Former CEO and Managing Partner of Defunct Public Charter Flight Company Indicted for Multimillion-Dollar Wire Fraud and Bank Fraud
The former CEO and a managing partner of a now-defunct public charter flight company were indicted today on fraud and conspiracy charges for their alleged roles in a multimillion-dollar fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Todd A. Damiani of the U.S. Department of Transportation Office of Inspector General made the announcement.
Judy Tull, 70, of Denton, Texas, and Kay Ellison, 55, of Kentucky, were each charged with one count of conspiracy to commit wire fraud and bank fraud, seven counts of wire fraud and seven counts of bank fraud. Tull and Ellison were the co-owners and, respectively, the CEO and managing partner of Southern Air & Tours, doing business as Myrtle Beach Direct Air & Tours (Direct Air), a public charter flight operator headquartered in Myrtle Beach, South Carolina.
The U.S. Department of Transportation’s regulations required charter operators to financially protect passengers either by posting a security or by keeping passenger payments for future flights in an escrow account with an approved bank. According to the indictment, Direct Air maintained such an account at a bank in New Jersey. Under the escrow agreement, the bank would not release these payments to Direct Air until Direct Air submitted a request for payment and a summary report detailing the completed flights and passengers, according to the indictment.
The indictment alleges that Tull, who handled Direct Air’s flight operations, and Ellison, who was involved in its customer reservations: made or caused others to make “ghost” reservations for fictitious passengers in Direct Air’s reservation system; submitted fraudulent documents, including request for payments and summary reports to the bank; requested payment for certain amounts on two occasions; and concealed the criminal activity and their participation in the criminal activity.
According to the indictment, in or around March 2012, Direct Air ceased operations and at that time, passengers had purchased tens of thousands of tickets for future travel, the funds for which should have been in the escrow account. At that time, however, the indictment alleges that the escrow account was $30 million short.
An indictment is merely a formal accusation. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The U.S. Department of Transportation’s Office of Inspector General investigated the case. Trial Attorney L. Rush Atkinson and Senior Litigation Counsel Carol L. Sipperly of the Criminal Division’s Fraud Section, and Deputy Chief Scott McBride and Assistant U.S. Attorney Andrew Kogan of the District of New Jersey are prosecuting the case.