RICHMOND -- The West Contra Costa school board will pay to defend the board president in an investigation by the Securities and Exchange Commission related to financing for the district's construction program.
Trustees voted in closed session Wednesday to pay legal costs for board President Charles Ramsey, who was subpoenaed Aug. 1 by the SEC, along with the district, county treasurer-tax collector, some members of the district's financing team and some of its consultants and advisers.
The subpoenas were listed in a supplemental disclosure for the district's sale of nearly $77.5 million in bonds through a negotiated refinancing deal that was finalized Wednesday.
"The district is aware that its board president, certain members of its financing team and some of its consultants and advisers also received subpoenas from the SEC," the disclosure states. "The district is currently preparing its response to the subpoena. The district has not been advised by the SEC of the nature or scope of the investigation to which the subpoena relates and is unable to predict the outcome of such investigation."
Ramsey referred specific questions to his attorneys, Amy Craig and his brother, Ismail Ramsey. His attorneys declined to comment about the investigation.
Since 1998, West County voters have approved six bonds worth $1.6 billion to finance the third-largest school construction program in the state, behind San Diego and Los Angeles. The district has issued about $1 billion, with nearly $600 million remaining.
The district subpoena requested documents relating to bonds issued from 2009 through 2013, and records related to current and proposed bond refinancing.
In June, the board approved a resolution authorizing its financial underwriters to refinance up to $100 million in previously issued bonds. In July, the board directed underwriters to only sell about $50 million and to hold off on the rest until next year or later. The underwriters sold $77.5 million in bonds at a lower rate. Ramsey said Thursday that despite the board's direction, the underwriters had authorization under the resolution to sell more than $50 million if district goals were met.
The SEC characterized its investigation as a "nonpublic, fact-finding inquiry." The commission's enforcement division can recommend civil actions in federal court or before an administrative law judge and can impose sanctions, including fines, according to its website. It also works with other law enforcement agencies on criminal cases.
Ramsey said the subpoenas do not mean there is any wrongdoing
"It's not an indictment, it's just a request for records," he said. "They're not saying anybody's guilty of anything or that they have a negative opinion of anybody."
District resident Linda Ruiz-Lozito questions whether the district will continue paying legal costs for Ramsey after his term expires in November.
"Educational dollars shouldn't be spent to defend school board members -- especially if they have violated federal laws," she said. "Is the district also going to be funding a defense for 'certain members of its financing team and some of its consultant and advisers?'"
Trustee Todd Groves said it made sense for the board to pay Ramsey's legal costs, which were not disclosed.
"I think that the district needs to represent its board members if they are in a position where they are under scrutiny related to what they're doing for our district," Groves said. "I think it would be a really discouraging situation if people see that they step up for service and end up having to defend themselves on their own dollar in relation to serving the public. It sends a very chilling message to potential candidates or anybody who serves."
Theresa Harrington covers education. Contact her at 925-945-4764. Follow her at Twitter.com/tunedtotheresa.