Special Reports

Airport paid tab at Texas strip club | Published 1/6/09

The Blue Grass Airport board will cancel credit cards for the airport's top officials in light of widespread concern about excessive and inappropriate spending, including the revelation that three airport employees charged $4,500 at a Texas strip club to one of the cards.

Bernard Lovely, the board's chairman, said Monday the cards would be canceled. He and airport attorney Thomas Halbleib discussed some of their findings in an ongoing inquiry into what they described as an entrenched "culture" that has allowed suspicious spending practices to flourish.

Last week, Michael Gobb, the airport's executive director, resigned because of questions about his expenses.

Gobb was one of the three at the strip club outing, which occurred in 2003, Lovely confirmed. He would not disclose who the other employees were, citing a continuing internal investigation.

The new disclosures also have prompted Lexington Vice Mayor Jim Gray to call for city leaders to take a stand on the "broadening scandal" when the Urban County Council holds its works session Tuesday.

Gray said they should ask Lovely to "step aside immediately." He also said that no new board members should be appointed and no out-of-state travel allowed until State Auditor Crit Luallen completes an audit of airport finances.

"If criminal actions have occurred, those involved must be punished," Gray said. "If those charged with oversight have failed in their responsibilities, they should be removed."

He said it was inappropriate for Lovely to be involved in day-to-day management of the airport when his oversight is being questioned.

Lovely, who is scheduled to step aside next week as board chairman, said the strip-club incident predates his tenure as chairman "and more importantly, I'm the one that uncovered it."

He said he'll serve the remaining year and a half of his term on the board. The board members are likely to nominate their treasurer, J. Robert Owens, president of Risk Placement Services of Lexington, as the next chairman, Lovely said.

Lovely said "no determination has been made" about whether the airport will press charges or forward information about the expenses to law enforcement agencies.

Lovely, who as airport board chairman is charged with overseeing Gobb's expenses, said Gobb may have hidden some spending from him by having subordinates purchase items for him on their airport credit cards.

It was Gobb's responsibility to review those charges.

"This, of course, offered Mr. Gobb the opportunity to cause purchases to be made on the airport credit cards without any review," Lovely said in a statement.

Gobb is in Hawaii attending an airport executives' conference. Neither he nor his attorney could immediately be reached for comment.

Lovely said he has learned that Gobb might have purchased original artwork that is unaccounted for, DVDs, computer software and expensive lunches and dinners, which might not have been appropriate.

The Herald-Leader reported last month that Gobb had spent more than $200,000 for travel and other expenses in a little more than two years.

A new Herald-Leader review of the credit-card statements from the six other officials beyond Gobb who were assigned airport cards shows thousands of dollars' worth of other questionable purchases.

Some charges, such as hundreds of dollars' worth of Nintendo Wii video games purchased last fall on another airport administrator's card, had Gobb's initials next to them or indications that Gobb had requested that the purchases be made.

Some specific instances discovered in the Herald-Leader's review of documents include:

■ $2,688 charged for five Bose Wave Music Systems on Dec. 20, 2005, on the credit card assigned to airport administration manager Debbie Kelly. The notation next to the purchase said it was for a "special event."

Lovely said Gobb asked Kelly to make the purchases from the Sharperimage.com so he could give them as Christmas gifts to employees, "and I guess himself. ... It has not been denied."

■ $663 charged on Kelly's card from Walmart.com on Nov. 9, 2007. Various Wii video games were purchased, including Donkey Kong: Barrel Blast and Tiger Woods PGA Tour '08. Gobb's initials "MAG" were listed next to the charge on the statement.

■ $697 charged on the credit card of John Coon, director of operations, in March 2007 for four tickets to a Baltimore Orioles-Arizona Diamondbacks game.

■ $389.26 for GPS mapping software of Italy, Greece and the Alps purchased in March 2008 and $1,700 for a telephoto camera lens bought on the card of another airport director, John Rhodes.

In addition to those spending examples, Lovely and Halbleib are investigating whether airport employees used funds to purchase four shotguns for a shooting fund-raiser for the Boy Scouts of America. At least three of the shotguns are missing, Lovely said.

Lovely said it appeared that airport staffers were afraid to come forward about problems they saw.

He said he learned of the 2003 strip club excursion after a Dec. 17 airport board meeting when he was approached by an airport employee, whom he declined to name.

"The employee indicated and the third employee confirmed that the evening involved a trip to a strip club in Texas, that a tab of over $4,500 was incurred, that the tab was put on a Blue Grass Airport credit card and that the airport was never reimbursed," Lovely said.

The charge was listed on the statement of one of the men's credit cards, with the justification that they were "entertaining American Airlines executives," said Lovely.

Halbleib said they think no American Airlines executives attended the strip club outing.

Lovely noted that he wasn't board chairman at the time.

Lovely said he confronted Gobb and his attorney about the strip club expenses last week and Gobb confirmed going to the strip club.

Gobb acknowledged that he did not tell the board of the events and that he had not reimbursed the airport, Lovely said. "This situation left me without confidence in Mr. Gobb's ability to lead and manage Blue Grass Airport," he said.

The six whose credit cards will be canceled are Coon; Kelly; Rhodes; John Slone, director of planning and development; Brian Ellestad, director of marketing and community relations; and Amy Caudill, manager of marketing and community relations.

The airport is a public, non-profit corporation that uses a mix of public and private funds, which are overseen by a board appointed by Lexington's mayor.

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