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MUSD IN CRISIS: HEWS MEDIA OBTAINS ONEROUS PRESERVATION LETTER AIMED AT BOND PROGRAM

By Brian Hews

Hews Media Group-Community News, through the Freedom of Information Act, has obtained the Preservation Letter sent to Montebello Unified School District from the United States Security and Exchange Commission.

The letter and impending investigation is a direct result of an HMG-CN four part investigation that started in 2016 and ended in 2017 with the SEC letter.

The onerous SEC letter casts a wide net over the entire MUSD asking for documents to be preserved since Jan. 1, 2010.

The letter was sent to interim Superintendent of School Anthony Martinez from the SEC’s San Francisco Regional Office, dated November 20, 2017, and signed by special counsel Jason Lee.

The first paragraph of the letter indicated that the SEC had initiated an earlier investigation saying, “we believe that MUSD may possess documents and data that are relevant to the ongoing inquiry being conducted by the staff of the United States Securities and Exchange Commission.”

The language also indicated an underlying concern by the SEC that documents were destroyed or will be destroyed.

The letter stressed to Martinez that he may need to, “Act affirmatively to prevent the destruction of evidence including quarantining certain evidence to avoid destruction or alteration.”

 

 

The SEC’s Lee took the unusual step of underlining “you have a duty to reasonably preserve and retain such evidence.”

“We hereby provide notice that such evidence should be reasonably preserved and retained until further notice. Failure to do so could give rise to civil and criminal liability.”

And in another unusual move, Lee requested that the MUSD “take no action to delete any content existing on social networking websites including Facebook and LinkedIn.”

Finally, Lee stated, “take no affirmative action to delete any emails even emails that may not fit within the parameters set up with this letter.”

The SEC considered potentially relevant documents and aimed squarely at MUSD’s bond, bond procurement and bid process asking for:

1. MUSD finances, accounting, budget, interim financial reports, general ledger, financial statements, financial solvency, and or general fund reserves;

2. MUSD’s municipal securities program;

3. Any contemplated or actual securities issued by MUSD;

4. The contemplated or actual use of any proceeds raised from securities issued by MUSD;

5. Any entity or individual who contemplated or actually submitted a bid it to MUSD for work related to the district municipal securities program;

6. The selection of any entity or individual to perform work for MUSD related to the district municipal securities program;

7. Del Terra Real Estate Services, any of its personnel, and or Luis D Rojas;

8. Any member of MUSD municipal securities financing team including Mission Trail Advisors, which is owned by Lalo Trujillo whom HMG-CN reported on in 2016.

Other members included Stifle Niclaus and Company, Piper Jaffrey and Company, Samuel A Ramirez and Company, RBC Capital Markets, Blalock Beal Van, LLC, Cabrera Capital Markets, US Bank National Association, any bond counsel, any disclosure counsel, and/or any of the foregoing and these personnel;

9. Any Citizens Oversight Committee for any securities issued a MUSD.

Lee finished, “we recognize that this may be a burden on you, it is absolutely necessary that you fully comply with the obligations to reasonably retain and preserve evidence.”

See letter click here.

 

 

 

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