Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Aviation fuel company, owner indicted for alleged scheme to defraud airline, (Aug 15, 2013)

By Tobias J. Gillett, J.D., LL.M.

A grand jury in the federal district court in West Palm Beach has indicted a Florida-based aviation fuel brokerage company and its former owner on charges of engaging in a conspiracy to defraud Illinois-based Ryan International Airlines through kickback payments made to a Ryan employee in exchange for awarding business to the company, the Justice Department has announced.

According to the indictment, Sean E. Wagner and his company, Aviation Fuel International Inc. (AFI), conspired with other co-conspirators, including a second unidentified company that was also controlled by Wagner during the relevant period, to make kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan. Ryan, a Rockford, Illinois-based charter airline, provided air passenger and cargo services to corporations, individuals, and the U.S. government, including the Department of Defense and the Department of Homeland Security.

In exchange, Kepple allegedly awarded contracts to AFI and the unidentified company for fuel supply services. From at least as early as December 2005 until at least August 2009, Wagner, AFI, and others made more than $200,000 in kickback payments to Kepple, the indictment asserts. Kepple, the unidentified company, AFI, and Wagner also allegedly agreed to inflate the price of fuel and equipment sold to Ryan and to split the proceeds between them.

“The conspirators traded contracts for kickbacks and took affirmative steps to hide their illegal scheme, including wiring payments to personal bank accounts and making secret cash payments,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division. “The division will continue to aggressively prosecute companies and individuals that seek to defraud the government and U.S. taxpayers by thwarting the competitive process.”

The indictment charges AFI and Wagner with one count of conspiracy to commit honest services wire fraud, two counts of wire fraud, and two counts of mail fraud. Each count carries a maximum sentence of 20 years in prison, as well as a $250,000 fine for individuals and a $500,000 fine for corporations. The indictment also provides for criminal forfeiture of any property which constitutes or is derived from proceeds traceable to the violations.

Wagner was arrested on July 19, 2013, in Weston, Florida on a one-count criminal complaint. Over the course of the Justice Department’s investigation, four individuals, including Kepple, have pled guilty, with three of them sentenced to serve sentences ranging from 16 to 24 months in prison and ordered to pay more than $220,000 in restitution. Kepple is currently awaiting sentencing.

Companies: Ryan International Airlines; Aviation Fuel International Inc.

News: Antitrust AntitrustDivisionNews