The city of Miami and its former budget director were found liable by a Florida jury on Wednesday for engaging in a financial shell game in a case brought by the U.S. Securities and Exchange Commission stemming from a municipal bond sale.
Taking less than a day to deliberate, the jury found the city of Miami and former budget director Michael Boudreaux violated the federal Securities Act in the process of selling over $150 million worth of municipal debt in 2009.
In a 2013 complaint, the SEC alleged that the city and Boudreaux violated the anti-fraud provisions of federal securities law.
The nine-person jury found the city of Miami liable on two counts of violating the Securities Act and one count of violating the Exchange Act and Exchange Act rules. It found Boudreaux liable for two counts of violating the Securities Act, though in one count noted he did not use a fraudulent scheme to sell a security.
The SEC called Miami a "recidivist violator" of federal securities laws and warned that this first federal trial by jury against a municipality or one of its officers might not be the last.
"We will continue to hold municipalities and their officers accountable, including through trials, if they engage in financial fraud or other conduct that violates the federal securities laws," the SEC said in a statement.
Boudreaux was also found liable on two counts of violating the Exchange Act and Exchange Act rules.
"I'm very disappointed by all of this," Boudreaux told reporters as he left the courtroom.
Boudreaux's attorney, Benedict Kuehne, indicated plans to appeal the jury's decision.
"That the jury found Mr. Boudreaux did not engage in a fraud on count one raises significant questions about the validity of the entire verdict," Kuehne said.