Miami-Dade County

Miami votes to settle securities fraud case as courts revive ousted auditor’s lawsuit

Miami's ousted internal auditor, Victor Igwe, (right) with attorney Ryan C. Brenton in 2015.
Miami's ousted internal auditor, Victor Igwe, (right) with attorney Ryan C. Brenton in 2015.

The city of Miami will end its long-running legal battle with the Securities and Exchange Commission over the manipulation of its finances in the late 2000s after commissioners voted Thursday to resolve a federal lawsuit post-trial by paying a $1 million civil penalty.

But the drama over the questionable financial decisions of the past isn’t over yet.

Coincidentally, as commissioners were voting to settle their case with the SEC, the Third District Court of Appeal published an opinion that went against the city in a case brought in 2011 by Miami’s former auditor general. Victor Igwe, who was let go by commissioners in 2011, says his contract was allowed to expire in part because of a scathing audit he issued regarding the city’s budget maneuvers and his cooperation with the Securities and Exchange Commission.

Igwe is asking for damages, back pay and court costs.

“What happened to Victor is a very clear optic lesson to whoever they put in that job: You can have teeth but we’re going to bash them in,” said William Amlong, Igwe’s attorney. “Hopefully, this opinion will take away that message.”

The opinion, however, doesn’t speak to whether Igwe’s allegations are true. What Judges Richard J. Suarez, Leslie Rothenberg and Ivan F. Fernandez agreed was that trial court Judge John Schlesinger erred last year when he said Igwe could not cite Florida’s whistle-blower law in bringing his suit against the city. Schlesinger said an auditor, whose job is to root out and unveil bad news, could not turn around and claim he was dismissed for doing his duty.

In the meantime, Miami will likely go back to court with Igwe without the specter of the federal government coming down any harder on the city than it already has.

Miami Commissioners voted 4-0 Thursday, with Commissioner Wifredo “Willy” Gort absent at the time of the vote, to pay a $1 million civil penalty to the SEC after losing a civil securities fraud trial last month. City officials denied wrongdoing, but a jury said Miami officials from a previous administration played shell games with the budget in order to hide gaping losses from the public and municipal bond investors.

They found former budget director Michael Boudreaux was not liable for one of several counts brought personally against him, but otherwise the civil securities fraud trial was a clean sweep for the SEC.

Boudreaux intends to challenge the verdict. But commissioners signaled that they will not appeal the verdict, nor oppose the federal government’s request for the court to issue an injunction barring Miami from once again violating securities laws, as they did previously in the 1990s.

The SEC has until the end of the month to present the terms of the agreement to Judge Cecilia Altonaga.

In other news Thursday:

Chairman Keon Hardemon pushed through a rarely-seen emergency law that starting in 45 days will require all owners of vacant lots in Overtown to erect fencing around their properties and allow police access. Hardemon brought the proposal amid concerns that drug users have been erecting tents in overgrown lots and using drugs, sometimes overdosing — even dying.

Last month, Miami’s police and fire chiefs warned that the city is experiencing an epidemic of overdoses related to the drug fentanyl, a synthetic heroin that had caused 130 deaths through the first eight months of the year.

According to the law, the city will process fencing permits in just three days after they’re submitted and waive permitting fees. The city will erect fencing around open properties and bill the owner if fencing isn’t erected within 90 days. The law is temporary, and lasts just one year.

Commissioners also voted 3-2 pass a law banning conversion therapy — the practice of trying to change a person’s sexual orientation or gender identity through counseling —for minors. Commissioners Hardemon and Frank Carollo opposed the measure. Carollo called it an issue better addressed by the Florida Legislature.