UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SECURITIES AND EXCHANGE COMMISSION,
:
:
Plaintiff,
:
:
v.
:
:
TOWN OF RAMPO, NEW YORK, RAMAPO
:
LOCAL DEVELOPMENT CORP, et al.,
:
Defendants,
:
:
:
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16 Civ. 2779 (CS)

CONSENT OF DEFENDANTS TOWN OF RAMAPO
AND RAMAPO LOCAL DEVELOPMENT CORP.

1.

Defendant Town of Ramapo (“Defendant Town”) and Defendant Ramapo Local

Development Corp. (“Defendant RLDC” and together with Defendant Town, “Defendants”)
acknowledge having been served with the summons and the complaint in this action, enter a
general appearance, and admit the Court’s jurisdiction over Defendants and over the subject
matter of this action.
2.

Defendants hereby consent to the entry of the Judgment in the form attached

hereto (the “Judgment”) and incorporated by reference herein, which, among other things:
(a)

permanently restrains and enjoins Defendants from violations of Sections
17(a)(1), (2) and (3) of the Securities Act of 1933 (“Securities Act”) [15
U.S.C. §§ 77q(a)(1), (2) and (3)] and Section 10(b) of the Securities
Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules
10b-5(a), (b) and (c) thereunder [17 C.F.R. § 240.10b-5(a), (b) and (c)];

(b)

orders that:

 i.

Defendants shall retain an Independent Consultant with municipal

finance experience (the “Independent Consultant”) appointed by the Court
to review and recommend improvements to the Town’s and RLDC’s
financial reporting procedures and controls, as well as to municipal
securities offerings disclosure policies and procedures. The Town and
RLDC will recommend and submit to the Court three proposed
Independent Consultant candidates that are not unacceptable to the
Securities and Exchange Commission (the “SEC”) staff. The Court will
appoint an Independent Consultant from these three candidates or from
any other candidates that the Court chooses to consider.
1.

After the Independent Consultant is appointed, it shall have

120 days to issue a report recommending improvements to the
Town’s and RLDC’s financial reporting procedures and controls,
as well as to municipal securities offerings disclosure policies and
procedures. The Town and RLDC will adopt all
recommendations contained in the Independent Consultant’s report
within 60 days of that report, provided, however, that within 30
days of the report, the Town and RLDC shall advise the
Independent Consultant and SEC staff in writing of any
recommendations that the Town or RLDC believes are
unnecessary, impractical, unduly burdensome, or outside the scope
of this Judgment, and the bases for the Town’s and/or RLDC’s
objections. The Town and RLDC may propose alternative

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 procedures, controls, and policies that they believe will achieve the
objectives of the Independent Consultant’s recommendations. The
Town, RLDC and the Independent Consultant shall engage in
good-faith negotiations concerning any objection raised by the
Town and RLDC, but if the Town, RLDC and Independent
Consultant are unable to come to agreement within 30 days, the
Town and RLDC shall be required to adopt the Independent
Consultant’s recommendations to which they object.
For two full fiscal years thereafter, the Independent Consultant
shall review and assess the sufficiency of the Town’s and RLDC’s
implementation of the Independent Consultant’s recommendations.
The Independent Consultant shall, within thirty days after the end
of the first full fiscal year thereafter, issue an interim report
regarding the sufficiency of the Town’s and RLDC’s
implementation of the recommendations, and, further, shall, within
thirty days after the end of the second full fiscal year thereafter,
issue a final report regarding the sufficiency of the Town’s and
RLDC’s implementation of the recommendations.
2.

In addition, the Independent Consultant may, upon motion,

seek authority from the Court to engage and employ persons in its
discretion to assist in carrying out its duties and responsibilities
hereunder, including, but not limited to, accountants, attorneys,
financial or business advisors, and forensic experts.

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 3.

Defendants shall cooperate fully with the Independent

Consultant in the discharge of the Independent Consultant’s
responsibilities. Defendants shall provide all information
requested by the Independent Consultant reasonably relevant to
Defendants’ financial reporting procedures and controls and
municipal securities offerings disclosure policies and procedures.
4.

The Independent Consultant, in undertaking its Court

ordered appointment, shall agree that, for the period of the
engagement and for a period of two years from completion of the
engagement, the Independent Consultant shall not enter into any
employment, consultant, attorney-client, auditing, or other
professional relationship with Defendants, or any of its present or
former affiliates, subsidiaries, directors, officers, employees, or
agents acting in their capacity as such. The Independent Consultant
will require that any firm with which it is affiliated or of which it is
a member, and any person engaged to assist it in performance of its
duties under this Consent shall not, without prior written consent
of the Court, enter into any employment, consultant, attorneyclient, auditing, or other professional relationship with Defendants,
or any of their present or former affiliates, subsidiaries, directors,
officers, employees, or agents acting in their capacity as such for
the period of the engagement and for a period of two years from
completion of the engagement.

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 5.

Defendants shall provide reasonable compensation to the

Independent Consultant relating to fees and expenses, as agreed to
by the parties. The Independent Consultant’s fees and expenses
will be submitted to the Court for approval and the Independent
Consultant’s proposed fees and expenses will be first reviewed for
reasonableness by the Town, RLDC, and SEC staff before the
Independent Consultant submits them to the Court.
ii.

For fiscal years 2017, 2018, and 2019 (FY2017, FY2018,

FY2019), Defendants shall retain an Independent Auditing Firm (the
“Independent Auditing Firm”), that is not unacceptable to the SEC staff,
to conduct audits of the Town’s and RLDC’s annual financial statements
for those fiscal years.
1.

Defendants shall cooperate fully with the Independent

Auditing Firm in the discharge of the Independent Auditing Firm’s
responsibilities. Defendants shall provide all information
requested by the Independent Auditing Firm reasonably relevant to
Defendants’ financial reporting and accounting internal controls,
policies, and procedures.
2.

The Independent Auditing Firm shall enter into an

agreement with Defendants providing that, for the period of the
engagement and for a period of two years from completion of the
engagement, the Independent Auditing Firm shall not enter into
any professional relationship with Defendants, or any of their

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 present or former affiliates, subsidiaries, directors, officers,
employees, or agents acting in their capacity as such, other than as
described herein. The agreement will also provide that the
Independent Auditing Firm will require that any firm with which it
is affiliated or of which it is a member, and any person engaged to
assist it in performance of its duties under this Consent shall not,
without prior written consent of the Court, enter into any
employment, consultant, attorney-client, auditing, or other
professional relationship with Defendants, or any of their present
or former affiliates, subsidiaries, directors, officers, employees, or
agents acting in their capacity as such for the period of the
engagement and for a period of two years from completion of the
engagement.
iii.

For a period of three years from the date of the entry of the

Judgment, Defendants may not participate in the offer and sale of any
municipal securities for which Defendants are issuers or obligated persons
unless Defendants have, prior to each such offering retained an
Independent Disclosure Counsel for each such offering (“Independent
Disclosure Counsel”) not unacceptable to the SEC staff and which is also
unaffiliated with the bond counsel retained for such offering. The
Independent Disclosure Counsel shall participate in the preparation of the
disclosure document for the offering, assist the Defendants in performing
a reasonable investigation concerning the accuracy and completeness of

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 that disclosure document, and render an opinion to the effect that during
its work, nothing came to its attention that would cause the firm to believe
that the disclosure document contains as of the date of the opinion, any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, including the
disclosure therein of the terms of the Judgment in this case.
1.

Defendants shall cooperate fully with the Independent

Disclosure Counsel for each such offering in the discharge of the
Independent Disclosure Counsel’s responsibilities. Among other
things, Defendants shall provide all information requested by the
Independent Disclosure Counsel reasonably relevant to efforts to
make any preliminary and final offering documents for such
offering accurate and complete, and ensure that the terms of the
Judgment are disclosed in any such offering documents.
2.

The Independent Disclosure Counsel shall enter into an

agreement with Defendants providing that, for the period of
engagement and for a period of two years from completion of the
engagement, the Independent Disclosure Counsel shall not enter
into any employment, consultant, attorney-client, auditing, or other
professional relationship with Defendants (except acting as
independent disclosure counsel for another bond offering by
Defendants), or any of their present or former affiliates,

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 subsidiaries, directors, officers, employees, or agents acting in their
capacity as such. The agreement will also provide that the
Independent Disclosure Counsel will require that any firm with
which it is affiliated or of which it is a member, and any person
engaged to assist it in performance of its duties under this Consent
shall not, without prior written consent of the Court, enter into any
employment, consultant, attorney-client, auditing, or other
professional relationship with Defendants, or any of its present or
former affiliates, subsidiaries, directors, officers, employees, or
agents acting in their capacity as such for the period of the
engagement and for a period of two years from completion of the
engagement (except to the extent the relationship relates to the
engagement of the Independent Disclosure Counsel for another
bond offering by Defendants).
iv.

Defendants’ obligations set forth in paragraphs 2(b)(i)-(iii) of this

Consent and the accompanying Judgment shall, for purposes of the
undertakings in paragraphs 2(b)(i) and (iii), automatically terminate upon
the expiration of 3 years from the date on which the Court enters the
Judgment; and shall, for purposes of the undertaking in paragraph 2(b)(ii),
automatically terminate upon the issuance by the Independent Auditing
Firm of an audit report regarding the financial statements for FY 2019;
subject in each case to the provisions of the next sentence. If (a) the SEC
staff within 30 days after an undertaking described above would otherwise

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 terminate informs Defendants that there is good cause shown, defined as
Defendants’ failure to comply with their obligations set forth in paragraph
2(b) of this Consent and the accompanying Judgment with respect to that
undertaking (the “Notice Requirement”), (b) Defendants do not cure any
such failure within 90 days thereafter (the “Opportunity to Cure
Requirement”), and (c) the Court finds following an evidentiary hearing
that there is good cause shown and the Notice Requirement and the
Opportunity to Cure Requirement have been satisfied and Defendants
have failed to cure, the Court may extend the term of any of Defendants’
obligations set forth in paragraphs 2(b)(i)-(iii) of this Consent and the
accompanying Judgment with which Defendants failed to comply for the
period necessary for Defendants to remedy that failure.
3.

Defendants waive the entry of findings of fact and conclusions of law pursuant to

Rule 52 of the Federal Rules of Civil Procedure.
4.

Defendants waive the right, if any, to a jury trial and to appeal from the entry of

the Judgment.
5.

Defendants enter into this Consent voluntarily and represent that no threats,

offers, promises, or inducements of any kind have been made by the Commission or any
member, officer, employee, agent, or representative of the Commission to induce Defendants to
enter into this Consent.
6.

Defendants agree that this Consent shall be incorporated into the Judgment with

the same force and effect as if fully set forth therein.

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 7.

Defendants will not oppose the enforcement of the Judgment on the ground, if any

exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and hereby
waive any objection based thereon.
8.

Defendants waive service of the Judgment and agree that entry of the Judgment

by the Court and filing with the Clerk of the Court will constitute notice to Defendants of its
terms and conditions. Defendants further agree to provide counsel for the Commission, within
thirty days after the Judgment is filed with the Clerk of the Court, an affidavit or declaration
stating that the Supervisor and Board of the Town and the Town Attorney, and the President,
Board, and Executive Director of the RLDC have received and read a copy of the Judgment.
9.

Consistent with 17 C.F.R. § 202.5(f), this Consent resolves only the claims

asserted against Defendants in this civil proceeding. Defendants acknowledge that no promise or
representation has been made by the Commission or any member, officer, employee, agent, or
representative of the Commission with regard to any criminal liability that may have arisen or
may arise from the facts underlying this action or immunity from any such criminal liability.
Defendants waive any claim of Double Jeopardy based upon the settlement of this proceeding,
including the imposition of any remedy or civil penalty herein. Defendants further acknowledge
that the Court’s entry of a permanent injunction may have collateral consequences under federal
or state law and the rules and regulations of self-regulatory organizations, licensing boards, and
other regulatory organizations. Such collateral consequences include, but are not limited to, a
statutory disqualification with respect to membership or participation in, or association with a
member of, a self-regulatory organization. This statutory disqualification has consequences that
are separate from any sanction imposed in an administrative proceeding. In addition, in any
disciplinary proceeding before the Commission based on the entry of the injunction in this

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 action, Defendants each understand that they shall not be permitted to contest the factual
allegations of the complaint in this action.
10.

Defendants understand and agree to comply with the terms of 17 C.F.R. §

202.5(e), which provides in part that it is the Commission's policy “not to permit a defendant or
respondent to consent to a judgment or order that imposes a sanction while denying the
allegations in the complaint or order for proceedings,” and “a refusal to admit the allegations is
equivalent to a denial, unless the defendant or respondent states that he neither admits nor denies
the allegations.” As part of Defendants’ agreement to comply with the terms of Section 202.5(e),
Defendants agree they (i) will not take any action or make or permit to be made any public
statement denying, directly or indirectly, any allegation in the complaint or creating the
impression that the complaint is without factual basis; (ii) will not make or permit to be made
any public statement to the effect that Defendants do not admit the allegations of the complaint,
or that this Consent contains no admission of the allegations, without also stating that Defendants
do not deny the allegations; and (iii) upon the filing of this Consent, Defendants hereby withdraw
any papers filed in this action to the extent that they deny any allegation in the complaint. If
Defendants breach this agreement, the Commission may petition the Court to vacate the
Judgment and restore this action to its active docket. Nothing in this paragraph affects
Defendants’: (i) testimonial obligations or (ii) right to take legal or factual positions in litigation
or other legal proceedings in which the Commission is not a party.
11.

Defendants hereby waive any rights under the Equal Access to Justice Act, the

Small Business Regulatory Enforcement Fairness Act of 1996, or any other provision of law to
seek from the United States, or any agency, or any official of the United States acting in his or
her official capacity, directly or indirectly, reimbursement of attorney’s fees or other fees,

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 expenses, or costs expended by Defendants to defend against this action. For these purposes,
Defendants agrees that Defendants are not the prevailing party in this action since the parties
have reached a good faith settlement.
12.

Nothing in this Consent or the Judgment shall prevent the Town from dissolving

the RLDC should the Town wish to do so.
13.

Nothing in this Consent or the Judgment shall require the Town or RLDC to

provide to the Independent Consultant, Independent Auditing Firm or Independent Disclosure
Counsel any information that is protected by the attorney client privilege, the attorney work
product doctrine, or any other applicable privilege.
14.

Defendants agree that the Commission may present the Judgment to the Court for

signature and entry without further notice.
15.

Defendants agree that this Court shall retain jurisdiction over this matter for the

purpose of enforcing the terms of the Judgment.

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 Dated:

2017
__________________________on behalf of the
Town of Ramapo

On ______________, 2017, ________________________, a person known to me,
personally appeared before me and acknowledged executing the foregoing Consent.

____________________________________
Notary Public
Commission expires:

Approved as to form:

__________________________
Michael Dell
Kramer Levin Naftalis & Frankel LLP
Attorneys for Defendant Town of Ramapo

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 Dated:

2017
_____________________, on behalf of Ramapo
Local Development Corp.

On ______________, 2017, ________________________, a person known to me,
personally appeared before me and acknowledged executing the foregoing Consent.

____________________________________
Notary Public
Commission expires:

Approved as to form:

___________________
Michael Dell
Kramer Levin Naftalis & Frankel LLP
Attorneys for Defendant RLDC

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