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NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI


JOHN F. WOOD


Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.usdoj.gov/usao/mow/index.html


MARCH 4, 2008

FOR IMMEDIATE RELEASE


LEE’S SUMMIT HELICOPTER DEALER PLEADS GUILTY

TO WIRE FRAUD, MONEY LAUNDERING


LIQUIDATES BUSINESSES, AGREES TO PAY $550,000 FINE


            KANSAS CITY, Mo. – John F. Wood, United States Attorney for the Western District of Missouri, announced that the owner of a Lee’s Summit, Mo., company that purchases damaged helicopters and repairs them for resale pleaded guilty in federal court today to wire fraud and money laundering related to the fraudulent sale of a damaged engine compressor from a helicopter that crashed into the ocean.


            Robert A. Schlotzhauer, 68, of Lee’s Summit, pleaded guilty before U.S. District Judge Gary A. Fenner this morning to the charges contained in a Nov. 6, 2007, superseding indictment. Under the terms of today’s plea agreement, Schlotzhauer has liquidated the assets of his Lee’s Summit businesses, Falcon Helicopter, Inc., and Lee’s Summit Turbine, LLC, and agreed to surrender all repair-related FAA certificates. The plea agreement also stipulates that an appropriate sentence in this case is a $550,000 fine, $63,854 in restitution to Rainbow Air, Inc., 12 months of home confinement at Schlotzhauer’s expense, and a period of probation to be determined by the court.


            “Fraudulently selling damaged helicopters and parts to unsuspecting victims is criminal conduct that jeopardizes the safety of pilots and passengers,” said Wood. “My office will vigorously prosecute those who violate federal law and safety regulations for the sake of padding their profits.”


            “This investigation demonstrates that ensuring the safety of the nation's air transportation system remains a high priority for both the Office of Inspector General (OIG) and the U.S. Department of Transportation (DOT),” said Michelle McVicker, DOT/OIG Special Agent-In-Charge. “Working with the Federal Aviation Administration and our prosecutorial colleagues, we will continue our efforts to uncover suspect unapproved parts, prevent their use, and punish those who seek to compromise the integrity of DOT's safety programs.”


            Schlotzhauer acknowledged that the government could prove beyond a reasonable doubt that in 2001 he repaired and returned to service, in violation of federal law and of FAA regulations, an engine compressor that had been removed from a helicopter that crashed into the ocean. The helicopter was involved in an accident in the Pacific Ocean off the coast of Australia, and was submerged in the ocean for several hours. This aircraft was insured for $700,000 and was evaluated by an insurance adjuster to be a total loss due to complete salt water immersion and damage from the impact of the crash. Schlotzhauer purchased the helicopter for $35,000 on July 20, 2001.


            On Dec. 25, 2005, Schlotzhauer admitted, he sent an e-mail to Marvin Kottman in West Point, Neb., claiming that the compressor was involved in a hard landing after running out of gas, which he knew was false. Schlotzhauer sold the damaged compressor to Kottman for $25,000. An employee of Kottman conducted an inspection of the compressor and discovered evidence of extensive corrosion caused by the salt water. Kottman contacted Schlotzhauer, who agreed to pay $31,000 in restitution.


            On March 21, 2006, Schlotzhauer purchased a $31,000 cashier's check involving the proceeds of that wire fraud. Schlotzhauer falsely stated that the payee on the check was Deward Tharpward instead of himself, in order to conceal the ownership of the unlawful proceeds from the FAA and law enforcement. Consequently, this check was sent by Schlotzhauer to Kottman as reimbursement following the discovery of the fraud.


            Schlotzhauer paid restitution to Rainbow Air for parts the company had to replace on a helicopter it purchased from him. According to the federal indictment, Schlotzhauer purchased a second aircraft in 2001 that was involved in an accident in Dartford, England, and was sold to him as salvage for $30,650. Schlotzhauer installed key components of the second helicopter into the first helicopter, which he sold to Rainbow Air for $450,000. Rainbow Air used the helicopter to transport tourists at Niagra Falls.


            A sentencing hearing is scheduled for Sept. 15, 2008.


            This case is being prosecuted by Assistant U.S. Attorney William L. Meiners. It was investigated by the Department of Transportation, Office of Inspector General.


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This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at

www.usdoj.gov/usao/mow/index.html