Argument: No scheme at GJ airport

DENVER — Even if the Grand Junction Regional Airport Authority had not erred in its initial grant application to the Federal Aviation Administration in 2011 for a $5 million fence around most of its facility, the federal agency would have approved helping to pay for the project anyway.

And because of that, the FAA and the U.S. Department of Justice said they believed there was no conspiracy or fraud going on at the airport, and only reached a settlement agreement with the authority after one error was discovered during a two-year investigation that wasn’t part of the initial complaint.

As a result, U.S. District Judge Christine Arguello should uphold a $16,500 settlement, government attorneys said Thursday in a whistleblower case that was the catalyst of a whirlwind investigation of possible wrongdoing by some authority officials.

“This settlement followed thorough investigation by experienced federal fraud investigators,” Assistant U.S. Attorney Andrea Wang told Arguello, who is to rule on whether the settlement is appropriate. “This settlement also followed due consideration by experienced Department of Justice attorneys.”

“The relaters (who initiated the suit) are two citizens, pilots who had hangars at the airport. They wish to substitute their judgment for the judgment of the Department of Justice,” Wang said. “The law does not allow that. The government determines the fate of its own litigation.”

After years of not knowing what prompted an FBI raid on the authority on Nov. 16, 2013, it was only recently discovered that two tenants of the airport, David Shepard and Bill Marvel, had filed a lawsuit under the federal False Claims Act alleging wide fraud and abuse by some airport officials, chiefly by its then manager Rex Tippetts.

Federal law allows citizens to file such claims. In this case, the court immediately sealed the lawsuit. Even its existence was unknown until earlier this year when that seal was lifted and the settlement announced.

In a two-year probe by the Department of Transportation’s Inspector General’s Office, fraud investigator Joe O’Haber said he quickly determined that the two men’s real issues were over a fence that initially was billed as one to keep wildlife off the airport’s runway. They were angry because it had become a security fence that ended up engulfing some airport businesses, which they didn’t like, he said.

Marvel and Shepard have objected to the eventual settlement, saying it should be much higher. Instead of paying just a $16,500 penalty, the airport should pay more like $16.5 million — more than three times a $5 million damage award they said is more fitting. The act allows for treble damages as a way of punishing wrongdoers.

Thursday’s hearing was to decide whether the reached settlement should go forward, and after a hearing Thursday on the matter, Arguello said she will rule on it soon.

“My relaters are not here to substitute their judgment for the judgment of the United States,” said John Steel, the Telluride attorney representing Shepard and Marvel. “They’re here, very happily, to place their case in front of you. They feel, very strongly, and have felt very strongly, that a fraud was committed at the airport. They have felt from the beginning that the administration of the airport allowed this fraud to be committed.”

By law, whistleblowers in successful cases are entitled to as much as 25 percent of any penalties awarded to the government. If a $16.5 million penalty were imposed, Shepard and Marvel could share in up to $1.6 million. A $16,500 award would mean only up to $4,125 could go to the two men.

In his closing arguments, Steel called the settlement agreement a “whitewash,” saying that because the authority had readily agreed to pay the penalty and $500,000 it had received from the FAA for equipment used to electrify the fence, a system that was never activated, that constituted collusion on their part, and that the airport and the FAA were somehow working together to cover something up.

Arguello, however, interrupted Steel, saying he has presented no evidence proving any of that.

“The testimony I heard, sir, was, ‘We weren’t induced by any fraudulent statements because we would have funded it anyway,’ ” Arguello said, quoting some of the witnesses. “Are there damages? They said, ‘No, there aren’t because we would have funded it anyway.’ “

Arguello was referring to testimony from O’Haber and John Bauer, Denver division manager for the FAA who ultimately approved the fence grant. Bauer said he was the one who alerted O’Haber after their first interview during the investigation, saying he was unaware some of the grant money had gone toward electrifying the fence.

Bauer told the court that the airport had erred on two change orders to the fence project — including on those orders that the fence would have no socioeconomic impacts — but corrected it on a third report. After getting approval from higher-ups in the FAA, the agency accepted the report and continued to support the fence project, Bauer said.

O’Haber said he agreed that the settlement was appropriate, particularly considering the damage the entire affair created at the airport, which resulted in the halting of a $6.2 million building, Tippetts’ firing and a fouling of the airport’s reputation nationwide.

“The airport board and the taxpayers of Mesa County and Grand Junction would be penalized with a much higher amount,” O’Haber said. “The fact that we really couldn’t come up with damages to the FAA, I think damages would be not necessary in this case.”

O’Haber said at first he was concerned that the new fence wasn’t built on the north side of the airport where there is open space, but was no longer concerned when he realized why. There already is a shorter, barbed-wired fence along that section of the facility.

“I was informed that the portion of the north boundary was in the process of being moved as part of a runway relocation project,” he said. “While they could have completed the fence, it would have cost a considerable amount to tear that down and move it again once that project got underway.”

Shepard and Marvel also testified during the hearing, saying they launched the entire effort because they believed the federal government was being lied to about airport projects, particularly the perimeter fence that cut off direct access to some businesses at the airport.

“My major concern was, who was looking out for the businesses,” Marvel told the court. “I tried to look out for them, the airport didn’t seem to care, the FAA didn’t seem to care. This is bothersome to me.”

Marvel said one business did benefit from the fence: West Star Aviation, the facility’s fixed-based operator.

“They essentially had any possible competition at the airport removed,” Marvel said. “I believe all of (the businesses) have closed except for the helicopter school.”

Steel also tried to argue that the grant application relied on a U.S. Department of Agriculture study looking at wildlife activities around the airport. Steel said because the report did not include a fence as a possible way to solve those issues in its “recommendations” section, that constituted fraud on the part of the authority.

Wang, and later Arguello, said the report might not have had that in its recommendations section, but there was a “suggestion” in the report about building a fence.

“I don’t know if you’d call it a recommendation or not, but there is a suggestion that a chain-linked (fence) skirting the entire perimeter would indeed be the best solution,” Arguello said, reading from the report. “We are splitting hairs. Does it really have to be in the recommendations section?”

Steel subpoenaed two witnesses to testify at the hearing, authority Chairman Steve Wood and Dennis Corsi, chief executive officer of Armstrong Consultants, an airport planning, engineering and construction firm that still operates at the airport.

Wood testified that he thought the settlement was fair.


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