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The gatekeepers: Striking it rich in the bail bond business

Columbus Alive Archive Article

The gatekeepers (Bail bonds)
05/07/1997
FEATURED ARTICLE
The gatekeepers
Striking it rich in the bail bond business

by Bob Fitrakis

Despite a city ordinance prohibiting the soliciting of business by bail bondsmen, “in or around any court or public place,” a month-long investigation by Columbus Alive revealed that the law is routinely ignored. One firm, SMD & HLS Bonding Company, appears to be running its business from the “interview” room next to arraignment Courtroom 4D in the Municipal Court building. SMD & HLS bail bonders linger in the hall and sit in the back of the court and appear to be soliciting business.

The so-called public “interview” room appears to function as a high-powered office for the SMD & HLS Bonding Company, listed in the yellow pages as four different firms: Handler Bonding, Lowell Fox, Sam English and A-Aa Absolute Bail Bonds. Still appearing in the yellow pages entry is a photo of Sam English, who has been dead for several years. As of the writing of this article, the woman who answers the phone at the Sam English firm tells callers that Mr. English “isn’t in.”

Although the courthouse is a no-smoking public building, smoke wafts from the interview room when the door is opened as bail bondsmen hustle family and friends of defendants from the arraignment court to their office equipped with phones and a criss-cross phone directory. As one highly placed law-enforcement source put it, “It’s the old adage. The best place to hide illegal activity is out in the open.”

A non-Handler bondsman pointed out what he saw as an analogous situation. In 1990, the Board of Commissioners on Grievances and Discipline of the Supreme Court of Ohio suspended Judge Ralph D. Dye Jr. of McConnelsville for using public space to conduct private business. The board labeled his free-rent arrangement at the courthouse “inexcusable, unfair to other attorneys and unethical.”

In a letter dated November 21, 1996, in response to a public records request, Municipal Clerk of Courts Paul Herbert, stated: “I have not been designated, nor do I have any authority to enforce the use of the conference room next to Court Room 4D. …The rules for the use of the room have been clearly posted on the door.”

Asked if his bondsmen are soliciting business on the fourth floor, Handler said in a telephone interview: “Totally untrue. I don’t need to solicit. I’ve been in business 25 years. I advertise. People refer other people to me.”

Are his bondsmen running a business out of the Interview room next to 4D? “No,” Handler responded.

Most court officials say that the interview room is set up to serve lawyers and their clients for privileged private discussion. On three different occasions, when Columbus Alive watched the Interview Room, the only people inside were bail bondsmen. The rules, according to a non-Handler bondsman, are “first-come, first-serve. But, it’s like the Old West. [Handler]’s got Woody Fox, a retired Columbus police officer working as a bondsman. He’s got Al Clark, former chief deputy at the sheriff’s department, and when you go up there, Handler’s got the nerve to tell you that you’re not supposed to be there. ‘No soliciting.’ So now I just sit by the phone and wait for people to call for bonds. It’s cheaper. Everyone over there has their palms out; if you pay one, you’ve got to pay ’em all.”

Handler now appears to be the top gun, but not after a fight—literally. In 1994, the Columbus Dispatch reported that “Bondsman Jack Bates said his nose was bloodied and his face bruised when Mark Glaser, a bondsman with Harvey Handler’s bail bonding agency, struck him in the face on the fourth floor of the Franklin County Municipal Court.”

Ironically, bail bondsmen were supposed to be a thing of the past. In 1972, Ohio Chief Justice C. William O’Neill attacked the Ohio General Assembly for yielding to “pressure from bail bondsmen in rejecting rules for criminal procedure” reforms proposed by the Ohio Supreme Court in January of ’72. In a Dispatch article, O’Neill stated that, “In 90 percent of the cases the bail bondsman renders no service and takes no risk, but keeps his profit.”

By 1974, the Franklin County Municipal Court initiated its Pre-Trial Release Program (PTRP) in hopes of eliminating the need for costly and often unnecessary bond fees in most criminal cases. The era of reform is long over in the Franklin County Municipal Court. Herbert acknowledges in his letter that between January 1, 1996 and September 30, 1996 SMD & HLS Bonding Company wrote far more bonds in Municipal Court than any other firm. The breakdown is as follows: SMD & HLS Bonding Company – 3411; Columbus Bail Bonds – 891; Chuck Brown Bail Bond Agency – 603; International Bonds – 424; Bates Bonding – 52; American Bail Bond Agency – 15; other – 75.

Whether it’s legal or not is a question few judges or court officials care to probe. A cozy relationship exists between bail bondsman Harvey Handler—who manages or controls the four different bail bonding agencies in Columbus—and judges, Clerk of Court officials and court employees. Handler is a major political contributor to judicial and Clerk of Court office candidates and sometimes generous benefactor to court employees.

“Handler runs the fourth floor,” said former bail bondsman Bill Neil. “It’s a protected racket. The reason they like the fourth floor of Muni Court is because the felons are initially arraigned there, even though they’re tried in Common Pleas.

“It’s easy money. They can bail somebody out and they know the charges will be dropped within two weeks in Municipal Court because they have to be tried in Common Pleas. They’re just taking people’s money with no risk involved,” explained Neil.

Neil claims he went “broke in the business. Every two weeks, when the clerks didn’t get paid, I had to spend $50 or $60 to get pizzas…. And I had to give a security guard 30 bucks to pass out my business card.”

Under the current system, for example, if you are arrested for felonious assault and your bond is set at $5,000, you must pay 10 percent, or $500, to the court for an “appearance bond” or $500 to a bail bondsman for a “surety” bond. In the case of an appearance bond, you would get all but 10 percent ($450) back when you appear in court. With a surety bond from a bail bondsman, you would get nothing back when you appear at trial. But if you paid a surety bond and failed to show at trial, the bondsman is legally liable for the entire $5,000 bond.

The type of bonds are set at the judge’s discretion. Judges may also set recognizance bonds and release the defendant without posting any cash.

“Judges vary greatly. When I was in the business, if [Municipal Court Judge] Anne Taylor was on the bench doing arraignments, we took the week off,” Neil explained.

Curiously, Criminal Rule 46 of Ohio Rules of Criminal Procedure concerning the “Pre-trial release in felony cases,” provides that judges should use “personal recognizance” or an “unsecured appearance bond” as the “preferred method of release.” But few judges besides Taylor appear to follow it.

Since the Municipal Court cannot try felony cases, arrested felons are seen by municipal judges primarily for the setting of bond. Court records indicate that arrested felons are routinely arraigned and bonded on the fourth floor of the Municipal Court building and, just as routinely, the charges are dismissed a short time later. Defendants are told that the case will “be dismissed for possible future indictment.”

A grand jury later meets in the Common Pleas Court and holds a hearing. If an indictment is handed up, a summons is usually issued for a Common Pleas court appearance. Thus, what the bail bondsmen know is that there is little or no risk involved in forfeiting a surety bond in Municipal Court since the charges against the defendants will be dismissed. “It’s a scam,” as one bondsman put it. By not carrying over the bonds from the Municipal Court arraignments of felons to Common Pleas Court cases, Handler and other bondsmen are regularly pocketing thousands of dollars in risk-free money. And defendants are often surprised when they are required to repost bond money when they are summoned to Common Pleas Court.

If Municipal Clerk of Courts Herbert, “wanted to put his foot down, he could end this practice tomorrow,” said a S. High Street bondsman critical of Handler. “I’ve practiced in Marion County, Delaware County, Madison County and Franklin County. This is the only place that allows this to go on,” he added.

Herbert, who is up for re-election this year, is on record defending the practices of his court. “…You must realize that surety bonds provide a valuable service to the criminal justice system. Not only do you have agents with a vested interest in catching and returning defendants to court to stand trial for their conduct, but the court holds the security (in the form of a power) that can be executed against for the amount of the bond if the defendant does not return or the agent does not pay the bond.”

Herbert pointed out in a telephone interview Monday that the interview room is “open to the public, attorneys and bondsmen.” While his office is on the fourth floor, he said he was unaware of any soliciting of business by bondsmen. “I have no idea; I don’t police those rooms.” He suggested that Administrative Judge David Fais or Building Manager Bill Charlton would be responsible. “I try to stay out of that area,” Herbert added.

Asked about his relationship with Handler, Herbert acknowledged that Handler is a political contributor to Herbert and other judges and court-related officials, but not a “big donor.” Herbert did term Handler “very supportive” of his own political campaign.

Both Neil and other bondsmen charge that the Clerk’s office allows another infamous “rip-off” of criminal defendants. All bonds include an additional fee collected for the Victims of Crime Fund and the Public Defender’s Office. In felony cases, this amounts to $41: $30 to the Victim’s Fund and $11 to the Public Defenders. When cases are dismissed, or defendants are found not guilty, the money is returned to the bondsman who posted it, not to the defendant who supplied the cash. Legally, the money belongs to the defendants, but all too frequently, bondsmen fail to return the money and pocket it as pure profit. With no court enforcement to return the funds, the bail bondsmen benefit. “Money for nothing,” one bondsman explained. Neil pointed out that since most of the defendants are poor and uneducated, they are “easy marks” who don’t understand the legal system and are unlikely to protest the practice. Plus, their reputation as suspected criminals does not garner much sympathy for their plight.

Asked if the bondsmen are essentially taking defendants’ money twice, Herbert responded, “I suppose they would [be]. You need to ask the prosecutors, they’re the ones that dismiss the cases.”

According to a 1994 Dispatch article, 1,279 defendants released on surety bonds set in Municipal Court skipped bond. Neil and other bail bondsmen charge that Municipal Clerk of Court Herbert and Franklin County Clerk of Courts Jesse Oddi show favoritism to Handler’s firms. “Hell, when I had to pay a bond for a skip, the deputy clerks used to joke that ‘Handler’s guys are never down here,’” said Neil.

The Dispatch article also reported that: “In reality, court officials say more than half of bond forfeitures are set aside by judges. They may forgive the debt at their discretion.” Court records obtained by Columbus Alive indicate that court officials seem to be more forgiving for the Handler firms than others. Take the case of Dean Hinchee, arrested in 1991. Handler posted a $3,500 surety bonded for Hinchee on November 11, 1991. When Hinchee failed to show on January 28, 1992, Handler had 30 days to produce him or forfeit the bond. In a November 1996 billing to the SMD & HLS Bonding Company, a Dean Hinchere is listed instead of Hinchee. Although the names are spelled differently, Alive has obtained copies showing that the case numbers are the same: 29681. In the ’96 Handler billing the court requests only $350 from SMD & HLS Bonding when the full amount that should have been forfeited by Handler in 1992 for Hinchee’s court skip is $3,500.

Either by accident or design, Franklin County Courts are apparently shaving a zero off of Handler’s bond forfeiture bills, in effect billing one of the court’s major political donors at only 10 percent of the amount due.

Asked about the apparent shaving, Herbert said, “It’s currently being litigated” and refused further comment.

Asked about the allegations that bills are being shaved, Handler answered: “Totally incorrect. It doesn’t deserve a response. My attorneys are dealing with it.”

When probed about allegations that court employees have accepted gratuities from Handler and other bail bondsmen, Herbert said, “I don’t think that’s going on; if it is, they need to knock it off. We’re not supposed to be taking anything of value; but it’s a gray area of the law.” Herbert pointed out that, unless there was a quid pro quo, a gift for service, any gratuities or perks provided court officials by bondsmen probably aren’t illegal. “We should avoid the appearance of impropriety, and I’ve instructed my people not to accept any gifts.”

The billing of bondsmen seems to be a haphazard system. Herbert and his deputy clerks reportedly have busied themselves of late putting records into “storage.” This may make it all the more difficult to account for the total amount of forfeited bonds owed the Municipal Court by bond firms. In an independent audit by KPMG Peat Marwick LLP for the period January 1, 1994 through December 31, 1994, the report states that the Municipal Court practices “other than generally accepted accounting principles.” In a June 25, 1996 letter, State Auditor Jim Petro—currently lobbying to head the U.S. General Accounting Office—”accepted” the KPMG report “in lieu of the audit required by Section 117.11 Revised Code.” Petro noted “The Auditor of State did not audit the accompanying financial statements and accordingly, we are unable to express, and do not express an opinion on them.”

The obvious beneficiaries of such a system are not the public or poor and uneducated defendants and their families and friends, but the incumbent judges and clerk candidates who receive political donations, and the bonding companies who benefit from court officials’ lack of oversight.

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Spook Air

Orig Published Columbus Alive 4-22-1999

4/22/1999
FEATURED ARTICLE
Spook Air
by Bob Fitrakis

Something’s rotten at Rickenbacker Port Authority. Maybe it’s just the stench of the bankrupt corpse of Southern Air Transport, or the moldering smell of the $3 million the state pumped into the notorious airline before it folded.

Ohio taxpayers are among the more than 800 creditors now lined up to file claims against “Spook Air.” SAT filed for bankruptcy in Columbus on October 1, 1998, the same day the Central Intelligence Agency Inspector General issued a report linking the cargo hauler to allegations of drug-running in connection with U.S.-backed Contra rebels in Nicaragua in the 1980s.

Once lauded as a coup for central Ohio development, landing Southern Air Transport’s business at Rickenbacker eventually turned into a nightmare, as the enterprise became mired in massive debt and was closed under a cloud of suspicion about its true activities. Just how and why one of the world’s most notorious airlines ended up in Columbus in the mid-1990s is a story that hasn’t been fully examined until now.

Through a Freedom of Information Act request, Columbus Alive obtained a massive number of documents from the Rickenbacker Port Authority and additional records from the Ohio Department of Development showing that the Franklin County Commissioners and the Voinovich administration offered hard-to-refuse incentives to get SAT’s business, despite the airline’s shady history.

“We are proud of Rickenbacker’s growth and believe the addition of Southern Air Transport would represent a significant step forward,” Franklin County Commissioner Arlene Shoemaker wrote Southern Air President William G. Langton in January 1995. SAT officials pitched a proposal involving the construction of a 180,000-square-foot corporate headquarters and air-maintenance facility on leased land in the Rickenbacker Air Industrial Park. They projected the total cost of the project at more than $36 million, and predicted the creation of 300 new jobs within a three-year period.

“I will need and look forward to help from the State of Ohio, the Port Authority, Franklin County, the City of Columbus, the Chamber of Commerce and any other groups or individuals you would suggest, to help effectuate a seamless move to Columbus, Ohio, and the Rickenbacker International Airport,” wrote Langton in a February 14, 1995, letter to the port authority’s Executive Director Bruce Miller. A “seamless move,” in Langton’s estimation, would cost $3 million.

The port authority and the Ohio Department of Development, under the aegis of Governor George Voinovich’s then-Chief of Staff Paul Mifsud, developed an attractive incentive package for SAT. The state development department agreed to provide SAT with a low-interest $6 million loan. The department promised an additional half-million dollars from a Business Development Capital Account to defray the cost of “eligible equipment associated with the project.” The Ohio Department of Transportation agreed to enter into a lease to support $10.2 million in Certificates of Participation to enable Rickenbacker to make “necessary taxi-way and parking improvements to allow SAT to locate in the park,” according to an SAT document. Such airport improvements are usually funded by the Federal Aviation Administration.

The document goes on to spell out that “the Rickenbacker Port Authority has committed approximately $600,000 to fund other public infrastructure improvements associated with the project… In addition, the port authority has also agreed to make available to SAT up to $30 million in port authority revenue bonds for eligible project related costs.” The SAT document noted that, “Franklin County has also committed to granting a 100 percent abatement for 15 years on real property improvements under Ohio’s Community Reinvestment Area Law.”

Shadowy ties to Ohio

News accounts show that The Limited owner Leslie Wexner played a role in SAT’s relocation to Rickenbacker. Two other key figures in the SAT story have Columbus connections: Alan D. Fiers Jr., a starting tackle on the 1961 Ohio State University football team and a Buckeye assistant coach in 1962, who later became the chief of the CIA Central American Task Force; and retired Air Force Major General Richard Secord, head of air logistics for the CIA-owned Air America’s covert action in Laos between 1966 and 1968, and air logistics coordinator in the illegal Contra resupply network for Oliver North in the ’80s.

Both Fiers and Secord eventually were found guilty of charges in connection with the Iran-Contra affair. On July 9, 1991, Fiers pleaded guilty to two misdemeanor charges involving illegally supplying weapons to the Contras. According to the recent CIA report on Southern Air Transport, Fiers informed U.S. Senate investigators that the CIA told the DEA early on about Contra leaders being involved in drug smuggling. Secord, who is a 1954 graduate of Columbus’ South High School, pleaded guilty in 1989 to a felony charge in connection with the cover-up of the Iran-Contra affair.

While SAT was busy setting up offices in central Ohio, the CIA was linking the airline to illicit activities. The October 1998 CIA report on Southern Air Transport says that as early as January 21, 1987, the customs office in New Orleans was investigating an allegation of drug trafficking by SAT crew members. The 1987 memorandum noted that the source of the allegation was a senior FDN (Contra) official, and indicated that the official was concerned that “scandal emanating from Southern Air Transport could rebound badly on FDN interest including humanitarian aid from the United States.”

The memo continues, “A February 23, 1991, DEA [Drug Enforcement Agency] cable to CIA linked SAT to drug trafficking. The cable reported that SAT was `of record’ in DEA’s database from January 1985-September 1990 for alleged involvement in cocaine trafficking. An August 1990 entry in DEA’s database reportedly alleged that $2 million was delivered to the firm’s business sites and several of the firm’s pilots and executives were suspected of smuggling `narcotics currency.'”

How did such a notorious company come to set up shop in central Ohio? Perhaps it was the efforts of Langton to keep the airline’s history in intelligence operations at arm’s length that assured Ohio officials of SAT’s success. In March 1995, Langton told the Columbus Dispatch that his company was “no longer connected to the CIA.”

“Too good to turn down”

It remains unclear exactly why Franklin County Commissioners were so willing to bring the scandal-ridden airline to central Ohio. Commissioner Dorothy Teater, currently running for mayor of Columbus, told Columbus Alive this month that she was not aware of Southern Air’s ties to the CIA. “If it’s true, that’s awful,” she said, adding the push to land SAT in Ohio came from the state Department of Development. “We commissioners were an afterthought. They asked us at the last second to sit in the audience at the press conference.”

When asked last week if she was aware of SAT’s past CIA links or allegations of drug running, Commissioner Shoemaker answered, “Certainly not.”

Documents obtained by Columbus Alive show that local officials did not balk at the notion of an enterprise at one time linked to drug smuggling and covert operations worldwide setting up shop here. They were apparently willing to overlook any danger signals in an effort to please local commercial enterprises that might benefit from SAT business. In 1996, SAT spokesperson David Sweet told Columbus Alive the airline moved to Ohio because “the deal [put together by the development department] was too good to turn down.”

The Franklin County Commissioners created the Rickenbacker Port Authority (RPA) in 1979 in order to utilize excess military land at Rickenbacker Air Force Base for industrial, distribution and air cargo purposes. In February 1992, the county commissioners created a Community Reinvestment Area for five years, making the Rickenbacker Port Authority a lucrative investment zone.

In a 1994 corporate report, which Columbus Alive retrieved from the Rickenbacker Port Authority’s files, Langton downplayed the airline’s controversial past and its crucial role in the Iran-Contra scandal, describing it as “an all-cargo airline operating schedule, charter and wetlease service for shippers, freight forwarders, the Department of Defense, relief organizations and individual customers around the world.”

On April 13, 1994, William B. Holley, executive vice president for economic development for the Columbus Chamber of Commerce, wrote the Ohio Job Creation Tax Credit Authority under the Ohio Department of Development, urging that the airline receive tax credits for relocating from Miami, Florida, to Rickenbacker International Airport in Columbus.

Edmund James, president of James and Donohew Development Services, told the Columbus Dispatch that negotiations with Southern Air had begun “exactly one year ago today,” speaking at the March 16, 1995, press conference announcing that SAT was locating to Columbus. He let it be known that “much of the Hong Kong-to-Rickenbacker cargo will be for The Limited.” James said, “This is a big story for central Ohio. It’s huge, actually.”

The day following the press conference, Brian Clancy, a cargo analyst with MergeGloban Inc., was quoted in the Journal of Commerce: “Limited Inc., the nation’s largest retailer, is based in Columbus, a fact that undoubtedly contributed in large part to Southern Air’s decision.”

That same day, the Dispatch noted a meeting between Langton, Governor Voinovich and “other officials yesterday to discuss the air cargo carrier’s plans.” Governor Voinovich is quoted saying, “This will be a new window to the world for Ohio business… It will be a boon for exports.” Within a week, SAT announced it would be flying twice-weekly freighters from Hong Kong to Columbus on behalf of The Limited.

In an article titled “Touchdown in Columbus,” SAT’s company newsletter featured an artist’s rendering of the proposed state-of-the-art headquarters on its cover and lauded “the very pro-business attitude of the State of Ohio and City of Columbus.”

That pro-business attitude is evident in a 1995 letter from SAT’s Langton to the Rickenbacker Port Authority. Although in response to Alive’s records request, former Governor Voinovich’s staffers claimed no records exist linking the governor or then-Chief of Staff Mifsud to the SAT deal, a February 22, 1995, letter from SAT chief Langton to Miller of the port authority stated: “I was very pleased with my visit with Mr. Paul Mifsud and Governor Voinovich, and after meeting with the State of Ohio it is my understanding that they will make the appropriate changes in funding amounts that we require in our Response to Proposal… I would expect to have a decision on the matter on or before March 10, 1995.” Numerous other SAT correspondence were carbon-copied to Mifsud at the governor’s office.

Repeated calls and a fax sent to Senator Voinovich’s office seeking comment for this article were not answered.

The next day, a letter from Ohio Department of Development Director Donald Jakeway to Langton begins, “Pursuant to your recent meeting with this department and Paul Mifsud, we are responding with this revised commitment letter…” Jakeway outlined a “revised preliminary commitment” worth an estimated $7.2 million in services, benefits, tax credits and low-interest infrastructure loans.

Jakeway is no longer with the Department of Development and was out of the country this week and could not be reached for comment. Calls to the Department of Development for comment were not returned by presstime.

On March 16, 1995, Langton joined then-Governor Voinovich and officials from the Rickenbacker Port Authority to announce officially the relocation of SAT from Miami to Columbus. In the Columbus Dispatch’s coverage of the announcement, an exuberant Voinovich gushed, “I am extremely pleased to welcome Southern Air Transport to Ohio, as it will be the first airline to have its world headquarters located at Rickenbacker Airport. This will help Columbus tremendously in becoming a world-class inland port.”

Shoemaker, representing the Franklin County Commissioners, said, “We’re deeply grateful to the governor and all those who helped make it possible to welcome Southern Air to Franklin County.”

Langton called Rickenbacker “an opportunity waiting to happen.”

By the end of the year, Langton was not sounding quite so positive. In the SAT newsletter, he stated: “As we close out 1995, I am sorry to report that we have the first loss year in recent history for Southern Air Transport.”

Spying the friendly skies

Apparently, the airline was in better shape financially when it was engaged in covert and possibly illegal activities. Officials of SAT, which was founded in 1947, acknowledge that their airline was owned by the CIA from 1960 to 1973. In 1960, the CIA purchased SAT for $300,000 and rapidly expanded the airline’s business into the Far East and Latin America. At one point, SAT was the CIA’s largest “proprietary”–a private business owned by the CIA–with estimated assets of more than $50 million and more than 8,000 employees worldwide.

In 1973, the CIA sold SAT to “the official who had run it on behalf of the CIA, with a $5.1 million loan from First National Bank of Chicago, known to be a CIA-used bank,” according to the National Journal. The airline retained informal ties with both the CIA and the National Security Council. The current principal owner is Miami attorney James Bastian, former CIA lawyer, who chaired the investment partnership of the management group that acquired SAT from the CIA. In 1979, Bastian acquired the company’s outstanding stock.

The airline’s activities after that suggest that it was still heavily tied to the U.S. national security apparatus. During the 1980s, Southern Air Transport carried a variety of military supplies, arms and equipment to the Contras. Southern Air President Langton admitted in an affidavit in the civil trial of SAT employee Eugene Hasenfus that SAT flew TOW anti-tank missiles from Kelly Air Force Base in San Antonio, Texas, to Israel. Southern Air crews then loaded the missiles onto Israeli-owned planes that flew them into Iran.

At the time, President Ronald Reagan was officially urging the world to embargo Iran, a country he called “Murder, Inc.” In 1986, SAT secretly shipped 90 tons of TOW missiles to Iran as part of the Reagan administration’s secret arms-for-hostages exchange. Proceeds from the sale of the missiles–some $16 million–were diverted to the Contra resupply effort in Central America. The scandal broke when on October 5, 1986, a Southern Air Transport C-123 cargo plane carrying 10,000 pounds of arms was shot down over Nicaragua.

The flight logs of the downed Southern Air Transport C-123 linked it to a history of involvement with the CIA, cocaine and the Medellin drug cartel in Colombia. The logs documented several Southern Air Transport flights to Barranquilla, Colombia, during October 1985, the same time Wanda Palacios, a Miami FBI informant, told the FBI that the airline was running drugs.

(It was also the same airplane that Louisiana drug dealer Barry Seal used in a joint CIA-DEA sting operation in 1984 against the Sandinistas. Seal acquired the plane through a complicated airline swap with the Medellin cartel, according to declassified government documents, and the plane was fitted with hidden cameras by the CIA at Rickenbacker Air Force Base. Seal reportedly flew weapons for the Contras and returned to the United States with cocaine. He was murdered in New Orleans in 1986 by Colombian hitmen.)

Reports of SAT involvement with drug runners surfaced early on in the Congressional Iran-Contra inquiry. In August 1987, the New York Times reported Palacios informed Congressional investigators that “she witnessed drugs being exchanged for guns intended for the Contras.” Palacios identified Southern Air Transport planes involved in the gun and drug running in two separate incidents in 1983 and 1985. Initially SAT denied any connection to the CIA and dismissed accusations of drug running as absurd.

Although SAT issued an internal memo denying any post-Iran-Contra connections to the CIA, during the Gulf War in 1990-91, Southern Air Transport played a key role in logistic support for the U.S. military. And in September 1990, the Air Force awarded SAT a $54 million contract for “air transport services.” Early 1996 opened for SAT with the same story line when it garnered a 90-day contract to transport construction supplies, equipment and civilian personnel from Zagreb, Croatia, to Tuzla, Bosnia, one of the world’s military hot spots.

The end of the runway

By the end of January 1996, company officials assured the Dispatch that SAT “isn’t backing away from the central Ohio hub,” but SAT officials were dragging their feet on plans to begin construction on a hangar at Rickenbacker.

SAT’s lack of action did not stop the state’s Controlling Board from approving, in May 1996, a half-million-dollar grant “related to the overall project of constructing a 180,000-square-foot facility.” Documents show that Doug Talbott of the Ohio Department of Development hand-carried a $500,000 check to an SAT official on August 5, 1996.

On December 19, 1996, the Dispatch reported that SAT was “delinquent in paying a $277,000 personal property tax bill.” SAT spokesperson David Sweet insisted that “the company is financially sound and intends to proceed with its Rickenbacker plans. `It’s not that we don’t have the money to pay the tax; we just dispute the amount,'” according to the Dispatch.

Langton, SAT’s president of 15 years, left abruptly in March 1997, handing the reins back to the airline’s owner James Bastian. Eight months later, SAT issued layoff notices to 100 of its 750 employees. Two months after that, Southern Air Transport publicly announced it would lay off 54 of the 65 maintenance workers at Rickenbacker and 43 of the 175 employees at the company’s temporary headquarters on Kimberly Parkway. Rickenbacker Port Authority now lacked any airport maintenance facility.

SAT, which had promised 300 new jobs within three years–and had already taken at least $3.5 million in state money–admitted that it hadn’t begun work on the maintenance facility project it had promised.

Marlo B. Tannous, deputy chief legal counsel for the Department of Development, issued a memo trying to figure out what “the exact job numbers” were submitted by SAT to the state. In June 1998, SAT announced it planned “to park and sell off most of its fleet of Lockheed Hercules L-100” planes.

That same month, Joseph C. Robertson, director of the state Department of Development, wrote J. Robert Peart, the executive vice president and CEO of SAT, inquiring about the $500,000 grant and an earlier $200,000 grant for new employee training. “It is critical that DOD receive an accurate assessment of your company’s situation related to these agreements,” Robertson wrote.

On July 30, 1998, Daniel F. Dooley, the chief financial officer of SAT, informed Lewie A. Main of the Department of Development that “Southern Air’s project will not proceed as planned at Rickenbacker due to severe financial difficulty.”

Fine Air Services of Miami announced a plan to purchase the financially troubled SAT on July 23, 1998. Robert Dahl, a consultant with Air Cargo Management Group, summed up SAT’s financial woes by pointing out “there are fewer belligerent circumstances in the world today than there were during the Cold War.” Apparently Spook Air needed the Soviets and the Red Menace to survive. Fine Air backed out of the agreement to purchase SAT “after getting a closer look at its books,” according to the Journal of Commerce.

Kitty Hawk Inc., the world’s largest operator of air cargo planes, signed a letter of intent shortly thereafter to buy SAT. Three weeks later, Kitty Hawk terminated the agreement. Neither Fine Air or Kitty Hawk gave reasons for their decisions not to purchase Southern Air.

Blanca Hernandez, a Southern Air spokesperson, denied rumors that the company was going to seek bankruptcy protection after the Kitty Hawk deal fell through. Three days later, Southern Air Transport grounded all its flights and fired 450 employees. Hernandez admitted that the company was “considering ways to liquidate assets.” The Dispatch reported that the Ohio Department of Transportation would not try to “recoup” $3 million it had loaned SAT.

Telephone calls to Southern Air Transport seeking comment for this story were referred to Columbus attorney Randy Latour. Citing pending litigation, Latour declined to comment.

The Dispatch managed to put a positive spin on the death of Spook Air: “But there were plenty of good times for Southern Air. Its Hercules fleet became the pack mules of the skies, transporting odd-size cargo, including Keiko, the whale, and taking part in humanitarian airlifts to Bosnia and Somalia.” Like local officials, the Dispatch ignored the mounting evidence of SAT’s ties to cocaine smuggling.

More recently, on April 4, the Dispatch reported that the airline’s already messy bankruptcy may be further complicated by allegations that $32 million in the private account of SAT owner Bastian’s wife Mary Bastian are company funds.

On October 1, 1998, the CIA Inspector General issued his report outlining allegations of Southern Air Transport’s involvement in drug-running. That same day, Spook Air filed for bankruptcy in Columbus.

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