U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18774 / July 1, 2004
SECURITIES AND EXCHANGE COMMISSION V. ROBERT A. KASIRER, ET AL. (United States District Court for the Northern District of Illinois, 04-C-4340).
Robert A. Kasirer, Jerold V. Goldstein, Joel T. Boehm, James E. Iverson and Victor P. Dhooge Charged With Fraudulent Offer and Sale of $131 Million of Municipal Revenue Bonds
The United States Securities and Exchange Commission ("Commission") announced that it filed a complaint in the United States District Court for the Northern District of Illinois on June 29 against Robert A. Kasirer, Jerold V. Goldstein, Joel T. Boehm, James E. Iverson and Victor P. Dhooge. The Complaint alleges that the Defendants, acting in concert, fraudulently offered and sold over $131 million of municipal revenue bonds to members of the public.
The SEC's Complaint alleges that the Defendants offered and sold the bonds in question through a series of eleven offerings underwritten by the now-defunct, Minnesota firm of Miller & Schroeder Financial, Inc. ("Miller & Schroeder"). The Complaint alleges that the Defendants sold the bonds to more than 1,800 investors residing in thirty-six states. The Complaint alleges that the purported purpose of each bond offering was to finance the development of a specified healthcare facility by Heritage Housing Development, Inc., a company effectively controlled by Defendant Kasirer ("Heritage"). The Complaint alleges that all together, there were ten Heritage facilities located in the states of Texas, Florida, Illinois and California. The Complaint alleges that the Defendants represented in offering documents that the proceeds from each bond offering would be used to finance one specific healthcare facility. The Complaint alleges that in fact, however, the costs of developing the Heritage facilities, including payments to Defendant Kasirer and some of his family members, outstripped the proceeds from the facilities' respective bond offering. The Complaint alleges that the Defendants covered the resulting cash shortfalls by operating a type of Ponzi scheme, commingling bond proceeds and diverting bond proceeds from more recent offerings to pay the expenses of earlier projects. The Complaint alleges that this diversion of bond proceeds from one project to another went on for three years. The Complaint alleges that beginning in February 2000, the Heritage facilities ran out of money and defaulted on their obligations to bondholders. Presently, all the Heritage facilities are in default on their bonds.
The Complaint alleges that Defendants Kasirer and Goldstein controlled Heritage and personally directed the commingling and misapplication of bond proceeds and that Defendants Iverson and Dhooge, representatives of Miller & Schroeder, managed the underwriting of the various bond offerings, despite their knowledge that bond proceeds were being wrongfully commingled and diverted. The Complaint alleges that Defendant Boehm, an attorney who acted as counsel for Miller & Schroeder in the bond offerings, issued favorable legal opinions despite his knowledge that bond proceeds were being wrongfully commingled and diverted.
The Commission seeks the entry of permanent injunctions, disgorgement of any ill-gotten gains plus prejudgment interest and civil penalties against Kasirer, Goldstein, Boehm, Iverson and Dhooge.