Former Blue Grass Airport executive director Michael A. Gobb and three of his managers were indicted on felony theft charges Tuesday. The charges stem from hundreds of thousands of dollars in questionable expenses the four men billed to the airport.
The indictments were returned by a grand jury in Fayette Circuit Court.
Gobb faces nine theft charges. Also charged were John Rhodes, the former director of administration and finance, with six charges; John Coon, the airport's former director of operations, and John P. Slone, who was director of planning and development, with one each. The airport board forced the four men to resign last winter.
Law enforcement agencies have been investigating spending at the airport for nine months. The Herald-Leader reported earlier this year that the top five leaders of the airport spent more than $530,000 on travel, meals, entertainment and other expenses over three years.
"From what we can see, this was an egregious violation of the public trust," said Attorney General Jack Conway, whose investigators teamed up with the FBI on the probe. "When that public trust is violated, our office is not going to hesitate to step forward and investigate."
The prosecutor in the case, Commonwealth's Attorney Ray Larson, declined to comment.
The criminal charges are the most serious consequences to date in a scandal that spawned a scathing state auditor's report and yielded widespread reforms of the airport board's oversight and internal expense policies.
In February, State Auditor Crit Luallen described the pattern of spending as "shameful" as her office's report detailed more than $500,000 in undocumented and questionable expenses. Her office referred the case to law enforcement before the audit was completed.
Luallen issued a statement Tuesday saying she was "pleased that the long and difficult process is coming to a conclusion."
Gobb's attorney, Patrick Nash, said Gobb will plead not guilty at the scheduled Oct. 30 arraignment.
Neither Coon nor his attorney, James Lowry, would comment. Slone didn't return a call for comment, and Rhodes could not be reached.
Nash said he was sorry it became a criminal case and was curious to see what evidence prosecutors have.
"These charges are so general. Obviously, we're going to engage in quite a bit of discovery to find out just what the commonwealth thinks was done wrong in a criminal sense," Nash said. "We'll look forward to putting together a defense to each one of the nine charges."
Only three of 15 total counts against the men gave any hint of specific wrongdoing. One theft charge against Gobb was related to an instance in summer 2006 in which he directed Amy Caudill, the airport's manager of marketing and community relations, to place an improper charge on her credit card. It does not specify what the charge was.
Another said Gobb directed Coon to make a charge on his airport card in late 2008.
And one count named Gobb, Coon and Slone. It relates to a 2004 trip to a strip club in Texas owned by Millenium Restaurants, in which Gobb, Coon and Slone were present. The group charged the airport $5,080 at the Dallas club, as the Herald-Leader previously reported.
The other charges accuse Gobb and Rhodes of committing theft of items or services worth more than $300 and list only the time frame in which the theft occurred.
Each charge is a Class D felony, which carries a jail sentence of between one and five years. If a defendant is convicted of multiple counts, a judge decides whether the sentences should be served concurrently or consecutively. There is a 20-year maximum.
Jim Deckard, a Lexington-based defense attorney who isn't representing any of the ex-airport officials, said most cases — both civil and criminal — settle before trial.
Deckard said he expected the men to employ a defense strategy that they were given little guidance or oversight.
"I suspect that these four individuals may well point to their board for having approved the expenditures, or for having created a culture that allowed this type of spending to flourish," he said.
Neither the board's former chairman, Bernard Lovely, or current chairman J. Robert "Bobby" Owens, who took over in January, returned calls Tuesday, nor did the board's attorney, Thomas Halbleib. After the Herald-Leader's initial reports about the executives' spending last winter, the board took away most of the airport staff's credit cards and tightened expense approval procedures.
A statement issued by the airport Tuesday said the board and the 84 airport employees are continuing to improve those internal controls.
"We have confidence that Commonwealth's Attorney Ray Larson and the Fayette Circuit Court will handle the matters appropriately," the statement said.
Nash, Gobb's lawyer, said it's not uncommon for an organization's chief executive to make mistakes.
"But that doesn't mean their mistakes are criminal in nature," he said.
Lexington Vice Mayor Jim Gray, the first to call for a state audit of the airport, said board members should be held accountable, too. "I urge those who were responsible for oversight and who endorsed the slow response to the scandal, to step aside," he said. "We need a clean slate, a fresh start, so confidence can be restored," said Gray.
Eight of the 10 current airport board members were on the board when the scandal broke late last year.
"Our community is continuing to move forward, thanks to the airport board, the criminal justice system and the city," Lexington Mayor Jim Newberry said. "Many important steps have been taken, including tighter fiscal policies, training for members of volunteer community boards and replacement of airport employees. I am confident that, in the end, justice will prevail."
Third District Council Member Diane Lawless, who has been outspoken about the airport scandal, said she was glad about the indictments and curious whether other charges could follow.
"I know that Ray Larson will be very diligent and careful in prosecuting this to bring justice for our community," she said. "I hope we'll get even more answers as this unfolds."
The airport's operating expenses come from a combination of revenues from shops, parking fees, ticket charges and landing fees. They also get some state and federal funds.
Conway, the attorney general, said he couldn't comment on whether there could be federal charges. The FBI in Louisville didn't return a phone call Tuesday.
By early August, the airport had received monetary reimbursements totaling thousands of dollars from Gobb, Rhodes, Coon, Slone and others, as well as thousands of dollars worth of merchandise. Rhodes had repaid the most — more than $21,000. Gobb had repaid more than $4,800. Coon had repaid more than $1,100, and Slone had repaid nearly $3,400. All of the money repaid by Coon and nearly $2,300 of the total repaid by Slone were for the Texas strip club visit.