The former mayor of Markham, Illinois partially settled fraud charges relating to an alleged "pay-to-play" scheme in connection with a municipal bond offering.
In a Complaint filed in the U.S. District Court for the Northern District of Illinois, the SEC claimed that David Webb Jr. solicited and accepted bribes in exchange for directing a multimillion dollar construction project to the contractor. The project, which involved construction of a 9,000 square foot office building, was funded by proceeds from a municipal bond offering. According to the Complaint, Mr. Webb, and a shell company through which he financially benefited, received $85,000 from the contractor in connection with the construction project. The SEC asserted that information regarding the pay-to-play scheme would have been important to the Markham City Council regarding authorization of the bond offering, and to investors regarding their decision to purchase municipal bonds.
As a result of the alleged misconduct, the SEC charged Mr. Webb with violations of Exchange Act Section 10(b) and Rule 10b-5 and Securities Act Section 17(a)(1). Mr. Davis agreed to partially settle the charges by agreeing to permanent enjoinment from future violations of the aforementioned statutes and a ban from participating in future municipal bond offerings. A federal judge will decide on the amount of disgorgement and penalties to be paid.
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