September 16, 2012 9:38 AM
Brooke Edwards Staggs, City Editor

VICTORVILLE • The firm that’s handled Victorville’s multimillion bond transactions over the last decade is now threatening to sue unless the city covers costs related to investigations into those bond expenditures.

Most active employees of Kinsell, Newcomb & De Dios have been “extensively interviewed” and asked to respond to subpoenas from the Securities and Exchange Commission related to four hangars the brokerage firm helped build at Southern California Logistics Airport using bond funds, according to a claim included in Tuesday night’s City Council agenda.

Principal Jeff Kinsell and other employees were also questioned by the SEC and the San Bernardino County grand jury about projects the firm helped finance for the city, including the failed Victorville 2 and Foxborough power plants, along with general questions about the $400 million in taxpayer-supported bonds KND sold for Victorville.

While the claim is included in Tuesday’s agenda, attachments detailing how much money Kinsell and his firm hopes to recover were not posted. A letter sent to the city Aug. 27 simply states: “KND’s costs have steadily mounted as it continues to defend its own and the city’s interests.”

“For many years, KND and its affiliates have undertaken an extraordinary set of responsibilities on behalf of the city,” the claim states. Though the letter acknowledges that the city still hasn’t recovered $13 million that went unaccounted for by the original developer of the SCLA hangars, it states KND completed the hangars that are now fully leased out. “These are assets for which the city has KND to thank,” the claim states.

The letter states KND has contacted the office of City Attorney Andre de Bortnowsky about compensation for the rising costs, but that they’ve been “frustrated by the delays and lack of response.” It also raises conflict of interest concerns related to the city attorney reviewing the claim, since he served as co-disclosure counsel on the bonds.

As part of its two-year probe into Victorville, the SEC is also investigating whether there were hidden financial ties between Kinsell and Tom Barnett, who led the charge on the Victorville 2 power plant. If so, a court judgment states Kinsell and KND might have violated federal securities law, which could subject the firm to fines and other disciplinary action.

Staff is recommending that the City Council deny the claim from KND, as is routine with most that are filed. However, if they deny it or don’t respond within 45 days, the claim states KND will file a lawsuit if Victorville doesn’t indemnify the company.

The City Council will vote on the claim during the meeting that starts at 7 p.m. Tuesday at City Hall, 14343 Civic Drive. The full agenda and streaming video are available at

Brooke Edwards Staggs may be reached at (760) 955-5358 or at

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