Swift Air executives’ involvement in other airlines that later filed for bankruptcy shows a pattern of their fraudulent scheme, according to Saipan Air Inc. counsel Steven Pixley.
Pixley said Swift Air executives Jeffry Conry’s and Boris Van Lier’s fraudulent scheme included the acquisition of Swift Air without any consideration and a plan to ultimately file for bankruptcy after obtaining as much money from Saipan Air as they could obtain.
Pixley disclosed the Swift Air executives’ alleged fraudulent scheme in Saipan Air’s opposition to Conry’s and Van Lier’s omnibus motion in limine.
In their motion, Conry and Van Lier, through counsel, want to exclude eight classes of evidence, primarily on grounds of relevancy and unfair prejudice.
In Saipan Air’s opposition, Pixley pointed out that just before Swift Air filed for bankruptcy on June 27, 2012, the defendants tried to obtain an additional $1.5 million from Saipan Air. When Saipan Air refused to give them more money, they immediately filed bankruptcy, Pixley said.
Saipan Air also alleged in its first amended complaint that Conry was involved in various airline ventures resulting in bankruptcy filings.
“It is submitted that the evidence of Conry’s prior pattern of bankruptcy filings is relevant to support Saipan Air’s claims because it shows a pattern of conduct,” Pixley pointed out.
The lawyer said Conry’s involvement with Direct Air is especially relevant to show a fraudulent scheme and pattern of fraudulent conduct.
Pixley said the first amended complaint alleges that Direct Air filed for Chapter 7 bankruptcy on April 12, 2012—a date directly relevant to this litigation.
Direct Air initially filed for Chapter 11 bankruptcy protection on March 15, 2012.
Pixley said once Direct Air filed for bankruptcy, the defendants initiated contact with Saipan Air pushing for the ACMI Agreement (aircraft, crew, maintenance, and insurance).
Pixley said the defendants needed additional funding because they could no longer use the Direct Air “cash machine.”
The lawyer added that Saipan Air alleges that on Dec. 12, 2011, Conry lied to Saipan Air that Avondale Ventures, the new owners of Swift Air, has $70 million in assets.
He said the same lie was repeated to Saipan Air’s chief operating officer Adam Ferguson during his trip to Phoenix, Arizona on March 21, 2012.
“Saipan Air intends to introduce evidence showing a pattern of fraudulent conduct in that these very same misrepresentation were made to the owners of Direct Air during the acquisition of Direct Air in September 2011,” Pixley said.
Pixley said iConry admitted n his deposition that he knew that when Avondale Company-Avondale Aviation acquired Direct Air, there was representations made to Direct Air owners that Avondale had $70 million in assets.
Pixley said while Conry discounts his involvement with Direct Air, Swift Air’s then chief restructuring officer Donald Stukes testified at his deposition that Conry was an owner of Direct Air and was actively involved in its operations.
Pixley said Stukes testified at his deposition that Conry told him that Direct Air was a “cash machine” and that he “led the charge” in meeting with the owners prior to acquisition of that entity.
The lawyer noted that Conry obtained an ownership interest in Direct Air under circumstances very similar to the Swift Air acquisition.
Pixley said Saipan Air has alleged in its first amended complaint that a salient component of the “fraudulent scheme… of obtaining money and other property from Saipan Air” included the payment of money to Van Lier.
Van Lier allegedly received payments of approximately $800,000 from Swift Air between March 30, 2012 and June 26, 2012.
Pixley said the defendants’ argument that Saipan Air has not shown that these payments were fraudulent seems to put the cart before the horse—while Saipan Air concedes that it has the burden of proving the elements of fraud, this burden begins when the jury trial commences on Feb. 2, 2015.
Pixley said Saipan Air will demonstrate at trial that Van Lier was reimbursed for personal expenses by Swift Air.
In its lawsuit, Saipan Air is seeking $2,541,370.78 in compensatory damages and $10 million in punitive damages.
Conry and Van Lier are currently employed by Arizona-based Swift Air, which emerged from bankruptcy in 2013.
Saipan Air filed the racketeering lawsuit against Conry, Van Lier, and Stukes in July 2012.
Swift Air filed for bankruptcy protection in Arizona shortly after notifying Saipan Air that it would not deliver two 757 aircraft and one 737 aircraft for Saipan Air’s program.
The Feb. 2 trial will be against the Conry and Van Lier relating to the fraud claims.