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Pacific Genesis Delays Bond Sale Amid Probe

November 06, 1996|Times Staff and Wire Reports

San Francisco-based underwriter Pacific Genesis Group Inc. has delayed a municipal junk bond sale in the face of a joint state and federal investigation of the company's recent underwritings. State officials said Pacific Genesis may have illegally sold individual investors more than $40 million of bonds in more than half a dozen offerings since December. The company's unrated municipal bond sales allegedly have raised money to illegally benefit private land developers. The Securities and Exchange Commission and the state attorney general's office jointly are investigating the allegations, which, if true, could cause certain bonds to lose their tax-exempt status. "We are still investigating, with the SEC," said Matt Ross, spokesman for Atty. Gen. Dan Lungren. An SEC spokeswoman declined to comment. Pacific Genesis had expected to complete its latest bond sale Oct. 31. That $17-million offering has been delayed, raising questions about a $27-million financing for the same project set for later this month. "They will close imminently," company spokesman David Fitzgerald said. The offerings are for an obscure public finance agency, Pacific Ocean Estates Public Financing Authority, a joint venture of the city of Waterford, Calif., and the Merced County Board of Education.

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