Ex-Newport News Airport Director Says He's a 'Fall Guy' and Did Not Hide $4.5M Payment to Failed Airline

Former Newport News airport executive director Ken Spirito says his federal corruption charges should be dismissed because he was just doing what airport commissioners told him in arranging the use of public funds to guarantee a loan to the now-defunct People Express airline.

He is asking a federal judge to dismiss 17 of the 18 charges filed against him in May. Those charges involve a series of complicated financial transactions federal prosecutors allege were intended to hide Peninsula Airport Commission’s use of public funds to pay off People Express’ $4.5 million debt to TowneBank.

Spirito’s motion filed last week in U.S. District Court says the charges blame him for actions of his employers, the airport commission’s board members.

It also says Spirito eventually resisted directives from then-Newport News City Manager Jim Bourey and the commission’s then-lawyer, a TowneBank director, to make payments on the People Express debt when the start-up airline collapsed after less than three months of operations in 2014.

“The indictment fails to allege an actual crime by Mr. Spirito,” the motion says. “Instead, it makes him the fall guy, chosen alone from half a dozen participants, to bear the public shaming the local federal prosecutors have decided is needed for a scandal sensationalized in the local media.”

The motion says the federal theft and bribery law Spirito is charged with violating does not apply in his case, which it says actually involves “a civil servant who at worst made a mistake in implementing state and federal programs for no personal gain.”

Spirito’s motion says the airport commission decided to guarantee the loan, that the then-chairwoman, LaDonna Finch, actually executed the guarantee agreement and that Bourey signed bank documents setting up accounts in case the commission had to pay. The motion noted another commissioner, TowneBank executive and former city councilman Bert Bateman, helped set up collateral accounts the commission needed for the guarantee.

The motion says use of state aviation funds for the loan guarantee was legal, since it was only in 2017, after the Daily Press disclosed the repayment of the People Express loan, that the General Assembly formally banned such spending.

The motion alleges the newspaper missed several earlier disclosures of the People Express loan repayment in audits and other reports and by not attending the meeting at which the guarantee was authorized. The board discussed the loan in a closed-door meeting, and empowered its chairman to sign the agreement with a vaguely worded public resolution that did not mention the loan or People Express.

The airport fired Spirito in 2017, accusing him of misusing public funds for personal expenses, all unrelated to the People Express deal.

A state audit, launched after the Daily Press reported the loan repayment, found Peninsula Airport Commission board members’ and executives’ lack of concern about People Express’ several failed promises about finances and their failure to check state law led to the unauthorized use of taxpayer funds.

The federal charges against Spirito include 11 counts of taking other entities’ money — specifically, state grants to the airport, federal money meant to promote air service and sums from a regional airport development program — and using them for purposes those bodies had not approved.

The total sum involved was $5.2 million, juggled through several different accounts, all to mask the actual amount lent but never repaid by People Express, the indictments allege.

Spirito’s motion also says prosecutors’ “effort to include misleading hints that Mr. Spirito or others sought to hide the loan guaranty does not rise to the level of corrupt intent or motive.”

In addition, Spirito was charged with six counts of money laundering and one count of providing false information to the Federal Aviation Administration, when it asked about the use of its funds after the Daily Press reports.

In a related case, People Express founder Michael Morisi, 59, of Suffolk, pleaded guilty in July to one count each of wire fraud and failing to file a tax return.

Dave Ress, 757-247-4535, [email protected]

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