Special Reports

Audit details the liquor, limousines

Blue Grass Airport directors were bracing for a big week.

In late February 2006, when the airport was up for two industry awards, five airport managers took off for Nevada for the events.

The airport didn't win the award for landing the first New York Times bookstore. So, perhaps to console themselves, Michael A. Gobb and John Rhodes — then, respectively, the executive director and finance director of the airport — bought a $700 bottle of champagne at the Pussycat Lounge in the posh Pure Nightclub at Caesar's Palace in Las Vegas.

Whatever $700 champagne tastes like, it was good enough for the airport officials to splurge for a similar bottle two days later after Gobb and John Slone, then the airport's operations director, picked up plaques in Reno for an airport landscaping project, according to state auditors. State Auditor Crit Luallen released a report last week detailing "a culture of wasteful and excessive spending." She questioned more than $500,000 in spending — including the champagne — by seven airport officials over three years. In all, they spent more than $813,000.

Luallen has referred her findings to the FBI, the U.S. Attorney's office and Kentucky Attorney General Jack Conway for criminal investigations.

Four airport managers — Gobb, Slone, Rhodes and former operations director John Coon — have resigned in the wake of the scandal.

A look at some of the trips taken by the officials provides a glimpse into what the free-spending culture at the airport was like. Whether it was dropping $36,000 for a group of officials and spouses to explore Hawaii during an annual conference or buying lunch every day of the week on their airport credit cards, it was a good life — while it lasted.

Fun in Vegas

Under the neon haze of the Las Vegas Strip, Gobb joined Rhodes and Debbie Kelly, the airport's manager of administration, on Feb. 21 to find out whether the airport would be recognized for opening the first New York Times bookstore.

The Airport Revenue News, a trade magazine, had picked the Pure Nightclub as the site of its awards ceremony.

Kelly, who had been in Las Vegas since Feb. 19, attended the event with Gobb and Rhodes, but left early so she could catch an early flight home the next day, said David Wescott, a spokesman for the airport board.

At 10:02 p.m., after learning they had not won, Rhodes signed a $702 credit card receipt for the champagne.

On Feb. 22, Gobb paid two bills totaling more than $1,000 at the Bellagio Hotel & Casino. He didn't include explanations for the charges in his expense reports, which was common. The auditors found that 96.5 percent of Gobb's spending in three years had inadequate documentation.

Then Gobb and Rhodes left for Reno.

The American Association of Airport Executives and two other industry groups were bestowing Gobb and Slone with an award for their work in overseeing the mural and landscaping project near the runway along Versailles Road.

The night of the ceremony, the men ran up a $1,049 tab at the Lone Eagle Grille at the Hyatt Regency Lake Tahoe.

The charge again was on Rhodes' airport credit card, and Luallen's audit said $700 of that tab was for another bottle of champagne.

Two directors capped off the trip with a souvenir shopping spree, in which Rhodes bought a pair of Lake Tahoe sweatshirts with pictures of the mountains on them and Coon picked up a fleece item at the airport gift shop. Coon also bought two pairs of FootJoy GreenJoy golf spikes. Gobb spent more than $300 that week at Sierra Trading Post, an outdoor clothing and equipment store.

Gobb appears to have returned to Lexington on Feb. 24, where, according to an expense receipt, he picked up two large pizzas for $40.27 just before 8 p.m. at the Brooklyn Pizza near his Andover home.

Go Braves

The Houston Astros kept it close against the Atlanta Braves for six innings on July 31, 2007, before Atlanta's offense unloaded on the way to a 12-4 win. Slugger Mark Teixeira was introduced on Turner Field's video screen as the new first baseman after having been acquired in a trade. And it was DHL Braves hat give-away night.

And Gobb and Blue Grass Airport marketing manager Brian Ellestad were there to take it all in.

On their annual summer trip to visit Delta Airlines, they entertained several executives at the game, shelling out $265 for in-seat food and drinks. That included a $50 tip for the server, Darrell, in a swank section of Turner Field seating.

"We spent time with ... Delta's VP of planning and four other members of his route planning team updating them on the Lexington market," Gobb wrote in his July 2007 travel report, according to the audit. "We continue to build positive relationships with the airlines."

Ellestad's airport credit card statement shows a $556.25 charge that night for Atlantic Limousine service for the Town Cars that took the group to and from the game.

They were also joined by a Delta employee who worked at Blue Grass Airport. His room at the Grand Hyatt, where Ellestad and Gobb stayed, was also charged to the airport.

Gobb and Ellestad returned to Turner Field the next night to see the Braves thrash the Astros again, 12-3. Ellestad charged to the airport a tab of more than $200 for in-seat food service and another limo service fee.

Ellestad also charged nearly $500 at Mori Luggage that day, although his records didn't include what he bought. In all, the two-day jaunt cost the airport nearly $6,500.

Hawaii and horses

In recent years, a cadre of Blue Grass officials, including key board members, have made annual pilgrimages to the American Association of Airlines Executives' conference in Hawaii.

In January 2008 in Kona, Hawaii, they played golf, went horseback riding and participated in water sports. When it was all over, they'd spent more than $36,000 of the airport's money.

Gobb, Coon and Ellestad — joined by their wives — made the trip, along with board members James Boyd and Bernard Lovely, who also brought their spouses. Gobb's daughter, Coon's two daughters and a friend also went along.

The conference was Jan. 6-10. Records indicate that Gobb stayed eight nights. Of the group, he spent the most on the trip: $8,840.

The other two airport managers also racked up more than $8,000 each in expenditures, while Lovely and Boyd both spent between $5,000 and $6,000. All of that was billed to the airport.

The trip included a host of expensive restaurant and bar bills, totalling more than $7,600. Luallen criticized a $1,500 horseback riding excursion that Coon, Gobb and their families took. Ellestad spent $591 at Red Sail Sports, a water-sports company.

Blue Grass Airport also paid conference fees of $650 for each of the men and $195 for four of the spouses.

It's unclear how much the airport officials reimbursed Blue Grass for personal expenses.

Airport records indicate Gobb wrote the airport a $219 check.

Lovely, who told the Herald-Leader repeatedly last summer that the airport did not pay for trip expenses for spouses and other family members, said he reimbursed the airport nearly $1,277 for his wife's plane ticket.

Luallen's audit found a $479 check that Coon wrote but was never cashed that was, apparently, for the Hawaii trip. The check, dated Jan. 31, 2008, was found in a desk.

While in Hawaii, Gobb spent $242 for Hawaiian coffee.

When he got back to Lexington, he ordered more coffee — $730 worth — and $378 in products from a coffee and macadamia nut farm.

A mundane week

While much of the $813,039 in total expenses that the seven airport officials incurred over the last three years was travel-related, they also ran up plenty of bills around town.

In one fairly typical week, the airport executives shelled out more than $4,313 between Monday, March 10 and Sunday, March 16, 2008.

They charged to the airport lunches and dinners at Papa John's, Max & Erma's, Clamatos Mexican Restaurant, Wendy's, Logan's Roadhouse and Panera Bread. (Kelly and Ellestad, particularly, seemed to favor Panera.)

Ellestad, for instance, always bought chocolate walnut cookies with his sandwich.

There were some curious purchases that week.

Gobb dropped $1,331 at Liquor Barn that Tuesday, and, again, provided no explanation or receipts.

Ellestad's card had a charge for $438 to Spirits Inc. from New York, which was described as a gift, according to the audit.

And Kelly charged $41.94 to Yellow Cab for a one-way trip for a "snow pickup — staff" for an employee on that Wednesday afternoon. But, according to the University of Kentucky Agricultural Weather Center, the high that day was 60 degrees and there was no precipitation.

Later in the week, Gobb bought $663 in Atlanta Braves tickets for the next trip to visit Delta executives. He later reimbursed himself twice for that purchase, the audit says.

Ellestad charged another $544 in Braves tickets for that July 2008 trip.

All this came more than a month after the Herald-Leader made its first inquiries about airport officials' spending.

'Sheer arrogance'

Luallen, who is in her sixth year as state auditor, was asked whether any expense particularly stunned her.

"There were a lot of those," she said. "As we went through this, just the sheer arrogance of some of these purchases and expenditures for personal benefit were alarming for me."

Whether it was five of the managers spending $7,400 on a NASCAR driving experience for so-called "team-building" or regularly buying their lunches on the airport's dime, it was "shameful," she said.

"It was just using those credit cards as if they were personal."


Blue Grass Airport's board of directors last week approved sweeping changes to policies on employee expenses and ethics. The changes were based on recommendations by an outside consulting firm and include guidelines to control excessive spending on food and travel.

In the future, all travel by the airport's executive director would need to be approved first by the board chairman. And other employees would need written authorization from their supervisors for anything other than normal, business-related travel.

The board also will add protections for workers and vendors who blow the whistle on wrongdoing.

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