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U.S. Securities and Exchange Commission


Litigation Release No. 23180 / January 27, 2015

Securities and Exchange Commission v. City of Harvey, Illinois and Joseph T. Letke, United States District Court for the Northern District of Illinois, Civil Action No. 1:14-cv-4744 (N.D. Ill., filed June 24, 2014)

Court Enters Default Judgment Against SEC Defendant Joseph T. Letke, Bars Him from Participating in Municipal Securities Offerings, and Orders Him to Pay Over $200,000

The Commission announced that on January 27, 2015, an Illinois federal court entered a default judgment against Joseph T. Letke ("Letke"), a defendant in an action filed by the Commission in June 2014. The Commission alleged in its complaint that beginning in 2008, Letke participated in a scheme to divert municipal bond proceeds for improper purposes, including undisclosed payments to Letke. According to the complaint, Letke, a certified public accountant, served as the comptroller for several municipalities, mostly in the south suburbs of Chicago, including the City of Harvey, Illinois (the "City of Harvey"). According to the complaint, Letke and a firm he owned and controlled also served as a financial advisor to the City of Harvey in connection with certain municipal bond issuances in 2008, 2009 and 2010 (the "2008, 2009, and 2010 Bond Offerings").

The complaint alleged that according to the offering documents for the 2008, 2009, and 2010 Bond Offerings, the purpose of these offerings was to finance the development of a full-service hotel and conference center in the City of Harvey (the "Hotel Development Project"). But according to the complaint, Letke participated in a scheme to divert the proceeds from these bond issuances for improper purposes, including undisclosed payments to Letke beyond what was disclosed in the offering documents, for payroll for the City of Harvey, and for other purposes unrelated to the Hotel Redevelopment Project. The complaint alleged that as the result of the scheme to divert bond-related proceeds, the Hotel Redevelopment Project turned into a fiasco, with the Hotel Redevelopment Project never having been completed.

The Court's final judgment enjoins Letke from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, bars him from participating in any municipal securities offerings as an adviser or consultant to any participant in such an offering, and orders him to pay disgorgement in the amount of $164,375.00, plus prejudgment interest of $22,740.23, and a civil penalty of $30,000, for a total amount of $217,115.23.

For further information, please see Release Numbers 23149 (December 5, 2014) and 2014-122 (June 25, 2014).



Modified: 01/27/2015