Wednesday, June 21, 2017

State, federal agents interview employees at Newport News/Williamsburg International Airport (KPHF)




Agents with the Virginia State Police and two federal agencies spent several hours at Newport News/Williamsburg International Airport on Tuesday interviewing employees about "matters of the airport," the airport's current chief said.

Sandy Wanner, the airport's acting executive director, said three investigators — special agents with the state police's criminal investigations division, the Internal Revenue Service and U.S. Department of Transportation's Office of Inspector General — met with five employees over the course of the day.

"They did not reveal anything to me about anything," Wanner said of what the agents were looking into. "They asked me, 'Can I arrange it?' and I said yes."

Last week, Wanner said, the investigator with the Department of Transportation Inspector General's Office asked for copies of the airport's annual audit reports going back to 2009. Wanner said he turned over the bound copies.

The moves come in the wake of a scathing Virginia Department of Transportation audit report that detailed widespread issues with airport spending — including a loan guarantee to a startup airline that ultimately cost $4.5 million in taxpayer money.

Wanner declined to name the five employees who were interviewed Tuesday, saying only that they were workers at "various levels" of the airport hierarchy. He also would not identify the agents beyond their agencies.

The three investigators arrived at the airport at 9 a.m. Tuesday, and when Wanner left the office at 4:15 p.m., he said, "they hadn't completed their last interview." He had scheduled the employee interviews in one-hour intervals, he said, "but I didn't track whether they were in there for an hour, two hours, or 10 minutes" for each one.

As of 5:40 p.m. Tuesday, the interviews appeared to be done for the day. No federal agents appeared to be inside the airport's front lobby area, and the lights were dark in the executive offices off the main terminal.

Virginia State Police spokeswoman Corrine Geller could not be reached for comment Tuesday evening on whether the agency has launched a criminal investigation into the Newport News airport or any of its current or past employees.

Representatives from the IRS and the U.S. Department of Transportation Inspector General's Office also could not be immediately reached. The DOT's inspector general monitors spending and other issues pertaining to the Federal Aviation Administration and other federal transportation agencies.

The airport and its financial practices have been under scrutiny since early this year, when the Daily Press reported that in 2014, the Peninsula Airport Commission quietly guaranteed a line of credit of up to $5 million from TowneBank for startup airline People Express.

After People Express quickly collapsed and defaulted on its loan, the commission paid off the $4.5 million debt using $3.5 million in state airport construction grants, $300,000 in federal grant money, and $700,000 from a regional marketing group funded by local city councils and county boards.

The Virginia Department of Transportation — which vowed to cut off future construction grants to the airport — launched a comprehensive audit that found the commission had improperly used state taxpayer money to guarantee the loan.

Moreover, Attorney General Mark Herring issued a formal opinion declaring the loan guarantee illegal under a provision of the state constitution that generally bars public bodies statewide from lending their credit to private interests.

The state auditors also found that airport executives routinely used commission money for personal expenses, skirted procurement rules, and worked to shield the loan from public scrutiny.

They found that Ken Spirito, the airport's executive director at the time of the loan, also authorized some airport employees to charge up to $2,400 for gasoline on their airport credit cards without requiring it to be tied to business travel. According to the audit report, Spirito directed the airport accounting department not to treat the gas allowance as taxable income.

The audit report quotes a passage from the letter of dismissal that the airport commission sent to Spirito:

"These payments actually are compensation to each employee receiving free gas, not fuel expense. According(ly), you have hidden employee compensation in the fuel expense account, also exposing these employees and the PAC to back taxes, additional filing obligations, and possible interest and penalties."

As controversy swirled around the loan guarantee and improper spending, the commission and city have seen major shake-ups.

On March 2, Newport News City Manager Jim Bourey — who voted for the loan agreement as an airport commissioner — resigned as an airport board member, then stepped down as city manager a few days later.

Also on March 2, the commission fired its longtime legal counsel, Herbert V. Kelly Jr., who had assured commissioners the loan guaranty was legal. The job serving as the airport's lawyer had been in Kelly's family for decades, with the airport terminal named after Kelly's father, Herbert V. Kelly Sr.

The Newport News City Council later removed longtime airport commission member Aubrey Fitzgerald as a board member.

Finally, on May 15, the Peninsula Airport Commission fired Spirito after auditors reported he had used commission money to pay for personal expenses — including car repairs for himself and Jessica Wharton, the airport's marketing and public relations director.

Wanner, the airport's acting executive director, said two of the investigating agents — from the state police and the IRS — came to his office last Tuesday to introduce themselves, in a meeting that lasted about 15 minutes.

"They said they were dealing with matters of the airport," Wanner said. "They did not say anything in any way, shape or form about any individual or individuals" (being investigated). ... They introduced themselves and said they'd be in contact."

The next day, he said, an agent with the U.S. Department of Transportation IG's office came by for an introductory meeting that lasted 10 minutes. It was during that meeting that the agent asked for "the audits from the airport going back to 2009," Wanner said.

Those are the annual audits performed by an outside accounting firm, Dixon Hughes Goodman LLC, of Newport News.

Later in the week, Wanner said, the agents called back about setting up Tuesday's meetings.

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