7th. Street in old town area of Victorville. (Irfan Khan / Los Angeles…)
Federal securities regulators have accused the city of Victorville, an official, the airport authority and municipal bond underwriters of fraud stemming from a 2008 offering.
The Securities and Exchange Commission on Monday accused the parties of inflating the value of properties -- mainly airplane hangars at the Southern California Logistics Airport --to secure $68 million worth of bonds.
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The bond underwriter, Kinsell, Newcomb & DeDios, also was accused of misusing more than $2.7 million in bond proceeds.
Named in the lawsuit are the city of Victorville; the Southern California Logistics Airport Authority; Kinsell, Newcomb & DeDios Inc.; KND Affiliates; J. Jeffrey Kinsell, president of KND; Janees L. Williams, vice president of KND; and Keith C. Metzler, assistant city manager of Victorville.
KND Holdings Inc. is a relief defendant. It is solely owned by Kinsell and is the parent company of KND.
"Financing redevelopment projects by selling municipal bonds based on inflated valuations violates the public trust as well as the antifraud provisions of the federal securities laws," said George S. Canellos, co-director of the SEC enforcement division. "Public officials have the same obligation as corporate officials to tell the truth to their investors."
A spokeswoman for the Victorville city manager's office said the city would release a statement on the lawsuit Monday afternoon.
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