By Shea Johnson
Posted Sep. 21, 2015 at 5:55 PM
- Records show dispute between city, bond underwriter over charge
VICTORVILLE — The Securities and Exchange Commission’s investigation into an allegedly fraudulent 2008 municipal bond offering also uncovered that the city’s bond underwriter may have taken an unauthorized fee of about $3.5 million for managing four hangars at Southern California Logistics Airport, federal court records show.
Part of a large records dump this summer by attorneys for both sides in the ongoing SEC case, the documents reveal an email sent in January 2013 by former Victorville City Attorney Charles Green, where he says that Kinsell, Newcomb & De Dios were never authorized to collect the money.
Green also acknowledged the city would likely never have known about the compensation if it weren’t for the SEC investigation.
“I understand that KND maintains that staff at the city agreed to the fee,” Green writes in the email sent to attorney J. Patrick Ragan’s office, “but no one at the city has confirmed this and to my knowledge KND has been unable to produce documentation to support that assertion.”
During his deposition April 24, Green is asked for his thoughts on KND owner Jeffrey Kinsell’s claims that agreements between the underwriter and city were routinely oral.
“It’s crap. That’s a legal term, by the way. It means lacking substance,” Green said, according to a transcript of proceedings. “What would be the purpose in having an oral agreement unless you were trying to pull a fast one of some kind?”
Green also insisted that the city’s attorneys would never allow the city to enter agreements that weren’t first approved by the City Council.
“I believe Mr. Kinsell arranged to take a fee to which he was not entitled,” he told an investigator, “and which he kept hidden, by the way, until you were kind enough to show me the document in that examination.”
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