Westbury, SEC settle case of D.C. charter-school funds
Monday, March 7, 2011; 8:02 PM
Eric M. Westbury Sr., a financial executive accused in 2006 of defrauding the District of Columbia over funds earmarked for charter schools, has agreed to pay a $130,000 penalty to the federal government.
Westbury, 47, also agreed to withdraw from the daily operations of some of his businesses but neither admitted nor denied wrongdoing under an administrative settlement Friday with the Securities and Exchange Commission.
"The Boards and I believe that the Settlement gives the SBM Companies the best chance to recover and restructure over the next 18 months," Westbury said in a news release Monday.
Westbury heads a group of businesses in Silver Spring and Vienna that include Geneva Capital Partners, SBM Investment Certificates and SBM Certificate Co.
The District years ago invested more than $21 million with Westbury using funds earmarked for charter schools. Westbury failed to disclose that he invested most of the money "in Westbury-related companies . . . in a losing effort to keep them afloat," the SEC alleged.
The SEC alleged that his businesses maintained insufficient reserves and misled investors about the safety of the investments. The SEC also alleged that Westbury failed to disclose that he had business relationships with people who were involved in the D.C. government's decision to invest with him.
A lawyer for Westbury, Melvin White, declined to comment on the settlement.
But Westbury has filed a lawsuit against the D.C. government and city officials alleging that they turned him into a scapegoat for their own mismanagement.
"Defendants set out to ruin Westbury because of his race alone, and they have nearly succeeded," Westbury, who is African American, alleged in the lawsuit.
Westbury also alleges that the SEC used a falsified document in the case against him.
The lawsuit says Westbury, his wife and his businesses have spent more than $4 million defending themselves against the SEC, and it seeks damages of more than $250 million.
The D.C. government has denied Westbury's allegations.