Vern Breland, the former mayor of Sterlington, Louisiana, responded Friday to fraud charges leveled by the Securities and Exchange Commission by denying any wrongdoing.
Breland, the Texas-based municipal advisory firm Twin Spires Financial, and Aaron Fletcher, owner of Twin Spires, were charged with fraud in June in connection with the sale of some $5.8 million of municipal bonds in 2017 and 2018. Fletcher and Twin Spires have already agreed to settlements, while Breland is litigating the charges.
Breland, representing himself, presented to a federal court in Louisiana a multi-part argument in his own defense including his reliance on Twin Spires for professional advice, questioning the role of the state bond commissioner, lack of damages to the investors, and his own lack of experience with bond issuances or securities law.
“Investors in Sterlington’s bonds had a right to know that the town had obtained approval of the bond offerings based on false projections and had misused proceeds from prior offerings,” LeeAnn Ghazil Gaunt, chief of the SEC’s Public Finance Abuse Unit, said when the charges were announced,
Breland also argued that even though the funds weren’t spent on sewer upgrades as promised, they still financed city operations. He defended the accuracy of the disputed projections, referring to them as reasonable estimations, “of the future income of the city of Sterlington including its actual operation,” while acknowledging the estimates were prepared by his co-defendants.
In addition to the federal charges, Breland has also been indicted by the state and is in trouble with the local authorities. According to a July article published in the Ouachita Citizen, “During Breland’s tenure as mayor of Sterlington, the town accumulated some $20 million in debt and spent some $3 million on unlawful expenditures, skirted public bid law on projects as large as $2 million and falsified documents sent to the state.”
Breland further defended his actions by claiming “the City of Sterlington was experiencing financial issues just like other small towns in northeast Louisiana during the time period … the expenditures in question were never intended to violate the law and were made solely for the purpose of covering short term problems until long term financing could be put in place.”
The tangled web of shady public finance undertakings began in 2015 when the town of Sterlington made plans for a sewer upgrade. They hired Twin Spires Financial to provide municipal advisory services, even though the firm was not registered with the SEC.
In 2017, the town applied to the Louisiana State Bond Commission for the approval of its Series 2017 $4 million utility revenue bonds. The next year it went after approval of Series 2018 $1.8 million wastewater, water, and sewer treatment utilities revenue bonds. Both series were privately placed with investors.