U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25901 / November 21, 2023
Securities and Exchange Commission v. Vern A. Breland, No. 3:22-cv-01467 (W.D. La. filed June 2, 2022)
SEC Obtains Final Judgment Against Former Mayor in Municipal Bond Offering Scheme
On November 6, 2023, the U.S. District Court for the Western District of Louisiana entered a final judgment by consent against defendant Vern A. Breland for his involvement in two fraudulent municipal bond offerings. On August 2, 2022, the Court had entered a final judgment in a related case against defendants Aaron B. Fletcher and Twin Spires Financial LLC for their involvement with Breland in the same fraudulent bond offerings.
According to the SEC’s June 2, 2022 complaints, in 2017 and 2018 the town of Sterlington, Louisiana issued two revenue bonds to finance the development of a water system and improvements to its existing sewer system. As required by state law, Sterlington applied to the Louisiana State Bond Commission (SBC) for approval of the two offerings. The SEC alleged that Sterlington submitted false financial projections, created by Fletcher and Twin Spires, with then-Mayor Breland’s active participation and approval, substantially overstating the number of historical and projected sewer customers in order to mislead the SBC as to the town’s ability to cover the debt service for the proposed bonds. The SEC alleged the Town and Breland did not disclose to bond investors that SBC approval of the bonds was based on the false projections or that Breland had directed the misuse of more than $3 million from earlier bond offerings intended for sewer system updates to instead pay for sports complex improvements, town legal fees, and payroll.
Breland, without admitting or denying the allegations, consented to the entry of the final judgment, which enjoined him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933, enjoined him from participating in future offerings of municipal securities and ordered him to pay a $35,000 civil penalty.
Robbie L. Mayer and Creighton Papier of the SEC’s Public Finance Abuse Unit conducted the investigation under the supervision of Peter J. Diskin and Deputy Unit Chief Rebecca J. Olsen. The litigation against Breland was conducted by William Hicks and Graham Loomis of the SEC’s Atlanta Regional Office. The SEC acknowledges the assistance of the investigative Audit Staff of the Louisiana Legislative Auditor.