Douglas MacFaddin and Charles LeCroy will pay $326,373 to settle SEC civil charges accusing them of paying friends of Jefferson County, Alabama officials $8.2M in return for $5B in county bond business. Together, the ex-J.P. Morgan Securities (JPM) executives will pay $326,373 once a district court judge approves the proposed settlements—that’s 4% of the $8.2M that was allegedly paid so that their firm could get the business.
Jefferson Count experienced financial woes when it borrowed funds so it could comply with a 1996 court order to stop sewer leaks from getting into area streams. Additional construction costs and bond swaps cost the project to exceed over $3B.
The Commission’s lawsuit had alleged violations of its law and rules. The regulator’s charges against the two men were resolved in mediation.
By settling, the two men are not denying or admitting to the claims. They have, however, consented to injunctions against future violations of all the counts charged against them.
Although the case against LeCroy and MacFaddin was filed in 2009, their trial was delayed because key witness Douglas Goldberg was unwilling to give his deposition until after he was sentenced in an unrelated criminal case. Goldberg is an ex- CDR Financial Products Inc. official. He pled guilty nearly six years ago to charges accusing him of manipulating bids for municipal finance contracts and investment agreements. He was sentenced last year.
In 2009, JPMorgan Chase & Co. consented to pay Jefferson County a $50M penalty and forfeit over $647M in swap termination fees to resolve a case over county bond deals. The firm settled without denying or admitting to the charges. The firm agreed to pay the SEC a $25M penalty that was to go into a Fair Fund for victims who were harmed, as well as to the county for municipal bond offerings and swap transactions.
Former J.P. Morgan bankers to pay JeffCo $326K to settle $8.2 million-bribery lawsuit, AL.com, December 1, 2015
SEC: JPMorgan will forfeit $647 million in fees under settlement, Blog.Al.com, November 4, 2009