November 19, 2013 11:03 AM
Shea Johnson, Staff Writer
Arguments made to dismiss SEC case in U.S. District Court
LOS ANGELES • The Securities and Exchange Commission’s case will move forward against Victorville city officials accused of defrauding investors in a 2008 municipal bond offering, although a judge said there isn’t any proof right now that they made improper money from it.
A U.S. District judge denied motions Thursday to dismiss the three claims against the city, Southern California Logistics Airport and Assistant City Manager Keith Metzler, but granted a motion to dismiss a prayer for disgorgement — a form of relief that seeks restitution of ill-gotten profits from security law violators.
The SEC filed a suit April 29 against those involved in the bond offering, saying they knew the assessed values of four SCLA hangars were inflated and “as a result, that the tax increment and debt service ratios disclosed to investors were false.”
The hangars’ value was reported to be $65 million when it was allegedly only $27.7 million, according to previous reports.
The city, airport authority and Metzler filed a joint motion June 12 to dismiss the claims, which was then argued by lawyers from both sides at a hearing Oct. 28.
Judge John A. Kronstadt ruled Thursday that arguments to dismiss the claims were “unpersuasive,” according to civil minutes from the hearing.
To read entire story, click here.