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PHILADELPHIA — A West Chester man was sentenced Monday to 366 days in prison for a single count of securities fraud in connection with a scam involving four Pennsylvania school districts, including North Penn and Perkiomen Valley.
Robert Bradbury, 63, of West Chester, was initially charged with eight counts of mail fraud and one count of securities fraud when he was arrested back in December 2007.
An investment broker at the time, Bradbury illegally sold high-risk securities in the form of bond-anticipation notes for the Whitetail golf course project, a speculative venture located in Franklin County.
Bradbury concealed from the school districts the true nature of and risks associated with the investments, according to court documents. The notes were sold between 1998 and 2004.
The four school districts — Boyertown Area, Red Lion, Perkiomen Valley, and North Penn — collectively lost approximately $10.5 million as a result of the fraud.
The state school code allows districts to invest the proceeds of bond issues for capital projects, but limits such investments to certain conservative categories.
At the time of the indictment, former U.S. attorney Pat Meehan said the case was “a long and complicated story.
“Bottom line is that these school districts lost real money — money that could have been used to build new schools and to renovate existing buildings,” Meehan said in 2007. “Unfortunately, it’s money that comes out of the taxpayers’ pockets.”
Court records state that Boyertown had the most money invested with Bradbury, approximately $9.8 million.
Boyertown school board member John Crossley, contacted by phone Monday night, said Bradbury made a good first impression.
“Well, I was really shocked (at what happened) because he was a personable individual,” Crossley said. “I then found out we made bad investments with him.
“We are getting approximately 80 percent of the money back. The 20 percent isn’t the total loss for us. We lost income on money if we had it.
“I just didn’t see it coming,” he added. “Sometimes you see things coming, but I didn’t see it. This was his choosing and this is what he did to get him there.”
The bonds were purchased by the investment firm of Dolphin and Bradbury and were placed in an investment account on behalf of the Boyertown Area School District in 2001. After receiving notice of the default in 2004, school district officials discontinued all connections with Dolphin and Bradbury, with whom they had worked for nearly 35 years.
Bradbury illegally abused the trust of school district officials when he underwrote notes issued for the Whitetail project by two municipal authorities that separately owned it at different times — the Dauphin County General Authority and the Hummelstown General Authority — and sold them to the districts, according to court documents.
When Bradbury could not find buyers for long-term bonds to pay off the initial notes when they matured in 2001, the Hummelstown authority issued more than $14 million in new notes to replace them, all of which Bradbury sold to the school districts.
When those notes matured three years later, the authority defaulted, prosecutors said. The authority subsequently sold the golf course for $3.8 million, which will be divided among the school districts, they said.
In addition to the prison term, U.S. District Court Judge R. Barclay Surrick ordered Bradbury to pay a $10,000 fine. Bradbury’s date for reporting to prison is Feb. 1, 2010.
This case was investigated by the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorney Bernadette McKeon. The U.S. Attorney’s office was also assisted by the U.S. Securities and Exchange Commission.
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