The Harrison-based firm responsible for audit reports connected to the municipal bonds Ramapo issued to pay for its $60 million baseball stadium has been ordered to pay nearly $500,000 in forfeitures and penalties, according to the Securities and Exchange Commission.
In a statement released Monday, the SEC said Domenick F. Consolo, a partner at PKF O’Connor Davies, also has agreed to pay $75,000 in penalties. His ability to practice public company accounting will be suspended.
According to the SEC, PKF O’Connor Davies and Consolo allowed Ramapo to “record a $3.08 million receivable in its general fund for a property sale” that Consolo knew had not taken place.
Consolo ignored “red flags” and accepted as fact the false representations of Ramapo officials “about certain other receivables, interfund transfers and liabilities,” according to the SEC, which added that PKF O’Connor Davies failed to take steps to minimize the risk of Ramapo’s false financials even after the ruse became apparent.
According to the SEC, four Ramapo officials -- including town Supervisor Christopher St. Lawrence -- the town and its local development corporation were charged with fraud after hiding a “deteriorating financial situation” from bond investors.
“When audit reports are used to sell municipal bonds, investors expect those reports to be accurate,” Andrew M. Calamari, director of the SEC’s New York Regional Office, said in a statement Monday. “Consolo failed to exercise professional skepticism, and PKF O’Connor Davies … left investors without an accurate picture of the town’s finances and its ability to repay bondholders.”
In addition to his $75,000 fine and the suspension, Consolo has agreed that he will not serve as the engagement partner or engagement quality control reviewer on any municipal audit for five years, according to the SEC, which specified that PKF O’Connor Davies’ penalty totaled $100,000 while it’s forfeiture totaled $380,000.
Under the terms of the agreement, neither PKF O’Connor Davies nor Consolo had to admit to the SEC’s accusations.
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