Sunday, March 13, 2011 – 11:55 a.m.
Last modified: March 13, 2011 – 08:10 p.m.

It appears a chapter 9 municipal bankruptcy filing is in the cards for the city of Victorville.

A city whose treasury has been plundered by questionable and possibly illegal business dealings.

Sources indicate the city council has been made fully aware of the situation, and a filing is most likely inevitable.

Victorville is currently under investigation by the U.S. Department of Justice, U.S. Securities and Exchange Commission (SEC), U.S. Citizenship and Immigration Service (USCIS) and the San Bernardino County Grand Jury, for various financial irregularities.

Finally a shoe Drops

A major shoe dropped last week, when Victorville auditor Mayer Hoffman McCann produced it’s “qualified” audit of the city’s financial condition.

The most important and not surprising statement made in the report, to be discussed at Tuesdays city council meeting, is there is “substantial doubt about the city’s ability to continue as a going concern”. has published articles discussing Victorville’s pending financial demise. Now that day is rapidly approaching.

The Victorville Daily Press reported in a story Sunday that the city and affiliated entities is about $180 million in the red and cash reserves are shrinking.

The audit apparently says the city could exhaust its available cash balance within 90 days.

The accounting firm, which was caught up in the scandal involving Bell, California, delivered a sobering disclosure of the activities that have basically brought the city down.

Juggling unauthorized loans between city funds and outside entities, some even partially-funded by neighboring cities, in an effort to throw off auditor’s was a huge red flag.

A primary point of concern is activities at the Southern California Logistics Airport Authority (SCLAA).

SCLAA reportedly had overdrawn its available funding by $11 million. Victorville, in-turn, loaned SCLAA funds sufficient to cover the shortage. Money the city didn’t have.

Money improperly loaned for more than a year.

In other words, if Victorville is forced to payback all the unauthorized and inappropriate loans, the city is insolvent.

The ongoing investigations

The SEC is probing as to whether or not officials made proper risk disclosures to investors who purchased various bonds issued by Victorville and/or its related entities.

The USIS is investigating the city’s failed EB-5 Worker Visa Program. A program the USCIS, in what is described as a rare move, terminated last year. A program Johns was paid more than $500,000 to implement and manage.

The San Bernardino County Grand Jury has been examining the city’s overall financial condition, with the help of an outside accounting firm, and with funding by approved by the San Bernardino County Board of Supervisors.

The latter, which has been ongoing for more than a year, is overseen by the San Bernardino County District Attorney, which could explain the lack of action.

Questionable ties

An Orange County businessman at the center of Victorville politics, and someone who has benefited handsomely from city spending, is a supporter of District Attorney Mike Ramos, and is more importantly a friend, client and cash cow, of Ramos’ O.C.-based political consultant David Ellis.

A point, which in recent weeks, likely brought agents of the Federal Bureau of Investigation knocking on Victorville’s door asking questions.

The O.C. businessman in question, William “Buck” Johns, chief executive officer of O.C. based-Inland Energy, over the years has exercised a firm grip on Victorville politics. His company has been a long-term beneficiary of Victorville taxpayer largess to the tune of tens of millions of dollars.

Ellis, as a paid political operative for Johns, has been active in Victorville city council elections, and he has also acted in a governmental relations role on behalf of Johns.

One former city council member reportedly says Johns was even paid a signficant sum of money to act as a city consultant in closed session meetings of the city council.

An example of what many consider as an irregularity?

Sources report Johns has a perpetual financial arrangement tied to the Victorville One power plant for as long as the plant exists and regardless of who owns it.

It was recently uncovered by Victorville Councilwoman Angela Valles that Johns, hiding behind the name Colusa Solar, was vying for a multi-million dollar solar energy project on city-owned land.

The fact that Victorville paid Johns’ company $11.2 million for the failed Victorville Two power projetc apparently made no difference at the time.

The city recently announced it was scrapping the entire solar project.

The mayor’s change of heart

Another inexplicable question surrounds Victorville Mayor Ryan McEachron.

McEachron, who early on, was a harsh critic of Johns during and after his successful campaign for election to the city council, has more recently taken a conciliatory tone.

McEachron recently embarrassed himself by calling for an end to all the outside investigations targeting Victorville’s financial dealings.

A statement McEachron made before the arrival of FBI agents.

A question’s answered?

The breaking developments may explain the sudden departure of long-time Victorville Mayor Terry Caldwell, who last year abruptly decided not to seek re-election.

Will Rothschild be the fall guy?

A source close to the situation says the person actually simmering in the stew is Councilman Mike Rothschild.

Rothschild, who has been staunchly opposed to any investigation into city operations, may have been used as the point man for many of the city financial dealings in question, and that Caldwell may have sufficiently insulated himself.

Is there more?

Sources also indicate that city officials may still have hidden material information from Mayer Hoffman that is not in the report.