Thursday, March 28, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, July 16, 2017
How Rail Bonds Can Help Put Local Politicians in Jail
By Tom Yamachika @ 5:01 AM :: 5428 Views :: Ethics, Rail

The Field of Dreams Led to the Slammer

by Tom Yamachika, President Tax Foundation Hawaii

On June 7, 2017,the Honolulu City Council voted to authorize bond funding to keep the Honolulu rail project on track.

What they might not realize is that bond funding dramatically raises the stakes for transparency around the rail project.

Beginning in late 2007, the U.S. Securities Exchange Commission began scrutinizing state and local governments to protect investors in what then-Chairman Christopher Cox called the increasingly complex municipal bond market.

In April 2008, the SEC charged five San Diego officials, including the former city manager and auditor, with fraud. City officials were accused of certifying financial statements in 2002 and 2003 that were false because they failed to disclose that the city was purposely underfunding its pension system. Eventually, the officials agreed to pay penalties ranging from $5,000 to $25,000 — the first such fines levied against officials in a muni-fraud case.

In 2010, the SEC established a new unit to investigate misconduct in municipal finance, with an emphasis on pension funding. They charged New Jersey in 2010 and Illinois in 2013 with fraud connected with bond offerings for misrepresenting that their respective pension systems were well funded, when they were in fact under water by billions.

In April 2016, the SEC turned the heat up another notch on Ramapo, a suburb in New York. The plot in this case sounded like “Field of Dreams” – officials in Ramapo wanted to build a $58 million baseball stadium after voters in the town overwhelmingly refused to guarantee bonds to pay for its construction. The officials went to the bond market anyway and raised the money to build the stadium, now called the Provident Bank Park, in part because they “cooked the books of the town’s primary operating fund,” according to the SEC. Instead of just going for fines and penalties, however, the agency involved Preet Bharara, who then was the U.S. Attorney for the Southern District of New York, to indict the town defendants on criminal securities fraud, wire fraud, and conspiracy charges. In May 2017, a federal jury convicted then-Ramapo Supervisor Christopher St. Lawrence on 20 of the 22 felony charges. The fraud counts on which he was convicted carry 20-year maximum terms. He will be sentenced on September 28th.

Back here in the Aloha State, there is a growing chorus of people who are expressing misgivings about the financial parameters of the rail project. One reader writes, “No one trusts the rail cost projections.  No one trusts the rail ridership projections.  No one trusts the rail energy use projections.  No one trusts the rail land condemnation projections.  No one trusts anything about rail.” Those who are now overseeing the project need to be concerned that going out to the bond market with cooked books is a recipe for repercussions of the federal criminal variety.

It doesn’t matter that the officials involved have gotten no personal benefit from the project. Mr. St. Lawrence had nothing to gain personally from building the Provident Bank Park. He just wanted the park built, no matter what. He now may be getting a one-way ticket to federal prison. Officials here may have the best of intentions, but they better be telling the public the truth. Or else.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT