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A long-running legal battle over the failed Great Plains Airlines ended Monday with the announcement of a mediated settlement.
The Tulsa Airports Improvement Trust and BOK Financial Corp. issued a press release stating that a mediation session before former U.S. District Court Judge Layn Phillips had resulted in the settlement.
Under terms of the agreement, the airports trust will pay $1,560,000 to the Tulsa Industrial Authority and BOK Financial Corp. and BOK will release its mortgage on 15.33 acres of Air Force Plant 3.
The airports trust also will contribute $125,000 to the Tulsa Regional Chamber's airport development efforts over five years. In March 2013, the Tulsa Industrial Authority and the Bank of Oklahoma sued the Tulsa Airports Improvement Trust for $15.6 million, accusing the trust of breach of contract. The $15.6 million represents the repayment of a loan plus interest and fees the bank made to the now-defunct airline in 2000. Great Plains owed $7.1 million on the loan when it defaulted in 2004.
BOK Financial Corp. is the parent company of Bank of Oklahoma.
"We regret that errors made in 2000 by TAIT in structuring the transaction led to this long legal battle," Tulsa Airport Improvement Trust Chairwoman Mary Smith said in the press release announcing the settlement. "We appreciate BOK, its leadership, and its commitment to the Tulsa community."
Steven G. Bradshaw, president and chief executive officer of BOK Financial Corp., said the settlement would "pave the way for the further economic growth of our region."
"Now Bank of Oklahoma, TAIT, and the city's leadership can continue to work together for the sake of our great city," Bradshaw said in the release. "Our commitment to the Tulsa region is steadfast, and we believe that together we can continue to see the region grow and prosper."
Tulsa Mayor Dewey Bartlett praised Bank of Oklahoma for its strong corporate support of the Tulsa community and its efforts to help expand air service to Tulsa International Airport.
"I'm pleased Bank of Oklahoma has accepted this settlement and am confident the mediation has resulted in a solution which strengthens our shared commitment to economic growth in Tulsa," Bartlett said in the release.
In 2000, as city and state officials sought direct air service to the East and West coasts as an economic development tool, two executives, Jim Swartz and Jack Knight, began seeking support for a startup regional airline that was to become Great Plains. Their business plan called for the airline to fly regional jet aircraft directly from Oklahoma City and Tulsa to the East and West coasts, bypassing hub airports. In November 2000, the city of Tulsa approved the issue of $30 million in Tulsa Industrial Authority bonds for Great Plains after the Legislature awarded the carrier $18 million in tax credits.
The industrial authority mortgaged Air Force Plant 3 property adjoining Tulsa International Airport for the $30 million, which would be loaned to Great Plains. The airports trust, in turn, agreed to buy that property if the airline defaulted.
The bank made the loan on Dec. 21, 2000, and Great Plains began service in April 2001. It filed for bankruptcy on Jan. 23, 2004.
Great Plains sold the tax credits for $15 million to a third party and repaid half the money it owed the bank.
The airports trust contended that its refusal to buy the Air Force Plant 3 property stemmed from an FAA ruling that it would be an illegal diversion of airport revenues as it would amount to a subsidy to an airline, which is prohibited.
World Publishing Co., the former publisher of the Tulsa World, invested $100,000 in cash in Great Plains and committed to providing advertising in exchange for preferred stock.
The lawsuit was the second brought by the bank against the trust. Former Tulsa Mayor Kathy Taylor used some $7 million from the city's sinking fund to settle the previous case. The action was later determined by the Oklahoma Supreme Court as illegal and the money was returned to the a