Jeff Smith noon, March 8
SEC: One Touchdown, One Fumble
The Securities and Exchange Commission, the agency that is being closely watched because of its egregious failures such as turning a blind eye to the Madoff Ponzi scheme, has recently done one laudable job and muffed another in San Diego.
First, the praise. Today (Oct. 26), U.S. District Judge Irma E. Gonzalez turned over to the U.S. Attorney's office the case of Alfred Louis (Bobby) Vassallo for criminal contempt of court prosecution. As has been noted here in several columns and blog items, Vassallo fleeced San Diego investors in a scam called Presto Telecommunications. In 2005, the federal court ordered Vassallo to pay about $2 million in various costs and penalties, enjoined him from committing sales of unregistered securities, misrepresenting ownership and control of companies and misappropriating investor funds. But Vassallo has not paid a cent. The SEC made a convincing case that he has done everything he had been enjoined from doing, including misappropriating investor funds. He is taking the Fifth, but now faces long-overdue criminal charges. Actually, Presto is just one of a long string of capers Vassallo has been involved in, but it looks like there will be some action.
Then the pabulum. According to the Union-Tribune, four former City officials have settled SEC allegations of misleading bond buyers about the City's pension health. Former City Manager Michael Uberuaga, former Auditor Ed Ryan, former Deputy City Manager Patricia Frazier and former Treasurer Mary Vattimo have agreed to settle the SEC charges. They will say they acted negligently. Frazier, Ryan, and Uberuaga will pay fines of $25,000 and Vattimo $5,000. The case has been heard and eviscerated in federal court, where the settlements were filed Friday, according to the U-T.