San Bernardino COUNTY: Grand jury disputes airport’s claims

A civil grand jury is saying officials tied to San Bernardino International Airport, seen above during an FBI raid, are misrepresenting findings from a previous civil grand jury that faulted the management of the airport's operations.

BY KIMBERLY PIERCEALL

STAFF WRITER

kpierceall@pe.com

Published: 08 November 2011 03:12 PM


The San Bernardino County civil grand jury has fired back at officials leading San Bernardino International Airport who had earlier accused the jury of getting its facts wrong in a highly critical audit of efforts to build a commercial airport at the former Norton Air Force Base.

The current grand jury defended the report Tuesday, saying the airport’s allegations were “unsubstantiated and misleading.”

While unusual for a grand jury to respond in such a way, the jury said in a statement Tuesday that it felt it was necessary to do so, quoting a line from the airport’s own response that it needed to “ensure the integrity of the process.”

The 15-page response was sent Nov. 3 to San Bernardino Mayor Patrick Morris, president of the San Bernardino International Airport Authority, and the rest of the board made up of elected officials from San Bernardino County’s east valley. One alternate member on the board called the response from the grand jury unprecedented.

“The (airport’s) written response to our audit report consistently misrepresents our findings and provides vast amounts of information that is superfluous to the audit topics,” the letter stated.

The grand jury letter was signed by Edward Burgnon, foreman for the current 2011-12 grand jury who wasn’t a juror June 30, when the airport report was released. Burgnon said the audit report commissioned by the prior jury was “very thorough” and “pointed out things that we would hope they would build on and correct.” He said the report was free of errors.

“We stand by that report,” he said.

The 120-page grand jury report questioned many of the airport’s operations, including the decision to award lucrative no-bid development agreements to Scot Spencer, who was convicted of bankruptcy fraud in the mid-1990s for his role at Braniff Airlines and who was later banned from the aviation industry by the Department of Transportation.

In 2007 Spencer was put in charge of developing the main passenger terminal and a smaller fixed-base operation for private pilots, earning a developer fee and a percentage for each construction contract awarded. The projects grew in scope and cost from $45 million in 2007 to at least $142.5 million today and now include a three-story U.S. Customs building still under construction.

After the grand jury report was released, airport officials, including Morris and former executive director Donald L. Rogers, defended the decision to award contracts to Spencer and often discredited the report for containing errors.

In one case, Rogers — a certified public accountant who is a former partner in the San Bernardino CPA firm Rogers Anderson Malody & Scott — said the report wasn’t a true performance audit as it was represented to them by San Francisco auditing firm Harvey M. Rose Associates. Harvey Rose auditors wrote the final grand jury report.

Rogers had said the audit wasn’t a performance audit because it didn’t compare the airport to similar airports, for example.

The 15-page letter from the grand jury pointed out that a performance audit, as defined by the U.S. Government Accountability Office, is exactly what the jury conducted.

Rogers resigned Sept. 28, a week following an FBI-led raid of airport offices as well as the offices and rented Riverside home of Spencer. The FBI was seeking evidence of conspiracy, bribery, fraud and money laundering among other wrongdoing, according to the search warrant.

The grand jury report had criticized the airport’s decision to buy used airport equipment from Spencer for $4.06 million and how the transaction was handled.

Calls to Morris and San Bernardino County Supervisor Josie Gonzales, another longtime member of the authority board, weren’t immediately returned Tuesday. Neither were calls to the airport authority’s assistant director Mike Burrows. In an e-mail, Rogers said he hadn’t seen the grand jury’s letter and declined to comment since he’s no longer with the airport.

The authority is related to the Inland Valley Development Agency, which earns revenue from property tax revenue and has been overseeing redevelopment of the former Norton Air Force Base since it closed in 1994. The IVDA funds the airport's construction and operation.

San Bernardino County Supervisor Neil Derry, who was appointed to the IVDA board in 2009 and is an alternate on the airport board said Tuesday that he hadn’t read the 15-page letter but had been told about its content and believed it was unprecedented.

“All in all, I don’t question its accuracy,” he said of the original grand jury report.

In August, the airport responded to the 120-page grand jury audit with a collection of 583 pages that included presentations made at public meetings and a Cal State San Bernardino report paid for by the airport that looked at the beneficial economic impact of private development, primarily nonaviation commercial development, at the former base.

The grand jury took issue with the airport using other companies, including TranSystems which is a subcontractor still developing the airport, to make presentations that attempted to discredit the grand jury’s claims. TranSystems ultimately misrepresented the report’s findings, the letter states.

The grand jury’s investigation spanned two years after it received an anonymous complaint in 2009.

http://www.pe.com/business/business-headlines/20111108-s.b.-county-grand-jury-disputes-airports-claims.ece