07/24/2012 03:06 pm ET

City Of Miami Cheated Investors, According To SEC Investigation Recommending Civil Fraud Charges

The 90s are back in Miami, so dig up those flannel shirts and prepare to trudge around all depressed.

Unfortunately, it's not so much the 90s where Madonna was chilling in Washington Avenue clubs, but the 90s in which the SEC brought the hammer down on the City of Miami for criminal accounting practices.

Yep, again! Investigators for the Securities and Exchange Commission have determined that the city misled investors about just how broke it was before shopping bonds to float city projects, and are recommending civil fraud charges according to a letter (below) sent Monday.

The probe, which began in December 2009, centered on two transfers totaling $26.4 million from capital projects stores into the city's general fund during fiscal years 2007 and 2008 -- transfers that decreased the city's overall deficit right before bond rating companies assembled reports on the city's fiscal fitness.

According to a statement from the city, it still intends to defend itself:

They (sic) City respectfully disagrees with the SEC staff's position and intends to present information to the SEC's Commissioners demonstrating that such charges are not warranted.

“We keep paying for the sins of the past,” Mayor Tomás Regalado told the Miami Herald. “But we have taken many, many measures to avoid anything like this from happening in the future.”

The inquiry, which is separate from the other SEC investigation into bonds sold to finance Marlins Park, was the most signficant since lax controls, corruption, and mismanagement caused the State of Florida to assume control of Miami's purses in 1996. At that time, investigators found the city attempted to hide a $68 million deficit by shifting funds between several hundred accounts.

When the current probe began, then-budget director Michael Boudreaux said he determined that the millions "legitimately" transfered from capital projects accounts were leftovers from finished or canceled projects.

"It was reviewed completely by everybody,'' he told the Herald, before being fired and later filing a whistle-blower lawsuit.

So far, according to the Herald report, the city has spent $1.4 million defending itself.