Wednesday, October 28, 2020

Former Newport News airport director sentenced for corruption, money laundering

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The former executive director of the Newport News airport, Ken Spirito, was sentenced Wednesday to four years of probation and ordered to pay the airport $2.5 million to make up for public funds it lost through financing for People Express Airlines.

Sprito was convicted on several charges of misusing public money and money laundering earlier this year, after arguing that a People Express loan and the Newport News/Williamsburg International Airport’s loss were the responsibility of the Peninsula Airport Commission’s board of commissioners.

He has repeatedly said he was acting on the commissioners’ direction in arranging a $5 million loan guarantee by the Peninsula Airport Commission to help launch a start-up airline, People Express, in 2014. The guarantee was backed by public funds from the federal government, the state and a regional body funded by Peninsula cities and counties.

People Express stopped operating after just three months and left the commission responsible for repaying $4.5 million of the airline’s debt. Eventually, TowneBank, the bank that the airport repaid on People Express’s behalf, returned $2 million to the commission.

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A pre-sentencing report recommended a prison term between 97 and 121 months — prosecutors sought a sentence on the low end of that range.

U.S. District Judge Raymond Jackson said the guidelines were excessive, noting that Spirito had not received any proceeds from the loan guarantee or the transfers of public funds from airport bank accounts to make good on the guarantee, according to Spirito’s lawyer, Trey Kelleter. The judge also held that Spirito’s conviction in itself served as a deterrent that would keep other airport officials from violating laws on handling public money.

Federal prosecutors had argued for prison time, noting that “in spite of various warning signs, including the lack of other investment, the debts of PEX and the lack of any real success for several years from 2011 – 2014, it was the defendant who put the PAC on the path to guaranteeing a $5 million loan.”

Spirito “was the chief steward of the airport and its resources,” but he “deliberately violated that stewardship … What is further troubling about the crimes of conviction is the defendant’s abject and continued refusal to accept any responsibility for his conduct and insist that his conduct was appropriate and justifiable,” the prosecutors argued.

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The airport commission had authorized the loan guarantee after a closed door meeting in 2014.

A Daily Press report in 2017 was the first that state and federal aviation officials learned of the guarantee and the use of public funds to make good on it.

In arguing that he was merely acting at the commissioner’s direction, Spirito had argued that commissioner Jim Bourey, then-Newport News City Manager, had signed bank documents setting up accounts in case the commission had to make good on the guarantee and that TowneBank executive and then-city councilman Bert Bateman, helped set up collateral accounts the commission needed for the guarantee.

Kelleter said the former airport director plans to appeal the conviction, adding that he was pleased the judge decided against prison time.

He had argued for probation, noting that Spirito did not personally profit from the loan guarantee, and that Hampton Roads politicians convicted of public corruption have been released to home incarceration, including former Del. Ron Villanueva, former Norfolk Treasurer Anthony Burfoot and former Congressional candidate Shaun Brown, while former Gov. Bob McDonnell’s conviction was overturned.

Spirito, who now lives in Maryland, will be under home incarceration, required to wear an ankle monitor for 30 months of his term of probation. To repay the $2.5 million to the airport, he is required monthly payments of $300.

He was convicted on 12 counts of misusing public funds, six counts of money laundering, one count of falsifying records, three counts of perjury and one count of obstruction of justice. Last week, the judge dismissed the obstruction charge, but denied Spirito’s motion to overturn the other convictions.




Spirito was fired from his airport job in 2017, when the commissioners decided he had misused his airport credit card. Bourey resigned as a commissioner and city manager that year, as well.

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