Call Now For a Free Consultation:
(614) 532-4576
Nationwide Representation

City of Victorville, CA and Underwriter Sold Muni Bonds Based on Inflated Property Valuations

The City of Victorville, Calif. and Kinsell, Newcomb & DeDios (KND) are among several defendants to be charged with defrauding investors by selling municipal bonds based on inflated property valuations. KND owner J. Jeffery Kinsell, KND Vice President Janees L. Williams, and Victorville Assistant City Manager and former Director of Economic Development Keith C. Metzler also were named in the SEC’s complaint.

According to the complaint, the Southern California Logistics Airport Authority, which is controlled by the City of Victorville, issued millions of dollars in tax increment bonds to finance several redevelopment projects, including the construction of four airplane hangers on a former Air Force base. The bonds were underwritten by KND and solely secured by property-tax increases attributable to increases in the assessed value of property in the area.

When the Airport Authority didn’t have enough money to complete the project, it was forced to issue additional municipal bonds, which the SEC claims were based on inflated property valuations.

"The principal amount of the new bond issue was partly based on Metzler, Williams, and Kinsell using a $65 million valuation for the airplane hangars even though they knew the county assessor valued the hangars at less than half that amount," stated the SEC in the release.

“The inflated figure allowed the Airport Authority to issue substantially more bonds and raise more money than it otherwise would have. It also meant that investors were given false information about the value of the security available to repay them.”

The complaint further alleges that KND, Kinsell, and another of Kinsell’s companies misappropriated more than $2.7 million in bond proceeds.

According to the SEC, Kinsell, through KND Affiliates, LLC, stepped in to manage the hangar construction project after the project's original contractor was accused of fraud.

Though Kinsell had no construction experience, the Airport Authority agreed to pay KND Affiliates a construction management fee of two percent of the remaining cost of construction.

Apparently, that wasn’t enough. According to the SEC, “Kinsell and KND Affiliates took an additional $450,000 in unauthorized fees to oversee the construction and took $2.3 million in fees that the Airport Authority was unaware of and never agreed to, purportedly as compensation to ‘manage’ the hangars.”

In its complaint, the SEC says it is seeking permanent enjoinders, disgorgement of ill-gotten gains plus prejudgment interest, and payment of civil penalties.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation
Atlanta Office

945 East Paces Ferry Road, Suite 2275
Atlanta, GA 30326
Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram