Following its victory against the city of Miami in a historic fraud trial, the U.S. Securities and Exchange Commission has asked a federal judge to levy a hefty fine against the city’s former budget director.
Through a settlement, attorneys for the federal regulator secured an injunction and a $1 million civil penalty against the city government last month after a federal jury ruled that Miami officials illegally hid gaping budget losses from bond investors in the late 2000s. Now, the SEC is seeking an injunction and a $450,000 fine against Michael Boudreaux, whom the agency accused of masterminding Miami’s financial “shell games.”
In a filing dated Oct. 28, attorneys for the SEC argued that the court ought to issue its most severe, “third-tier” penalty against Boudreaux by fining him $150,000 for each of the three 2009 bond issues at question in the civil case. In making the plea to U.S. District Judge Cecilia Altonaga, lead SEC attorney Amie Riggle Berlin stated that court testimony shows Boudreaux’s current salary as a business manager for the Lafon Nursing Facility of the Holy Family in New Orleans is somewhere around $150,000.
“Imposing a third-tier penalty for each of the three bond offerings, for a total penalty of $450,000, would serve the need to both punish Boudreaux and others,” she wrote.
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Boudreaux’s attorney, however, described his client as a “man of modest means,” and the proposed fine as “egregious.”
“The City of Miami’s nearly $1 billion budget is scarcely impacted by its settlement. Yet for Mr. Boudreaux, the SEC’s requested penalty exceeds the bounds of fairness and justice,” said attorney Benedict Kuehne. “Mr. Boudreaux calls upon the SEC to abandon its efforts to bring him to personal ruin for City decisions that did not enrich him, did not result in any actual loss to any person or institution, and did not create a significant risk of substantial losses to anyone.”
Kuehne said Boudreaux “will continue to fight for his vindication.” The jury found Boudreaux liable on one count of violating the Securities Act and two counts of the Exchange Act. The jury found him not liable on a fourth count.