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Show Clearfield bond recall unlikely field, $26,800; interest payment on bonds 6-1-86, $290,625. As reported earlier in the Clipper, Clip-per, James W. Newman, Esquire, who was the counsel for the bond projects, had pled guilty to federal indictments, and it has been stated that "there is no reasonable expectation expec-tation that the proposed projects would ever be constructed with or by use of the bond proceeds since they were only funds available and they were invested in the GIC's, and therefore, the bond issues should never have been issued ...When in truth and fact, the bond proceeds were being invested in such a manner as to make the bonds 'arbitrage bonds' " ("arbitrage ("arbit-rage bonds" are created with the investment of low interest rate "tax exempt" money at a higher rate of interest, thus not using the bond proceeds for the project intended in-tended by the municipality). The Housing Authority has limited li-mited choices. It appears that there is a coordinated "silence" with Clearfield, MONY of NY and In-terFirst In-terFirst Bank Trustee. If the "tax-exempt" "tax-exempt" bonds are called due to the fraud by Mr. Newman "and others," the GIC with MONY NY would pay $6,319,449.59 as of June 1, 1988, less penalties and costs, leaving the "tax exempt" bondholders bond-holders with about $500,000 in losses los-ses on the $6.8 million bond issue. There appears to be little question the IRS will declare the bonds taxable tax-able for the full term of the bonds. Bondholders in other localities who have lost money because of the fraudulent issuance of "tax-exempt" "tax-exempt" municipal bonds have already commenced class action lawsuits. CLEARFIELD The Housing Authority of Clearfield met April 26 at a public meeting and declared that bond holders of the Heather Estates Apartment Project "tax exempt" Series 1985A Bonds Clearfield issued Dec. 1, 1985 and reinstated July 15, 1986, need not fear that the bonds' tax-exempt status will be changed. The Housing Authority further stated that MONY of New York has their bond funds and are making mak-ing the semi-annual interest payments pay-ments through a guaranteed investment invest-ment contract (known as a "GIC" in the bond community). The Clipper had previously reported re-ported that Clearfield was unaware that Matthews and Wright Underwriters, Under-writers, the original underwriters of the December 31, 1985 bond closing, had approved the reinstated re-instated bonds July 15, 1986. However, minutes of a Clearfield Housing Authority meeting on May 13, 1986 which had apparently been misfiled have now surfaced and clarify that Clearfield had approved the reinstated bonds May 13, 1986. On Dec. 31. 1985, the underwri- ters and signatories of the bond closing were listed as Donaldson, Lufkin and Jenrette, one of New York's largest bond dealers. Standard Stan-dard and Poor's rated the bonds AAA because of the "GIC," the "tax-exempt" status of the bonds, subject to the combination thereof to a "credit enhancement" for the Developer, Heather Estates Inc., to build the project. Heather Estates has failed to obtain a loan from the "credit enhancement"; en-hancement"; thus, the project has not started. The city has indicated their present building authorization authoriza-tion has expired. This would require re-quire a new application which would delay any construction. The two-year building project must be completed by Dec. 1 , 1988 in order for the developer to be in compliance com-pliance with the terms of the bonds. The Housing Authority stated they wanted their $26,800 fee for issuance of the "tax exempt" bonds and instructed the city's legal leg-al counsel to pursue possible legal action against the developer or their agents to recover that amount from bond proceeds they received July 15, 1986 for payment to the city. The trustee for the bonds. Inter-first Inter-first Bank of Houston, gave Heather Heath-er Estates $569,94 1 .75 for payment . of the fee to Clearfield and others. The city did not notify the public at its hearing last Tuesday that there are several hundreds of thousands of dollars not accounted for: Accounting includes, Residential Residen-tial Mortgage Inc., $20,000; Heather Heath-er Estates Option fee, $20,000; Residential Re-sidential - M&J Construction, Ed Higley (land cost) $207,841.75; MONY of New York 7-15-86 $6,288,236.03; MONY of New York 4-8-88, $6,170,683.84; Inter-first Inter-first 12-1-93, $7,063,500; Interfirst 12-1-93, $6,800,000; City of Clear- |
