SEC and FBI question use of proceeds from municipal bonds to pay for out-of-scope projects
According to Federal authorities, municipalities strapped for funds have, it appears, used the proceeds of municipal bonds intended for capital infrastructure for other municipal purposes. As the Wall Street Journal reports, Miami is currently the subject of a Federal SEC and FBI investigation into the use of highway bond proceeds to fill unrelated budget gaps. The SEC and FBI are evaluating whether this transfer constitutes fraudulent conduct. The investigation was prompted by bondholders and whistleblowers.