Scot Spencer’s once-ironclad grip over operations at San Bernardino International Airport has eroded further, as the agencies dedicated to the civilian use conversion of Norton Air Force Base that once viewed him as their deliverer are systematically moving to disengage from him. In the face of mounting evidence that Spencer has utilized his position of authority and trust to benefit himself and his corporate affiliates at the expense of the public facility he was hired to manage, his days as the airport’s contract manager appear numbered.
The San Bernardino International Airport Authority, known by its acronym SBIAA, is a joint powers authority consisting of the county of San Bernardino and the cities of San Bernardino, Highland, Loma Linda and Colton dedicated to transforming the grounds of Norton Air Force Base, which was shuttered by the Department of Defense in 1994, into a viable civilian aerodrome.
Spencer, who has long enjoyed extensive contacts throughout the aircraft industry, was brought in by the San Bernardino International Airport Authority in 2007 under a no-bid arrangement and entrusted with converting the facility into a true international airport. In hiring Spencer, local authorities disregarded a crucial portion of his history.
In 1991, Spencer and financier Jeffrey Chodorow sought to utilize the remaining assets from Braniff International Airways to create Dallas-based Braniff International Airlines, Inc. Braniff Airways, which had been in operation since 1928, had faltered under its corporate successor, Braniff, Inc., which was created after the former company’s 1982 bankruptcy. Spencer’s effort was unsuccessful and Spencer and Chodorow were both convicted of fraud for absconding with $14 million of the company’s funds. Spencer served a four-year prison term from 1995 until 1999 as a result of that conviction.
After paying his debt to society, Spencer took up where he had left off, becoming involved in the aircraft industry largely on the strength of his contacts with manufacturers, airlines, mechanics and maintenance companies.
He leased from the San Bernardino International Airport Authority the lion’s share of property at the airport, where several companies he was an owner or investor in set up shop, and in 2007, Spencer entered into the agreement with SBIAA and the Inland Valley Development Authority (IVDA), a joint powers authority overseeing the development of the property surrounding the airport, to direct what was supposed to be a $38 million renovation of the airport’s passenger terminal and a $7 million development of its concourse. Spencer undertook that assignment amid confident predictions that upon completion of those projects, the airport would attract at least one passenger carrier and as many as a half dozen airlines. The cost of the passenger terminal and the concourse escalated to $142 million and the airport has yet to host any commercial airlines, although corporate jets and other private pilots have been landing at the Million Air corporate aviation facility, for which Spencer was the franchisee, since 2010.
The cost overruns for the terminal project, the failure of San Bernardino Airport to attract commercial airlines and Spencer’s relationship with former San Bernardino International Airport Authority and Inland Valley Development Authority executive directors Don Rogers and T. Milford Harrison as well as Timothy Sabo, the legal counsel for the authorities, have raised eyebrows and brought SBIAA and IVDA under increasingly critical scrutiny.
On June 30, the San Bernardino County 2010-11 Grand Jury delivered a report that questioned several elements of Spencer’s performance and that of Rogers, calling into question what was characterized as lax oversight of the airport’s operations and favorable treatment accorded Spencer with regard to leasing arrangements.
Spencer’s influence over operations at the airport, where several companies he owns are housed, was perceived by many observers as being in conflict with and counterproductive to the goal of bringing in aeronautics-oriented companies interested in remaining at the airport for the long term. In some cases, Spencer’s pursuit of his own imperatives conflicted with the corporate aims of other companies functioning at the airport, resulting in those companies departing.
One such company was Aeros Aeronautical Systems Corp., a blimp builder which did work on dirigibles and other lighter-than-air craft in Hangar 695, which it had leased at the airport.
In 2008, business was booming for Aeros, and the company was making its lease payments to the airport authority on time and in full. But that year, two companies Spencer was a controlling partner with, SBD Aircraft Services and Norton Aviation Maintenance Services, entered into a subcontract with another Spencer-affiliated outfit, Unique Aviation, which, it was represented, had orders from the Democratic National Committee for the renovation and refurbishing of a then-35-year-old Boeing 727-227 for use in the Barack Obama presidential campaign. Spencer claimed he needed the hangar space Aeros was using to have SBD and Norton Aviation do the work. Despite the consideration that Aeros was a tenant paying top dollar for the space it was using and that it had secured in June 2008 two successive short term leases with 30-day termination notices to undertake tests on a dirigible, Spencer used his leverage with SBIAA to have SBIAA/IVDA legal counsel Timothy Sabo of the law firm Lewis Brisbois Bisgaard & Smith author a letter which IVDA general manager Don Rogers signed that essentially evicted Aeros.
In July 2008, before Aeros vacated the hangar, Spencer and SBIAA signed a lease for Hangar 695 at a rate less than half of what Aeros was paying for the space and despite the consideration that Aeros had yet to vacate it. When Aeros did not leave quickly enough to satisfy Spencer, who said he was prevented from completing $750,000 worth of repairs on the 727 to be used by the Democrats, he threatened SBIAA with legal action. Before the incident was over, Aeros, which had offered the promise of remaining as a longtime paying tenant, left in a huff, never to return. The authority kowtowed to Spencer even further by providing him over $1 million worth of concessions, including the forgiving of a $155,000 balance on a previous loan, the extension of another $550,000 loan at 5 percent interest, and an ongoing $315,000 hangar rental subsidy. It is now alleged that the Democratic National Committee had not commissioned the 1973 Boeing 727-227 from Unique Aviation and had no contract with Spenser or any of his companies.
Also in 2008, Spencer forced the exodus of another paying tenant, Virginia-based BaySys West, from San Bernardino International Airport. BaySys West had established an aircraft maintenance operation in San Bernardino employing 300, which Spencer apparently felt was in competition with Norton Aircraft Maintenance Systems. BaySys left in December 2008 under pressure from Spencer.
Another troubling consideration for many was that by the summer of 2011, Spencer owed the county more than $604,000 in unpaid taxes on property and equipment at the airport since 2005. The airport authority’s relationship with Spencer and the settlement of the dispute with regard to Hangar 695 was mentioned in the June 30 grand jury report.
There are questions as well about Spencer’s relationship with T. Milford Harrison, a one-time Loma Linda city councilman who served for a time as the executive director of IVDA. Harrison was given several lucrative positions with companies involved at the airport which Spencer owns or controls. With Spencer, Harrison is a manager of KCP Leasing and Services. Harrison and Spencer are also listed as officers with Million Air Development Company, LLC, as well as Million Air San Bernardino LLC. Harrison also has an unknown relationship with SBD Aircraft Services. That company had issued to Harrison an American Express Business Platinum card, against which Harrison charged $63,043.45 in expenses and a second Starwood Preferred Guest Business credit card, which Harrison used for $4,642.86 in purchases. There was a question about how those charges were related to airport business and American Express was not paid. Eventually American Express sued Harrison for payment. Harrison did not respond and American Express obtained a default judgment for $75,147.75.
Despite questions over those several issues, the SBIAA and IVDA boards of directors maintained faith in Spencer, preparing a defiant response to the grand jury criticisms that had been leveled at both the authority and Spencer. But on September 21, Spencer’s seemingly charmed existence at San Bernardino International Airport fell into eclipse when federal and state authorities descended upon San Bernardino International Airport, serving search warrants at five offices, businesses or facilities there as part of a comprehensive investigation into allegations that millions of taxpayer dollars were illegally diverted, mismanaged, laundered, misappropriated or siphoned off by officials or individuals affiliated with the airport’s development. Targeted in the raid led by the FBI were SBIAA and IVDA headquarters, the San Bernardino Million Air Franchise; three hangars, including Hangar 763, where two Spencer-affiliated companies, Norton Aircraft Maintenance Services and SBAM Technics are located; a storage facility at the airport, and Spencer’s Riverside residence. According to the search warrants, the authorities were seeking information regarding suspected misuse of federal funds, bribery, mail fraud, wire fraud and conspiracy.
On September 28, Rogers resigned as SBIAA and IVDA executive director. On November 9, the SBIAA board hired A.J. Wilson, a municipal manager with an extensive list of top administrative assignments inside and outside of California, to the position of interim executive director of San Bernardino International Airport. The no-nonsense Wilson conducted a crash review of the operations at the airport and on November 30, the SBIAA and IVDA boards took a tentative step toward removing Spencer as the contract developer of San Bernardino International Airport. Noting that Spencer had not properly managed the airport’s billing, the board transferred management of the remaining project work from Spencer to itself and Wilson. The board also moved to authorize paying subcontractors for work done on a U.S. Customs and Border Protection facility after their bills had gone unpaid by Spencer for months.
On February 17, Superior Court Judge Brian McCarville ruled that the airport authority was legally entitled to assume from Spencer and his company, SBD Properties, control of the airport’s fuel farm, consisting of tanks from which the private jets that fly out of San Bernardino International Airport are fueled. Spencer had allowed fuel in the tanks, which have a capacity of 150,000 gallons, to dwindle to 1,100 gallons as of February 1. Under the authority’s contract with SBD, a minimum of 20,000 gallons of aviation fuel must be maintained in the fueling system at all times. On February 7, the authority sought to end its contract with SBD.
On February 21, Million Air Interlink, the Texas-based provider of landing and take-off services for operators of private and corporate jets that had already sued Spencer for $837,290 in long past due franchise fees, revoked Spencer’s franchise. That move significantly attenuates Spencer’s primacy at the airport. Because of previous contractual commitments, Spencer’s Million Air franchise was given exclusivity of use at the plush private jetport, described by one pilot as “opulent beyond anything I’ve ever seen.” The terminal was reportedly offered by Spencer to two of the major principals in both the IVDA and SBIAA, San Bernardino Mayor Patrick Morris and county supervisor Josie Gonzales, who are the co-chairs of the SBIAA and IVDA boards, for use as a forum for campaign fundraising events. Spencer’s granting of these alleged political favors to Morris and Gonzales had dragged them into the FBI investigation and had previously paralyzed the authority in its effort to disengage from Spencer. But the same contract that had provided Spencer’s franchise with exclusivity at the jetport also liberated the authority to separate from Spencer if the jetport remains tenantless for 30 days. If Spencer does not find a replacement for Million Air by March 22, the airport can remove him from the terminal altogether.
Coby King, a spokesman for Spencer as well as San Bernardino Airport Management, SBD Properties LLC, KCP Leasing and Services, SBD Aircraft Services and Norton Aviation Maintenance Services and Unique Aviation, vowed legal action against SBIAA and IVDA if those entities are deprived of their rights to operate out of San Bernardino International Airport.