Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Plea agreement will end U.S. case against former airline fuel supply service company owner, (Mar 6, 2014)

By Jeffrey May, J.D.

A former owner and operator of Florida-based airline fuel supply service company Aviation Fuel International Inc. (AFI) pleaded guilty today to participating in a kickback scheme to defraud Illinois-based Ryan International Airlines, a charter airline company. Sean E. Wagner entered a guilty plea in the federal district court in West Palm Beach to one count of conspiracy to commit honest services wire fraud (U.S. v. Wagner, Case 9:13-cr-80162-DTKH).

In 2013, a grand jury indicted Wagner and AFI on charges of engaging in a conspiracy to defraud Ryan International through kickback payments made to a Ryan International employee in exchange for awarding business to the company. According to the five-count indictment, Wagner and AFI conspired to make kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan International. Ryan International provided air passenger and cargo services to corporations, individuals, and the U.S. government, including the Departments of Defense and Homeland Security.

In exchange, Kepple awarded contracts to AFI and another company controlled by Wagner for fuel supply services, according to the government. Between December 2005 and August 2009, Wagner, AFI, and others made more than $200,000 in kickback payments to Kepple, the government alleged. The conspirators also allegedly agreed to inflate the price of fuel and equipment sold to Ryan and to split the proceeds between them.

Wagner pleaded guilty to one count of conspiracy to commit honest services wire fraud. The count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals. The charges against AFI were dismissed on February 21.

The Justice Department’s investigation into fraud and anticompetitive conduct in the airline charter services industry is ongoing. Just last month, Craig Perez, a former AFI employee, pleaded guilty to a one-count felony charge of obstructing the investigation. According to the charge, Perez in 2011 knowingly destroyed relevant files from his laptop computer relating to his employment at AFI during 2007 and 2008 with the intent to impede the probe. As a result of the ongoing investigation, four other individuals have pleaded guilty and have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $580,000 in restitution, according to the Justice Department.

Companies: Ryan International Airlines; Aviation Fuel International Inc.

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