Two Former Airline Industry Executives Convicted of Orchestrating Multimillion Dollar Scheme to Steal Passenger Money from Escrow
A federal jury in the District of New Jersey found the former chief executive officer and the former vice president of a now-bankrupt public air charter operator guilty for their roles in a scheme to steal millions of dollars in passenger money for future travel from an escrow account, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and Special Agent in Charge Todd A. Damiani of the U.S. Department of Transportation Office of Inspector General’s New England Field Office.
Judy Tull, 73, and Kay Ellison, 58, both of Edenton, North Carolina, were each convicted of one count of conspiracy to commit wire fraud affecting financial institutions and to commit bank fraud, four substantive counts of wire fraud affecting financial institutions and three substantive counts of bank fraud following a seven-day trial. Tull is the former CEO of Myrtle Beach Direct Air and Tours (Direct Air), which was headquartered in Myrtle Beach, South Carolina, with operations in Daniels, West Virginia, and Ellison is its former vice president and managing partner. Sentencing has been scheduled for July 17, 2018 before U.S. District Judge Susan D. Wigenton of the District of New Jersey, who presided over the trial.
“Judy Tull and Kay Ellison stole passengers’ money to try and prop up their failing company,” said Acting Assistant Attorney General Cronan. “Their brazen scheme created a multimillion dollar shortfall that left passengers stranded at airports, and banks and credit card companies scrambling to pick up the pieces. “This important case is just the latest example of the pivotal role the Fraud Section plays in the Department of Justice’s ongoing efforts to combat white collar fraud.”
“This investigation demonstrates the Department of Transportation Office of Inspector General’s (DOT-OIG) commitment to protecting the traveling public from fraudulent schemes involving charter flight operations,” said DOT-OIG Regional Special Agent in Charge Damiani. “We will continue our vigorous efforts in preventing, detecting and prosecuting fraud that erodes the public’s confidence in the integrity of transportation-related goods and services.”
According to evidence presented at trial, from October 2007 through March 2012, Tull and Ellison engaged in a scheme to steal passengers’ money for future travel from an escrow account by artificially inflating the amount of money the defendants claimed they were entitled to receive, and by sending this falsified amount in a letter to the escrow bank telling the escrow bank to release the money. The evidence further established that to cover up their fraud, the defendants falsified profit and loss statements to make the company look like it was making money rather than losing money, and sent these falsified documents to credit card companies and banks to trick them into continuing to do business with the company.
Testimony at trial established that two financial institutions sustained losses of nearly $30 million for having to refund thousands of passengers their money that should have been held for them in escrow, but was actually stolen by the defendants as part of their fraud.
Robert Keilman, 73, of Marlboro, New Jersey, Direct Air’s former Chief Financial Officer, pleaded guilty to charges stemming from his role in this scheme and is awaiting sentencing.
This case was investigated by DOT-OIG. Trial Attorneys Michael T. O’Neill and Cory E. Jacobs of the Criminal Division’s Fraud Section are prosecuting the case. Former Fraud Section Trial Attorney L. Rush Atkinson also investigated the case.
Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website for more information.