On September 23, 2015, Robert Keilman of Marlboro, New Jersey, was charged and pleaded guilty in U.S. District Court, Newark, New Jersey. He pled to conspiracy to commit wire fraud affecting a financial institution and bank fraud in connection with his role in a multi-million dollar public air charter fraud scheme. Keilman, the former Chief Financial Officer and co-founder of the now-defunct public charter operator known as Direct Air, admitted in this OIG investigation to using fraudulent documents and inflated revenue figures to defraud a New Jersey bank and other financial institutions out of millions of dollars.
In March 2012, Southern Sky Air & Tours d/b/a Myrtle Beach Direct Air & Tours, commonly referred to as Direct Air, ceased their public charter operations that serviced Massachusetts and filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Massachusetts. After filing for bankruptcy, the Office of the Secretary of Transportation learned that Direct Air officials may have misappropriated pre-booked ticket revenue that was supposed to be kept in an escrow account per DOT regulations.
Keilman acknowledged that DOT regulations required charter operators like Direct Air to protect passengers financially by posting a security or by keeping passenger payments for future flights in a designated depository or escrow account with an approved bank. Pursuant to this regulation, Direct Air set up an escrow account with a bank headquartered in Wayne, New Jersey. According to Keilman, Direct Air and the bank agreed that money in the escrow account for future flights would not be released to Direct Air until after the flights were completed. Additionally, Direct Air would have to submit a request for payment along with summary reports detailing the flights purportedly flown.
From January 2010 through September 2011, Keilman admitted conspiring with others to engage in a "double-dipping" scheme. The conspirators fraudulently submitted release requests for passenger payments from escrow accounts disguised as "membership fees" prior to the completion of the flights. After the flights were completed, they submitted release requests for the same funds.
Keilman also admitted that he and two other Direct Air executives submitted release requests containing inflated passenger revenue figures, causing the bank to release millions of dollars in revenues for fictitious passengers. Keilman and the other executives concealed the shortfall in Direct Air’s bank account by sending fraudulent financial statements to creditors.