The city of Victorville, CA and several others were charged with defrauding investors with misleading statements made during a 2008 Airport Authority bond offering, according to a press release from the U.S. Securities and Exchange Commission. Of the accused is the Airport Authority’s bond underwriting firm Kinsell, Newcomb & DeDois (KND), which is suspected to have misappropriated and misused $2.7 million.
Elaine C. Greenberg, Chief of the SEC’s Municipal Securities and Public Pensions Unit, said, “Investors are entitled to full disclosure of material financial arrangements entered into by related parties. Underwriters who secretly line their own pockets by taking unauthorized fees will be held accountable.”
The money that was allegedly taken from investors was supposed to fund the construction of airport hangars for the Airport Authority.
The Airport Authority lent over $60 million to KND and its affiliates, allegedly. Of this money, KND owner Jeff Kinsell allegedly took about $2.3 million that the Airport Authority did not know of under the guise of management compensation.
“When Wall Street abuses positions of trust, it must be held fully accountable for its actions,” said Peter Mougey of Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor P.A.. “Capitalizing on conflicts of interest and those who are not as sophisticated is a complete betrayal of the trust bestowed upon them.”
The SEC is pursuing full repayment of monies taken, with interest, among other penalties and fines.
Joshua de Leon is a writer and researcher with Ring of Fire.