s Duty to Comply with Order.
On August 23, 2017, the U.S. Securities and Exchange Commission issued an “Order instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order”
Beaumont Staff and Council’s response to the SEC Order was to “Neither Admit or Deny” and a Presentation at the Finance and Audit Committee on September 11, 2017 claiming that SEC Laws do not Apply to Municipalities: https://beaumont.civicweb.net/…
Below is a breakdown of the Order, Definition of SEC Regulations Cited, and the City’s Duty to Comply with Order.
THE SEC ORDER:
“Pursuant to Section 8A of the 1933 Securities Act, Respondent BFA Cease and Desist from Committing or Causing any Violations and any Future Violations of Sections 17(a)(2) and 17(a)(3) of the 1934 Securities Act.”
The SEC Order cites three Laws: Section 8A of the 1933 Securities Act; and Sections 17(a)(2) and 17(a)(3) of the 1934 Securities Act.
LAWS CITED:
Cease and Desist: Section 8A of the 1933 Securities Act: “If the Commission finds, after notice and opportunity for hearing, that any person is violating, has violated, or is about to violate any provision of this title, or any rule or regulation thereunder, the Commission may publish its findings and enter an order requiring such person, and any other person that is, was, or would be a cause of the violation, due to an act or omission the person knew or should have known would contribute to such violation, To Cease And Desist From Committing Or Causing Such Violation And Any Future Violation Of The Same Provision, Rule, Or Regulation. Such order may, in addition to requiring a person to cease and desist from committing or causing a violation, require such person to comply, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify, with such provision, rule, or regulation with respect to any security, any issuer, or any other person.”
Fraudulent Interstate Transactions: Securities Act of 1934:
SEC. 17. (a)(2) “to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
SEC. 17. (a)(3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.”
The Order to Stop Forging Government Documents was Issued after the SEC conducted a three-year Investigation and gave the City an opportunity to correct itself.
The SEC Order also includes a 180 Day Timeframe to Comply with SEC Regulations:
Undertaking 21:
Establish Appropriate and Comprehensive Written Policies and Procedures and Periodic Training regarding All Aspects of BFA’s Municipal Securities Disclosures;
Formal Policies and Procedures to be followed for the Preparation, Review, and Approval of Official Statements and Continuing Disclosures;
Designate an Individual Officer Responsible for Ensuring Compliance
Implement and Maintain a Record of Training
Undertaking 22:
Establish Appropriate and Comprehensive Written Policies and Procedures and Periodic Training for Accounting of Bond Proceeds and Recordkeeping;
Designation of Individual Officer Responsible for Ensuring Compliance
Implement and Maintain a Record of Training
Undertaking 23:
Ensure that District (CFD) Complies with All Existing Continuing Disclosure Undertakings
Update Past Delinquent Filings
Undertaking 24:
Retain Independent Consultant to Conduct Review of BFA’s Policies and Procedures in All Aspects of Municipal Securities Disclosures, Accounting of Bond Proceeds, and Recordkeeping.
Independent Consultant Can NOT be Associated with any of the Crooks involved in the last two years.
Undertaking 25:
Independent Consultant must Agree to NOT be involved with the City or any Associates for Two Years after the Contract.
Independent Consultant must Submit Written Report of Findings to the BFA and SEC including Recommendations and Changes to Policies and Procedures.
Undertaking 26:
Adopt Recommendations of Independent Consultant within 90 Days of Report.
Undertaking 27:
Disclose Terms of Settlement in any Official Statements for an Offering Within Five Years of Order.
Undertaking 28:
Certify Compliance to Paragraphs 21-27 in Writing within 60 Days of Completion.
Identify Undertakings, Provide Written Evidence of Compliance and Exhibits Sufficient to Prove Compliance.
COMPLIANCE TO ALL ASPECTS OF BFA’S MUNICIPAL SECURITIES DISCLOSURES
“Designation of Individual Officer Responsible for Ensuring Compliance”
“Formal Policies and Procedures to be followed for the Preparation, Review, and Approval of Official Statements and Continuing Disclosures”
The above requirements are a Direct Response to Beaumont Staff and Council’s ‘no one is accountable’ dance.
On May 23, 2016 the SEC Issued Subpoenas after three years of attempting compliance.
On June 6, 2016 Mayor Lloyd White blamed Judy Bingham for the City’s Corruption and stated that the City would “Fight the SEC”.
On July 5, 2016 Beaumont City Council ‘Approved’ Forging the Sewer Fund’s Financial Statements.
On September 6, 2016 Beaumont City Council ‘Approved’ the Forging of the Bond Certificates of Completions in order to steal $5 Million from the CFD Fund and Deposit it into the General Fund.
On March 28, 2017 Beaumont Staff, Council, and Auditing Firm of Van Lant Fankhanel Colluded to Forged the 2015 Financial Statements.
On August 15, 2017 Beaumont City Council ‘Received and Filed’ the Forged 2015 Financial Statements.
On September 11, 2017 Finance Director Melana Taylor told the Beaumont Finance and Audit Committee that SEC Regulations did NOT Apply to Municipalities. The 2016 Financial Statements for the Transit Fund were on the Committee Agenda with no Direction. The Committee Approved the Financial Statements after Chair Elaine Morgan read a prepared statement that the Committee was not responsible for the Audit or the hiring of the Auditors as required in Section 10A of the 1934 Securities Act. The Auditing Firm of Van Lant Fankhanel did not Attend the Meeting.
September 19, 2017 City Council Consent Calendar contains the Transit System Audited Financial Statements for Fiscal Year 2016 with no Direction to Council.
“Comprehensive Written Policies and Procedures and Periodic Training for Accounting of Bond Proceeds and Recordkeeping”
TO THIS DAY the City refuses to release the CFD Bond Fund Accounts, to reestablish the Finance Department, and refuses to hire qualified Accountants to maintain the Bond Records.
“Ensure that District (CFD) Complies with All Existing Continuing Disclosure Undertakings” and “Update Past Delinquent Filings”
The City must submit Financial Statements and Certificates of Completion that are not Forged. Beaumont Finance Director Melana Taylor can not prepare the Financial Statements because she Forged the last Financial Statements. Beaumont Public Works Director Amer Jakar can not prepare the Certificates of Completion because he Forged the last Certificates of Completion.
“Provide Written Evidence of Compliance and Exhibits Sufficient to Prove Compliance.”
Written Evidence with Exhibits because the City has a track records of lying.