BIRMINGHAM, Ala., March 12 (UPI) -- Jefferson County, Ala., is staring at possible bankruptcy resulting from advice a former county finance official said he didn't understand.
Former county official and current mayor of Birmingham Larry P. Langford told The New York Times, "I still don't understand 99 percent of it."
Yet, in 2002, Charles E. LeCroy, a managing director at JP Morgan Chase, convinced Langford to switch the county's debt from a fixed rate to adjustable rates, promising they could stay ahead of rate hikes by initiating a complex series of transactions called swaps.
The swaps didn't work, although the county tried it 18 times on debt totaling $5.4 billion.
The county now faces one of the largest public bankruptcies in U.S. history, the Times said Wednesday.
The Securities and Exchange Commission is investigating Langford to see if he was paid kickbacks on any of the deals. They are especially concerned with Langford's relationship with William Blount, a friend whose firm Blount Parrish & Co. earned large fees on the deals.
Adviser LeCroy, no longer with JP Morgan Chase, is currently in jail, serving a three-month sentence for a municipal corruption case in Philadelphia, the report said.
