November 17, 2012 2:22 PM
Brooke Edwards Staggs, City Editor
VICTORVILLE • It’s been more than two years since the Securities and Exchange Commission first subpoenaed Victorville, requesting documentation on how the city has spent $480 million in bond funds over the last decade.
Victorville has now turned over more than 740,000 pages of records and spent more than $1 million in legal fees and staff time responding to the SEC’s probe, City Manager Doug Robertson said, with staff working on the latest request from the federal agency now.
“This has been a Herculean effort by city staff just to respond,” Robertson said via email. “We have not hired consultants to compile, process or number the documents. And we have had no reimbursement from the federal government for our time or legal costs.”
The SEC’s investigation has been heavily focused on the way Victorville used a series of bonds issued in 2007 and 2008 through Southern California Logistics Airport Authority, a city-run agency that controls former George Air Force Base.
The majority of the bond funds were used to make improvements at the airport. However, at least a quarter of SCLAA’s total $330 million bond debt funded projects off airport property, including development of the La Mesa/Nisqualli interchange, land for an abandoned city library and work on the shelved Victorville 2 power plant.
Victorville spent $50 million from a 2007 SCLAA bond series to put a down-payment on equipment for the VV2 plant, for example. However, the city defaulted on its payments and was forced to forfeit the deposit and equipment in 2010.
The SEC won a lawsuit in the spring requiring Thomas Barnett, head consultant on the VV2 project through the firm Inland Energy, to turn over his personal bank records as part of the agency’s investigation into the city. The SEC stated in the suit that investigators believes Barnett had a secret and improper relationship with Kinsell, Newcomb & De Dios, the brokerage firm that issued the SCLAA bonds — a claim that firm denies.
Most of the SEC’s requests are for documents related to particular city projects or consultants who’ve worked on those projects, Robertson said.
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