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SEC Investigation Of Marlins Ballpark Financing Could Heat Up Soon

It's been pretty quiet in Miami since the Securities and Exchange Commission opened an investigation into the financing of the Marlins' new ballpark. That might change soon.

A view of the new Marlins Ballpark during a game between the Miami Marlins and the University of Miami Hurricanes at Marlins Park in Miami, Florida.  (Photo by Mike Ehrmann/Getty Images)
A view of the new Marlins Ballpark during a game between the Miami Marlins and the University of Miami Hurricanes at Marlins Park in Miami, Florida. (Photo by Mike Ehrmann/Getty Images)
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The U.S. Securities and Exchange Commission opened an investigation into the financing of the Marlins' new ballpark in early December. We reported on the story here and here. Since then it's been pretty quiet, but that could change soon.

You might recall that the focus of the SEC probe was three-fold:

First, whether the City of Miami or Miami-Dade County provided false or misleading information to prospective purchasers of bonds sold to finance Marlins Ballpark.

Second, whether the Marlins or team executives made improper campaign contributions to Miami or Miami-Dade officials in order to secure financing for the ballpark as part of a pay-to-play scheme.

Third, on negotiations leading to the City's decision to pay any taxes owed on the stadium parking garage, which will be used almost exclusively for Marlins games.

The SEC kicked off its probe with broadly-worded subpoenas to the City of Miami and Miami-Dade County, as is customary with these sorts of investigations. Earlier this month, Miami Today reported that the County responded to its subpoena by sending 35 boxes of documents, computerized records and other materials to the SEC. There's been no word on whether the City has complied with its subpoena and, if so, the nature of documents it provided to the SEC.

But the County's documents are likely keeping SEC enforcement officials busy for now. As reported by Miami Today, the County turned over materials related to a lawsuit filed by Norman Braman in 2008 to kill the stadium-financing deal. Braman's lawsuit alleged that the ballpark deal violated Florida's constitution because it set aside public money to fund a stadium that would be used exclusively for private purposes.

At the trial, Braman's attorney showed a videotape of sworn testimony by Carlos Alvarez, who was, at the time, the Mayor of Miami-Dade County.

Alvarez's taped statements said he never saw financial statements for the Marlins before approving public funding for the stadium, and that he had no guarantees the Marlins could pay for cost overruns, as required.

Alvarez also said in the recording that he never asked why the county couldn't keep naming rights for the stadium, which were assigned to the Marlins, or why the county couldn't retain scheduling at the stadium when the Marlins' season ends.

The trial judge overseeing Braman's lawsuit dismissed the case after the trial, ruling that the plan to publicly finance the new ballpark was not unconstitutional. That decision was affirmed on appeal. But the damage from Alvarez's testimony and his decision-making was done. Miami-Dade voters recalled Alvarez from the mayor's office in May of last year. Norman Braman had spearheaded the recall effort.

All of this -- and more -- is now before the SEC in those 35 boxes of documents.

This week, there was another interesting development.

The Miami Herald reported on Wednesday that the SEC will be filing civil charges against the City of Miami and former city officials for securities violations stemming from a different bond sale in 2009. While the two investigations target two separate and different bond deals, the SEC's action in the first investigation suggests the ballpark probe isn't going away any time soon.

  • The first investigation started with broadly-worded demands that the City turn over all documents and communications relating to the bond deal.
  • The SEC then used those documents to depose (question under oath) nearly every City official who had anything to do with the bond deal or how the proceeds would be used.
  • The SEC spent more than two years reviewing the documents and the sworn testimony before deciding to move forward with charges.

So far, the ballpark investigation is at step one: demanding, receiving and reviewing the documents. Unless the SEC's concerns are put to rest after reviewing Miami-Dade County's 35 boxes of documents, along with any documents provided by the City, the next step will be to question officials from the City, County, the Marlins, and possibly Major League Baseball under oath. And if recent events are any guide, the deposition of Marlins President David Samson is likely to be a flashpoint.

A few weeks ago, Samson spoke to the Beacon Council, a local business group, and had some choice words for local politicians and anti-ballpark advocate Norman Braman. Samson's comments ignited a firestorm. Then a video surfaced that put in dispute precisely what Samson said about local elected officials.

But there is no dispute what Samson told the Council about the Marlins' strategy for obtaining public financing for a new ballpark. Watch the video of Samson in this Miami Herald story. Samson says:

We let it bottom out. We pretended we were going to move. We didn't want to move. We wanted to be in Miami. Why did we want to be in Miami? Because we know for a fact we can make more money in Miami than in San Antonio.

Those words may come back to haunt Samson as the SEC investigation unfolds.

For now, though, it's clear that the SEC means business when it comes to possible securities violations by Miami and Miami-Dade County. "The Miami Regional Office of the SEC has significant experience investigating fraudulent municipal bond offerings," said Ryan Dwight O’Quinn, a former SEC enforcement attorney now in private practice in Miami. "The issuance of subpoenas in this matter indicates that they have instituted a formal investigation and, if misconduct occurred in this offering, the SEC will not hesitate to bring an action against those involved."

What remains to be seen is what that means for the Marlins and their shiny new ballpark.