Town secured loans to Singh putting taxpayers at risk.
By Raif Karerat
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An Indian American businessman has been implicated in a money-moving scandal in which Town of Oyster Bay officials in New York helped him secure loans by arranging with lenders to have the town pay in event of any defaults, potentially exposing taxpayers to millions of dollars in liabilities, a Newsday report revealed.
Records indicate Harendra Singh, a restaurateur who holds several lucrative contracts with the Town of Oyster Bay, secured a $1.5 million line of credit in 2010, due to a guarantee from the town that it would pay the lender in the event that Singh defaulted within a time period just short of five years.
Singh secured two more loans totaling $14 million in 2011 and 2012, and emails obtained by Newsday show that Deputy Town Attorney Frederick Mei negotiated directly with lenders to structure those loans with a township-backed guarantee similar to the first.
“The way it was structured is that the town became a guarantor, so that if Singh was to default, the town was a guarantor and the bank would be able to go after them as well,” said Singh’s lawyer, Joseph Conways.
Municipalities are not legally permitted to guarantee private debt, as is stated in New York’s state constitution. In fact, emails obtained by Newsday show that outside attorneys explicitly warned town officials that their plans to guarantee Singh’s debt were illegal and in violation of the state constitution.
Another potential issue for Oyster Bay is that the Singh loans do not appear to have been disclosed in the town’s audited financial statements or bond prospectuses. The glaring omissions could expose the town to sanctions from the Securities and Exchange Commission.
The Town of Oyster Bay’s bizarre complicity in aiding Singh’s pursuit of funding came just months after Nassau County Executive Edward Mangano first took office in January 2010, following a narrow victory over incumbent Thomas Suozzi.
Newsday had previously reported that Singh, a longtime friend of Mangano, arranged and paid for vacation trips for Mangano and his family, as well as separate trips for Mei.
One financial expert, who asked not to be identified, reviewed the town’s documents and told Newsday Oyster Bay officials “could be in very serious trouble with the SEC, and it wouldn’t surprise me that it would spark a federal investigation.”