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Former Charter Airline Executive Sentenced for Stealing From Passenger Escrow Account

On January 11, 2019, Judy Tull, former chief executive officer at Myrtle Beach Direct Air and Tours (Direct Air), a now-defunct air charter operator, was sentenced in U.S. District Court, Newark, New Jersey, to 94 months’ imprisonment, 60 months’ supervised release, an $800 special assessment fee, and $19.6 million in restitution. Tull and her co-defendant, Kay Ellison, were convicted in March 2018 on conspiracy, wire fraud, and bank fraud charges. Ellison, Direct Air’s former vice president and managing partner, and Robert Keilman, former chief financial officer, were sentenced in November 2018 for their roles in the scheme.
In March 2012, Direct Air ceased its public charter operations and filed for bankruptcy protection. After the bankruptcy filing, the Office of the Secretary of Transportation learned that Direct Air officials may have misappropriated pre-booked ticket revenue that, per DOT regulations, was supposed to be kept in an escrow account.
Evidence presented at trial showed that from October 2007 through March 2012, Ellison and Tull artificially inflated the amount Direct Air was entitled to receive from the escrow account. They sent the falsified amount in a letter that asked the escrow bank to release the funds. To cover up their fraud, Ellison and Tull falsified profit and loss statements to suggest the company was making money. They sent the falsified documents to credit card companies and banks to trick them into continuing their business relationships with Direct Air.
Testimony at trial established that two financial institutions incurred losses of nearly $30 million because they had to issue refunds to the thousands of passengers whose money was stolen by the defendants.
DOT-OIG conducted this investigation with the Department of Justice Criminal Division Fraud Section’s Securities and Financial Fraud Unit.