Friday, November 21, 2014

Government questions fraud judgment against CEO seeking daily Youngstown-Warren Regional Airport (KYNG) flights


The U.S. Department of Transportation wants answers to some questions before deciding if it will give a stamp of approval to an airline that has applied to provide daily flights between Youngstown Warren Regional Airport and O'Hare International Airport in Chicago.

A letter from Lauralyn Remo, Chief of the DOT'S Air Carrier Fitness Division, asks the legal counsel for Aerodynamics Incorporated for information and an update on the status of a civil lawsuit filed last year in federal court against ADI CEO Scott Beale.

A jury found in favor of one of Beale's former business partners who claimed he was defrauded by Beale. The jury awarded compensatory damages in the amount of $500,000 and punitive damages in the amount of $100,000.

In October, the judge hearing the case threw out a request by Beale to throw out the judgment as excessive.

DOT is asking ADI for a copy of the original complaint filed in the case, as well as the judgment and the status of the case.

Chief Remo points out in her letter that this is a second attempt by the DOT to obtain information on Beale's legal case.

The letter from DOT notes that the documents requested pertain directly to the compliance disposition of one of ADI's key personnel.

The government has an obligation to determine if the company has access to resources sufficient to begin operations without posing a risk to consumers.

The letter from DOT also asks for citizenship information for ADI's Chief Inspector Robert Anderson, Chief Pilot R.K. Smithley, and Director of Maintenance Matthew Moreau.

The DOT also asks for the status of an FAA investigation simply identified with the number 2015SO65002.

ADI has fifteen days to respond to the request from DOT.

The public is permitted to file comments on ADI's application for service. According to the online federal database, two comments have been filed, but only one can be accessed by the public.

The anonymous posting claims it was submitted on behalf of “various interested entities,” and questions the financial stability of Aerodynamics Incorporated. The unknown author claims that the agreement between ADI and the airport will place consumers at risk.

The air carrier pointed out in a previous filing that it is assured a 5% profit margin on the Youngstown Warren Regional Airport service under a $1.2 million revenue guarantee provided by the airport, the Western Reserve Port Authority, Mahoning County, Trumbull County, various private sector corporations and YNGAir Partners, a nonprofit organization providing community based support for the airport.

ADI summed up the guarantee by asserting, “Such assurance is unheard of in the context of certificate applications, which ordinarily involve a significant commercial risk on the part of the applicant. By virtue of the revenue guarantee, ADI's initial pattern of scheduled service will be essentially risk-free.”

Local airport officials have expressed confidence that ADI will pass DOT inspection, and predict that flights could begin in March.

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