Former Oyster Bay Town Attorney Agrees to Settle SEC Charges

Litigation Release No. 24059 / March 1, 2018

Securities and Exchange Commission v. Leonard Genova, No. 2:18-cv-01298 (E.D.N.Y)

The Securities and Exchange Commission today charged former town attorney and deputy supervisor of Oyster Bay, New York, Leonard Genova, with defrauding investors in the Town's municipal securities offerings by hiding the existence and potential financial impact of side deals with a businessman who owned and operated restaurants and concession stands at several town facilities. The SEC charged Oyster Bay and the former town supervisor John Venditto in November 2017.

The SEC's complaint against Genova, filed in U.S. District Court for the Eastern District of New York, alleges that Oyster Bay agreed to indirectly guarantee four separate private loans to the vendor totaling more than $20 million.  The SEC's complaint alleges that Genova concealed the indirect loan guarantees when they should have been disclosed in connection with the Town's 26 securities offerings from August 2010 to December 2015.  According to the complaint, this information was material to current and prospective investors due to the potential impact on the Town's finances.

The SEC's complaint charges Genova with violations of Section 17(a)(1) and (a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  He also is charged with aiding and abetting violations and as a control person under Section 20(a) of the Exchange Act for the Town's violations of the Exchange Act.

Genova has agreed to settle the case by agreeing to permanent injunctions against violating the charged securities laws or participating in any offerings of municipal securities. The proposed settlement is subject to approval by the court, which also will determine, at a later date, whether to impose a civil penalty and the amount of any such penalty.

The SEC's continuing investigation is being conducted by the SEC's New York office and the Enforcement Division's Public Finance Abuse Unit, including Alison R. Levine, Ladan F. Stewart, Charles Riely, Creighton L. Papier, Joseph Chimienti, and Jonathan Wilcox.  The case is being supervised by Sanjay Wadhwa, LeeAnn Ghazil Gaunt, and Mark R. Zehner.  The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation.