Spencer Makes Interference Complaint Against SBIAA In Federal Bankruptcy Court Filing

RIVERSIDE—Attorneys representing Scot Spencer, the figure at the center of the burgeoning scandal at San Bernardino International Airport, are maintaining that airport officials have interfered with Spencer’s legitimate business activities at the aerodrome by cutting off his access to the airport’s fueling facilities. They filed a complaint on April 17 in U.S. Bankruptcy Court in Riverside on behalf of one of Spencer’s businesses, the now-bankrupt SBD Airport Services, to have that business again be  provided access to the San Bernardino International Airport fuel farm.
Spencer once exercised an ironclad grip over operations at San Bernardino International Airport, where beginning in 2007 he served as the contract developer of the facility. In hiring Spencer, the airport board, consisting of representatives from the county of San Bernardino and the cities of San Bernardino, Highland, Loma Linda and Colton, overlooked the consideration that Spencer had spent four years in federal prison following his conviction for bankruptcy fraud in connection with his failed effort to revive Braniff Airways in the early 1990s. The board, gambling that Spencer’s extensive connections throughout the aviation industry would translate to success in transforming the former Norton Air Force Base into an international airport, provided him with autonomy in directing operations at the airport.
Over the last several years, however, airport officials have been driven to the conclusion that their trust in Spencer was misplaced. Spencer’s management of what was supposed to be a $38 million renovation of the airport’s passenger terminal and a $7 million development of its concourse was dogged by cost overruns, boosting the combined cost of the passenger terminal and the concourse to $142 million. No commercial airlines agreed to fly out of the airport upon the completion of those improvements, as Spencer had confidently predicted and the major beneficiary of the project was the corporate jet-servicing company, Million Air, for which Spencer was the franchisee. Million Air terminated its relationship with Spencer earlier this year after the company claimed Spencer had failed to pay it hundreds of thousands of dollars he was in arrears on. In controlling airport operations, Spencer showed favoritism toward companies he owned or controlled, including SBD Aircraft Services, Norton Aviation Maintenance Services, Unique Aviation, San Bernardino Airport Management, SBD Properties LLC, KCP Leasing and Services, SBAMTechnics, and SBD Aircraft Services, to the detriment of other aviation-related companies located at the airport, such as Aeros Aeronautical Systems Corp and BaySys West. Aeros and Baysis were making substantial lease payments for hangar space at the airport before they were essentially forced to leave.
Questions mounted when Spencer formed at least two business partnerships with T. Milford Harrison, who had formerly served as the executive director of the San Bernardino International Airport Authority (SBIAA) and its sister agency, the Inland Valley Development Authority (IVDA), which is dedicated to the development of the property surrounding the airport. While Spencer allowed vendors to go unpaid and the aviation fuel stores at the airport to deplete to levels that threatened the continuing operation of the airport as a host to corporate jets, Harrison ran up non-aviation related charges of $63,043.45 on an American Express Business Platinum card issued to him through the authority and another $4,642.86 on a second Starwood Preferred Guest Business credit card he secured through the airport authority. Meanwhile, 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 and was in arrears on interest and principal payments on $1.2 million in loans to him through the airport authority.
The coup de grace came on September 21, 2011 when federal authorities, in the person of FBI and IRS agents, together with state law enforcement officers 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 were SBIAA and IVDA headquarters, the San Bernardino Million Air franchise; three hangars, including Hangar 763, where two Spencer-affiliated companies were 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, 2011, Don Rogers, who had served as the executive director of SBIAA and IVDA during Spencer’s tenure as contract developer, resigned. 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 December 23, 2011, the airport board terminated the airport management and development agreement it had with Spencer’s San Bernardino Airport Management, LLC.
Earlier this year, airport officials became alarmed when they learned Spencer had allowed the fuel level in the tanks at the airport’s fuel farm, 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 was to be maintained in the fueling system at all times. The fuel farm supplies aviation engine rated kerosene to the private jets that fly out of San Bernardino International Airport.
On February 7, the authority sought to end its contract with SBD and 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.
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 contract between the airport authority, Spencer and Million Air Interlink had provided Spencer’s franchise with exclusivity at the jetport but it also provided the authority with the ability to separate from Spencer if the jetport remained tenantless for 30 days. When Spencer failed to find a replacement for Million Air by March 22, the airport authority sought to remove him and his companies from the terminal altogether.
In seeking bankruptcy protection in March, Spencer hoped to preserve what little of his dwindling presence at the airport is left. In the bankruptcy filing for SBD Airport Services, Spencer’s legal team claimed San Bernardino International Airport’s leaders were aiming to cripple Spencer’s business operations and that his loss of the Million Air Franchise was a direct result of Spencer having lost access to the fuel farm. In the April 17 filing, Spencer’s attorneys maintain SBD Aircraft Services sustained $20 million in damages after the company lost access to the fueling facilities. “Defendants’ wrongful conduct, including but not limited to the purported termination of the fuel agreement will cause great and irreparable injury,” according to the complaint, which seeks SBD’s reinstatement as the manager of the fuel farm.
Airport officials maintain the fuel agreement was legally terminated when Spencer breached his end of the arrangement by allowing the fuel stores to dwindle to the point that in early February a 727 pilot was unable to fuel his jet to the required level.

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