A federal grand jury yesterday charged a West Chester investment broker with defrauding four suburban school districts by selling them risky securities that were not permitted by state law.

The school districts - Boyertown in Berks County, Red Lion in York County, and Perkiomen Valley and North Penn in Montgomery County - collectively lost about $10.5 million as a result of the fraud.

Authorities allege that Robert Bradbury, 61, who provided investment-banking services to the districts, sold each district short-term notes to finance a speculative golf- course development and then hid the true nature and risks associated with them.

The four districts had authorized Bradbury to make their investment decisions.

The indictment, which follows a civil complaint filed by the Securities & Exchange Commission in August 2006, said Bradbury rarely sought approval or contacted school district officials before making an investment.

Authorities charged that between March 1999 and August 2004, Bradbury underwrote and sold the districts short-term notes for a golf- course project in Franklin County in south-central Pennsylvania.

Such notes are designed to provide interim financing until permanent financing is secured.

The notes were actually issued by two local municipal authorities, the Dauphin County General Authority (DCGA) and the Hummelstown General Authority (HGA).

According to the indictment, the DCGA issued $7.5 million of short-term notes to buy land and finance construction of an 18-hole course, adjacent to the Whitetail Ski Resort.

Bradbury sold most of the notes to the Boyertown and Red Lion districts. The remainder were sold to a small bank in Downingtown, on whose board Bradbury sat.

In 1999, the HGA issued $8.5 million in short-term notes to acquire the golf course from DCGA and to fund additional construction costs.

Bradbury allegedly sold these notes to the same districts.

HGA attempted to sell long-term bonds in both 2000 and 2001, but Bradbury couldn't sell them, the feds said.

In September 2001, after the bond failures, HGA issued $14 million in short-term notes to replace the earlier notes and to cover additional expenses connected with the golf course's operations and debt service.

Authorities said Bradbury then sold the majority of these notes to the Boyertown, Red Lion and North Penn districts. By the end of the year, all $14 million of the notes was held by the districts.

The feds said that Bradbury continued to deceive the districts about the risks, and didn't tell them the golf course operated in the red in both 2001 and 2002 and that the managers had to be fired.

By 2003, the golf course couldn't even cover interest payments due in 2004.

With the notes in danger of default, the feds said that Bradbury repurchased notes from the North Penn and Perkiomen Valley districts in 2004 and promptly resold them to the Boyertown and Red Lion districts.

HGA defaulted on the Whitetail notes in September 2004 and sold the golf course for $3.75 million. The funds were then distributed to the school districts, leaving them with a shortfall of about $10.5 million. *