ISU alum overpays for airplane former president damaged

Iowa State University announced today that it sold the Cirrus SR22 airplane mostly used by former President Steven Leath for $450,000.

According to a statement on the university’s website, “ISU considered using a broker and a bid process to sell the plane. However, after evaluating broker responses to the RFP, bid responses and other market factors, ISU decided to sell the plane directly.” The university had purchased the Cirrus for $498,000 in 2014, spending a total of $470,000 after trading in an older plane for $28,000.

The buyer was Midwest Aviation Equipment, LLC, a company registered with the Iowa Secretary of State’s Office just last month. Dennis Munson was the LLC’s registering agent; the Associated Press reported that he is an ISU alumnus and “says he’ll use the plane to fly to his logistics company’s warehouses.” That company, Linn Star Transfer, operates in twelve states.

This document shows six entities bid on the Cirrus in April. Munson submitted the highest bid (for $426,000) on behalf of Midwest Truck Leasing, a subsidiary of Linn Star Transfer.

Munson’s first bid was already $71,000 higher than the second-highest bid of $355,000. Why he created a new company to buy the Cirrus for $24,000 more than he had bid in April is unclear.

ISU is fortunate an alumnus was willing to pay a premium price for this airplane, despite a July 2015 hard landing by Leath. When ISU disclosed earlier this year that the Cirrus would likely be listed for between $429,000 and $480,000, several private pilots told me that with the plane’s damage history, they would be surprised if it sold for more than $400,000. Two appraisers hired by the universities produced wildly different estimates of the plane’s market value: $667,712 and $432,000.

The university has not completed a review of its Flight Service, to determine whether it makes sense to keep employing professional pilots to fly personnel on ISU’s larger King Air 350 airplane.

Any relevant thoughts are welcome in this thread. Leath’s last day as ISU president was in early May. He is due to start work as president of Auburn University in mid-July.

P.S.- This language in the purchase and sale agreement caught my eye (all-caps in original):

“Except as provided otherwise in this Agreement, this Aircraft is sold ‘AS IS.’ Except as otherwise provided herein, SELLER MAKES NO WARRANTIES WITH RESPECT TO THE AIRCRAFT OR ITS EQUIPMENT OR LOGBOOKS, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WARRANTIES AS TO THE ACCURACY OF THE AIRCRAFT’S LOGBOOKS.”

According to a pilot source, that is standard language in contracts for aircraft, not a sign of particular problems with this plane’s logbooks. Leath’s private pilot’s log was never properly scrutinized, and a full record of flights he took in ISU’s Cirrus has never been made public.

UPDATE: Munson told Foley his “company was already in the market for a Cirrus when he learned Iowa State’s was coming up for sale.”

He said that he believes he received a fair price, adding that he doesn’t know Leath and has few ties to Iowa State these days.

Munson said he felt comfortable buying the plane after discussions with Classic Aviation of Pella, which had repaired the plane’s damage.

But he also wanted to avoid attention surrounding his acquisition of the notorious plane.

“I told Iowa State I hope nobody calls me,” he said. “But I was prepared for one.”

Disclaimer: I know very little about aviation compared to a pilot. Still, I don’t understand why Munson would believe he paid a fair price when none of the other interested buyers bid more than $355,000. And if Munson’s company was already planning to purchase a Cirrus, why did he register a new company for this deal instead of buying through the trucking subsidiary? Maybe there is a business accounting reason I’m not aware of.

  • More money for the school is good, but...

    Well, as someone currently attending ISU, I’m glad that they managed to get some extra money from somewhere considering the emails we’ve gotten about budget cuts.

    Of course, I have a feeling that money isn’t really going to trickle down and help with the budget shortfalls caused by our state legislature/governor cutting money for education. It’s probably going to go towards a new private plane. Does the school president really need a private plane? That part I really don’t know.

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