District poised to spend $35,000 to answer SEC probe

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Photo - Andrew Harnik/Examiner

Federal and local law enforcement agents along with the United States Attorneys for the District of Columbia and Maryland hold a press conference along with Washington, DC Mayor Adrian Fenty and DC Chief Financial Officer Natwar Gandhi, pictured, to discuss the arrest of 5 people, including 2 employees of the District of Columbia who have connected with a property tax refund fraud scheme. In Washington, DC on Wednesday November 7, 2007.
Andrew Harnik/Examiner Federal and local law enforcement agents along with the United States Attorneys for the District of Columbia and Maryland hold a press conference along with Washington, DC Mayor Adrian Fenty and DC Chief Financial Officer Natwar Gandhi, pictured, to discuss the arrest of 5 people, including 2 employees of the District of Columbia who have connected with a property tax refund fraud scheme. In Washington, DC on Wednesday November 7, 2007.
Local,DC,Alan Blinder,Jack Evans

The District is poised to spend at least $35,000 to respond to a "confidential, informal inquiry" from the Securities and Exchange Commission, which opened a probe in October into disclosures surrounding sales of the city's municipal bonds.

According to billing records obtained by The Washington Examiner under the Freedom of Information Act, the District spent $25,812.50 for nearly 74 hours of legal work tied to the investigation late last year.

In April, the District received a bill for another $9,362.50 in counsel from Stanley Sporkin, a retired federal judge who was a top SEC official for much of the 1970s. The city has not yet resolved that invoice.

The office of D.C. Chief Financial Officer Natwar Gandhi, which is responding to the SEC's queries on behalf on the city, declined to discuss the status of the investigation and declined to release most correspondence between the District and federal regulators.

"Providing copies of the correspondence would interfere with the SEC confidential informal inquiry," Gandhi's office said in an email.

The SEC, which asked the District for "audits, inspections, reviews and investigations" conducted by Gandhi's internal watchdog, has declined to comment on the investigation.

The regulators began their review after a series of media reports revealed that Gandhi's office had not released audits that were critical of his agency.

The lack of disclosure infuriated lawmakers, who quickly passed legislation requiring Gandhi to post audits online, and prompted new questions about the CFO's stewardship of District finances.

But the SEC, in its letter informing the District of its inquiry, said that the examination "should not be construed as an indication by the commission or its staff that any violations of the law have occurred, nor should it be considered a reflection on any person, entity or security."

Ward 2 Councilman Jack Evans, a securities lawyer who is chairman of the D.C. Council Committee on Finance and Revenue, said he thought the District was getting a bargain for Sporkin's services.

"I think that's pretty low, so it doesn't sound like there's been a whole lot of activity on the SEC's part," Evans said, though he added that he would have preferred for the District to have avoided the impetus for the investigation.

ablinder@washingtonexaminer.com

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Alan Blinder

Staff Reporter, D.C. City Hall
The Washington Examiner