SEC Obtains Final Judgment Against Former Mayor in Muni Bond Pay-To-Play Scheme
Litigation Release No. 25160 / August 9, 2021
Securities and Exchange Commission v. David Webb, Jr., 17-cv- 8685 (N.D. Ill., filed December 1, 2017)
United States v. David Webb, Jr., 17-cr-0220 (N.D. Ill., filed November 30, 2017)
On July 26, 2021, the U.S. District Court for the Northern District of Illinois entered a final consent judgment against David Webb, Jr., the former mayor of Markham, Illinois, whom the SEC previously charged with securities fraud related to a $5.5 million municipal bond offering by the city.
According to the SEC's complaint, Webb engaged in a pay-to-play scheme by soliciting and receiving a $75,000 bribe from a construction contractor. The complaint alleged that, in exchange for the bribe, Webb promised the contractor that he would steer a multi-million-dollar city construction project, to be paid for with bond proceeds, to the contractor. At a Markham City Council meeting one month later, Webb allegedly responded to a question about the potential improper use of bond proceeds by assuring the City Council that he did not "make deals." According to the complaint, Webb gave these assurances despite the fact that he had recently solicited and received the bribe.
In a parallel criminal action, the U.S. Attorney's Office for the Northern District of Illinois filed criminal charges against Webb. Webb pled guilty to those charges and, on June 22, 2021, was sentenced to a prison term of 24 months and ordered to pay forfeiture and restitution.
The district court previously entered a partial judgment by consent permanently enjoining Webb from violating the antifraud provisions 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, barring him from participating in future municipal bond offerings, and ordering him to pay disgorgement, prejudgment interest, and penalties in amounts to be determined by the court at a later date. The final judgment, entered on July 26, 2021, finds Webb liable for disgorgement in the amount of $85,000 and prejudgment interest in the amount of $32,849.35, for a total amount of $117,849.35. These amounts were deemed satisfied by the restitution ordered against Webb in the parallel criminal action.
The SEC's investigation was supervised by Brian Fagel of the Public Finance Abuse Unit. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of Illinois and the Federal Bureau of Investigation.