The Observation Deck

Here is the document:

Here is a refresher on the SEC HARRISBURG RELEASE:

Here is the link: https://www.sec.gov/litigation/investre ... -69516.htm

Here's just a sample of what you will learn from this Release:

“[…] the statements of those public officials who may be viewed as having knowledge regarding the financial condition and operations of a municipal issuer should be carefully evaluated to assure that they are not materially false or misleading. […] public officials may have liability under the anti-fraud provisions of the federal securities laws for such statements.”

Clearly, now each of us can see actual documentary evidence of email to the Mayor advising him and other elected and appointed City officials that the cited figure of $120 million dollars in benefits to the City was known to be "bogus".

It was used anyway.

Out of the mouths of babes:

http://lakewoodobserver.com/read/2015/0 ... artnership

"Press release" by Colin McEwen.

$120 Million Investment To Be Made In Lakewood; New Health & Wellness Campus to Include Family Health Center with Emergency Department

This plan includes a $120 million investment in Lakewood to transition from the current model to a future one which will modernize healthcare and deliver a more sustainable way to meet the long-term needs of the Lakewood community.

Kevin Butler also insisted this was a $120 million dollar deal in this document from April 27, 2015, well after he was informed that the 120 million dollar figure was wrong.

https://assets.documentcloud.org/docume ... iation.pdf

All told, we are informed the letter of intent represents a proposed investment of up to 120 million

Thank you to Ms. Conant for posting these additional references to other representations by the City that the proposed transaction to close the hospital had a value of $120 Million. It is also my understanding, that to this point, the City has not provided requested public documents that would show how this number was established.

Here's the view of the U.S. Securities and Exchange Commission:

"There is a substantial likelihood that a reasonable investor would consider the financial condition of the City important in making an investment decision..."

"Public officials should be mindful that their public statements, whether written or oral, may affect the total mix of information available to investors, and should understand that these public statements, if they are materially misleading or omit material information, can lead to potential liability under the antifraud provisions of the federal securities laws."

"Given this potential for liability, public officials who make public statements concerning the municipal issuer should consider taking steps to reduce the risk of misleading investors. At a minimum, they should consider adopting policies and procedures that are reasonably designed to result in accurate, timely, and complete public disclosures; identifying those persons involved in the disclosure process; evaluating other public disclosures that the municipal securities issuer has made, including financial information and other statements, prior to public dissemination; and assuring that responsible individuals receive adequate training about their obligations under the federal securities laws."

Has the City of Lakewood proceeded with the minimum compliance steps, set forth by the SEC? You've seen the documents. You can make your own judgments.

Does the City of Lakewood now have an affirmative duty to consult with its bond counsel and correct these "bogus" public statements? Probably.

Here's another "funny accounting" of the deal:

http://www.crainscleveland.com/article/ ... ily-health

$32 million will be made available for a new foundation that, according to the letter of intent, will “support community health and wellness activities” in the city of Lakewood. In all, the entire deal involves about $120 million.

Remember this, anyone?

Moreover, the Clinic plans to ask the city of Avon to provide Lakewood a cut of the payroll tax revenue generated by the new hospital, which is a hulking $143 million facility being built

Summers said the tax-sharing agreement could generate an additional $1.2 million for the city.

How quickly people forget all the phony promises, promises meant to mislead and deceive.

Need more proof?

From the city's own website:

http://www.onelakewood.com/wp-content/u ... d_CAFR.pdf


The CAFR. Please navigate to page 58 of the document where you will find:

On January 15, 2015, the Lakewood Hospital Association (LHA) and the Lakewood Hospital Foundation (LHF) signed a Letter of Intent with Cleveland Clinic. This proposal includes a $120 million investment in Lakewood to transition from the current model to a future one which will modernize healthcare and deliver a more sustainable way to meet the long-term needs of the Lakewood community.

Kudos to Ms. Conant! Her research on the 2014 CAFR nails this issue. I had overlooked this particular document.

The misrepresentation about the supposed $120 Million investment is actually made in the 2014 Annual Report of the City of Lakewood.

This is at page 58 in the PDF file. I have highlighted the text.

This is exactly the kind of material misrepresentation in a public financial document that the SEC might find to be of concern under its Harrisburg Release.

Given the Disclosure Problems (No. 1 through No. 9) previously reviewed in "Civic Accountability -- Honesty In Local Government I", there is a strong case to be made that our municipal officials acted recklessly and with disregard of the federal securities laws.

Bridget Conant wrote:Need more proof?

From the city's own website:

http://www.onelakewood.com/wp-content/u ... d_CAFR.pdf


The CAFR. Please navigate to page 58 of the document where you will find:

On January 15, 2015, the Lakewood Hospital Association (LHA) and the Lakewood Hospital Foundation (LHF) signed a Letter of Intent with Cleveland Clinic. This proposal includes a $120 million investment in Lakewood to transition from the current model to a future one which will modernize healthcare and deliver a more sustainable way to meet the long-term needs of the Lakewood community.

Ms. Conant,
Great work.
That's the fourth serious blow you've delivered to Summers, Butler and Pae's 120 million dollar lie.
If this was a professional fight they'd stop it on account of bleeding.

In the interest of fairness and equity, if any Deck reader has a copy of any document that substantiates the representation of "$120 Million in investment value", it would be help if you would post the document and identify the source.

Speaking of accountability: I was told by a city employee that there is slim to no money left in the coffers.

Perhaps this is why we have tons of broken down police cars that have been sitting on the lot for over two years and have yet to be fixed.

Perhaps this is why our garbage trucks are breaking down on a daily basis, sometimes more than one on the same day!

What happened to the REAL city checkbook?

For the time being, until we see actual documents that show how the "$120 Million investment value" was calculated, I will assume that the number is artificial and that it was created solely for public relations purposes.

The February 2015 email (attached above) from two Lakewood Hospital Association trustees indicates that they both knew it was "bogus" and that its use should be discontinued. Public officials received copies of these emails.

Yet, it is very interesting to observe (as we did above) how this artificial ("bogus") financial representation is incorporated into official City of Lakewood documents, including its Annual Report for 2014.

To speak to Ms. Allen's point, the U.S. Securities and Exchange Commission investigates municipalities and other local authorities when their finances "go south" and bring securities fraud cases where public officials have misrepresented the condition of their public finances.

Is the U.S. Securities and Exchange Commission active in its enforcement activities against municipal issuers?

I will leave it to the reader to judge.

https://www.sec.gov/news/pressrelease/2016-166.html

If you take a look at page 58 (page 16 in the hard-copy) in the PDF for the 2014 Lakewood CAFR (attached above), there is also a material omission from the description of the Letter of Intent among LHA, LHF and CCF.

It does not include the City of Lakewood as a participant!

So that single paragraph has both a material misrepresentation (the $120 million figure) and a material omission (the City missing as an LOI participant).

This is in the document that the bond market truly relies upon and the document that the SEC can bring cases upon.

I appreciate the fact that so many of you have followed this lengthy and somewhat tedious review. I find it extremely troubling that official City financial documents contain erroneous financial information.