LOS ANGELES —Authorities announced on Monday the arrest of former airport developer Scot Spencer on charges that he defrauded the San Bernardino International Airport Authority of more than $1 million.
The arrest comes more than three years after a grand jury convened to investigate fraud charges involving business dealings at the airport, and more than two years after the airport’s financial advisor
“We have excised Mr. Spencer from any participation in the airport as of October of last year,” said A.J. Wilson, interim executive director of the Inland Valley Development Agency, which issued tax allocation bonds for airport authority. “Part of the reason we did that is we questioned his business operations and veracity. The [charges brought] seem to be consistent with our concerns.”
Wilson said it took between eight and 10 months on two different issues involving leases and operating agreements to get claims in Spencer’s bankruptcy thrown out of court to extricate him from involvement with the airport.
Spencer, who was tasked with redeveloping the former Norton Air Force Base, is a convicted felon who previously served time in federal prison for bankruptcy fraud, according to the district attorney’s office.
San Bernardino County District Attorney Michael Ramos
“Thanks to the hard work of our investigators and partners at the FBI, we were able to take another step towards weeding out corruption in the county of San Bernardino,” Ramos said in a prepared statement.
The Inland Valley Development Agency disclosed in the December 2011 disclosure filing that it and the San Bernardino International Airport Authority were being investigated by the FBI.
The FBI conducted a search of the shared offices of IVDA and the airport authority on Sept. 21, 2011, according to the material event notice posted nine days later on the Municipal Securities Rulemaking Board’s EMMA website. IVDA and the airport authority, in a county civil grand jury report, have been accused of fiscal mismanagement and questionable financial oversight.
IVDA issued $162 million of bonds to fund development of the former Norton Air Force Base, which was closed in 1994 and converted to civilian use. The IVDA is a joint powers authority created to handle the base closure which had been granted redevelopment powers by the state. SBIA is a joint powers authority set up for operations and long-term control of the airport.
“We wanted to make sure that the bondholders knew what was going on — not in connection with the bonds or prospective default, but because it was newsworthy,” Alexis Crump, bond counsel for the IVDA and a partner with the law firm Lewis Bribois Bisgaard & Smith LLP told the Bond Buyer in December 2011. Crump could not be reached for comment for this article.
The felony charges filed against Spencer, 48, of Boca Raton, Fla., and Luciano, 69, of Tempe, Ariz., included two counts alleging that Spencer and Luciano conspired to commit grand theft and presenting false documents to be used in evidence. Spencer was also charged with two counts of perjury and one count of preparing false documentary evidence.
Spencer was arrested in Florida on Friday and is being held on a $1 million bail, the district attorney’s office said. Luciano remains at large.
If convicted on all counts, officials said Spencer and Luciano face five years in prison.
The investigation was handled by members of the district attorney’s office and the FBI, who are both part of the Inland Regional Corruption Task Force (IRCTF), a special joint corruption task force set up in 2010 to address corruption allegations surfacing in San Bernardino County. The task force includes the district attorney’s office, the FBI, the U.S. attorney’s office and the California attorney general’s office.
Investigators could not be reached for comment on whether additional arrests are anticipated. The indictment mentions that Luciano and Spencer “did conspire with another person whose identity is unknown.”
Standard & Poor’s affirmed the A rating on IDVA’s bonds on March 1, but gave them a negative outlook. The bonds were placed on CreditWatch July 6, 2012 based on uncertainty from the state’s dissolution of the redevelopment agencies and the fact that it had not received approval from the state for a planned refunding of the bonds.
“We base the negative outlook on our view of IVDA’s need to refinance ahead of scheduled mandatory tenders on the 2011 TABS,” said S&P Credit Analysts Sussan Corson.
The outlook also reflects IVDA’s exposure to refinancing risk associated with upcoming bullet payments on the agency’s unsecured note and subordinate tax increment obligations.
“We haven’t missed any bond payments,” Wilson said. “Even with the redevelopment dissolution we haven’t had any disruption in our ability to pay bondholders.”
The agency’s bonds related to redevelopment of the airport were issued in June 2011.
“We plan to do a refinancing later this year – and we have plenty of money to cover the issuance related to the refinancing,” Wilson said.
They will be refinancing a portion of the bonds and $100 million in loan debt in December, Wilson said.
“The refinancing is not coming before bond maturity,” Wilson said. “It will be done within the 90-day period prior to maturation of the February deadline.”
