Retained by McDowell Hetherington LLP

In Crossfirst Bank et al v. Vieste SPE LLC et al. (2:18-cv-01637), Plaintiffs CrossFirst Bank and CrossFirst Investments, Inc., et al. alleged that there were material misstatements and omissions in the official statement dated April 17, 2013 used to sell The Industrial Development Authority of the City of Phoenix, Arizona’s Solid Waste Disposal Facilities Revenue Bonds. Plaintiffs are parties that purchased and currently hold the at-issue bonds.

The Bonds were issued to fund a new materials recovery facility to be built through the efforts of Vieste SPE, LLC, Vieste Energy, LLC, and Vieste, LLC, a developer of municipal and other major capital projects. Herbert J. Sims & Co., Inc. and Lawson Financial Corporation served as the underwriters for the bond offering. The project was to receive the City of Glendale’s municipal solid waste stream to recover and sell recyclable materials. However, subsequent to operational issues, a legal dispute arose between Vieste and the City of Glendale related to Acceptable Waste Types allowed to be supplied to the facility, and the bonds entered default. 

Plaintiffs alleged that, connected to these issues, the official statements contained misrepresentations and omissions related to the design of the facility, the experience level of Vieste and its personnel, and the basis for assumptions regarding the financial projections and anticipated waste mix. With regard to the initial underwriting of the transaction, Plaintiffs allege that the underwriters did not conduct sufficient due diligence in accordance with industry standards and practice, thus allowing the alleged misrepresentations to occur. 

Gary Strumeyer and Vega Economics were retained by the municipal bond underwriters to analyze and address underwriting of certain bonds, the transactions by which certain investors acquired their bonds, and investors’ opportunities to sell their bonds from the perspective of industry standards and practice.

Gary Strumeyer has over thirty years of professional experience as a capital-markets professional related to municipal bonds and other fixed income securities. From 2008 to 2016, he was the President of BNY Mellon Capital Markets, LLC. As President of BNYMCM, he was responsible for a range of financial instruments and was tasked with understanding the nature, risk/reward, market structure, and growth opportunities of those securities, including a variety of municipal bond products. From 1996 to 2008, he managed and supervised all aspects of BNY Mellon’s municipal bond department, including the underwriting, public financing, and sale and trading of such bonds.