Story ID: 
Questionable ‘Customers’ Still Target the Charter Business
By: Matt Thurber
Caption: Fraudulent charters, nonexistent airplanes and thousands of dollars of absconded funds serve as a warning to watch out for potential scammers.
Word Count: 2298
An AIN article last year about an individual who allegedly booked and flew charter flights without paying the provider more than $220,000 prompted readers to submit additional information about suspected aviation-related scams. In one case brought to AIN’s attention, an individual expressed interest in large transactions that never came about and ended up costing a service provider a significant amount time and also harmed this provider’s reputation. In another case, a charter company that might not even exist allegedly kept money for charter trips that never took place.

The purpose of this article is to alert readers to the existence of fraudulent activity in some segments of the charter marketplace, and to illustrate what is driving legitimate participants to seek reforms that would protect both customers and providers. Because formal charges have not been brought against the suspected scammers in all cases, AIN has withheld the names and identities of the people and companies alleged to have engaged in such fraud.

Nowadays it can be difficult to determine whether an earnest phone-caller is not only serious about a request but also has the money to pay for it. One caller contacted Skyflite Aviation vice president Winsor Brown early last year with a detailed story about wanting to purchase a number of large airplanes using his own funds and money from other investors. According to Brown, this individual claimed to be a stockbroker and provided information on a well known social media website that supported his claims. This person listed a previous job as CEO of a specific company for which AIN could find no website or any other records. He also listed on his profile that he was president of an aircraft management company during most of the first decade since 2000.

AIN contacted the CEO of the management company, who responded: “This guy never worked at [our company]. I have been here all 32 years and he was never with our company.”

When AIN first looked at the individual’s profile on the social media site, the listing for his work with the management company included the company’s logo. The CEO said in an email to AIN, “We became aware of him when contacted by someone he was trying to scam.”

The social media website has a process for users to submit information about possibly false listings, and the CEO said that he tried this process; however, as of January 13, the profile had not changed, although the management company logo was no longer there. This social media website has no telephone numbers on its website for either customers to contact the company or for members of the media to contact press representatives. AIN submitted a request for more information about this situation to the company email address but never received a response. The website user agreement requires that users provide accurate information.

AIN contacted the individual via the social media website and received a response from him. However, when AIN asked him about the management company listing in his profile, he did not respond any further, and he has not removed the information claiming that he worked there for nearly 10 years.

This individual also listed on the social media website that he received a bachelor of business administration degree from a noted business university. AIN contacted the university to verify this information and was referred to National Student Clearinghouse, a service that many educational institutions use. After submitting a request to verify that this person did graduate from the university, AIN received this information from the Clearinghouse: “Unable to confirm using the information you provided.”

Brown provided more information to AIN about the individual’s attempt to work with Skyflite. According to Brown, he contacted him with a proposal involving the purchase of many large aircraft (more than 19 seats) and a helicopter that would be used to transport sports teams in the northeast U.S. The individual represented himself as a big-city stockbroker and someone who could raise funds for such a project, claiming that he had done this before with a Boeing 727 and millions of dollars invested. “We put the project together and were to become an operating partner,” Brown told AIN. This included coordinating a possible aircraft purchase with a major business aviation manufacturer, which sent a representative from its foreign headquarters to Skyflite to work on the project.

The project unraveled after Brown requested letters of commitment and actual funds to support the project. According to Brown, while at first the individual had claimed to be a major investor in the project, he later said that he was only a facilitator for other investors. At this point, Brown’s wife, Sharon, began looking more carefully at this person’s background. She says she found that he held no stockbroker license in the state where the big city was located and that “numerous individuals that he stated he knew did not know him.” She also contacted the management company and received the information that the individual had never worked there.

“While we did not suffer any real monetary loss,” Brown added, “there were nevertheless numerous hours expended to no avail. And we made ourselves look really bad in an aircraft manufacturer’s eyes. The purpose of this email is to alert all [charter] operators to be on your ‘A’ game so you are not affected as well.”
 Questionable Actions
AIN was contacted last year by a charter broker based on the East Coast. In March 2013, according to the broker, a person posing as a charter provider caused his company to lose $55,000 from a $78,000 charter. The broker said he wired $78,000 to a bank account in New York to pay for a flight from Germany to Florida, to be fulfilled by this person, but the flight never took place. According to the broker's attorney, hours after the funds were wired to this company, the company sent an email canceling the trip. In fact, the lawyer stated, the business jet promised for the trip did not exist. In the following days, this person allegedly promised to repay the funds with an American Express card, a copy of which he sent to the broker, but the lawyer says it turned out that card had been canceled days before. About a month later, the broker was able to obtain $20,000 from another company that was holding some funds from this person. In any case, the broker did fulfill the trip for his customer.

The broker's lawyer sent a memo to the Federal Bureau of Investigation on May 31, 2013, outlining not only the broker's losses but also the alleged losses of other companies that were involved with this person. The memo outlined the names that this person was using and that the total amount involved in these alleged crimes was $315,000. The memo also named companies associated with this person. According to the memo, four companies lost money in transactions with this person and his companies in the respective amounts of $45,000; $65,000; $55,000; and $95,000.

The broker said that the FBI responded that it could not do anything unless a far larger amount of money was involved. So he contacted the applicable county sheriff’s office and provided information to help prove that this person was representing that he could provide an aircraft that did not exist. “We forwarded that to the sheriff’s office and they put out a warrant for [his arrest].”

The broker provided a copy of the warrant, and AIN contacted the detective involved to confirm the warrant and also the detective’s attempt more than a year ago to reach out to French police about this person. According to the email from the detective to his French counterpart: “I am confirming [we] have a felony arrest warrant on file for [this person] for fraud. He is operating a business from France and had defrauded several people in the United States. His MO is to book flight charters for people and [accept] their money when in reality he is not even booking the charters. [This person] defrauded my victim, [the broker], out of $75,000 USD. The [name of his business is XX]. And his website is [XX]. If you need further information on [this person] or anything else to open a criminal investigation on him, please contact me.”

The detective told AIN that he never heard back from France, but that the warrant for [this person’s] arrest in the U.S. remains active.

Based on information provided by the broker, AIN examined the website purportedly representing this person and his companies. The website claims that the company offers charter, aircraft management, jet cards and other services and that it has received a new large-cabin business jet into its fleet. AIN telephoned and emailed the company in an attempt to confirm information on the website and also to ask whether this person named by the broker was involved with the company. AIN also sent an internal message, via the same social media network mentioned with the previous individual, to this person, who also had a profile; no reply was received.

During the telephone call to the company, a receptionist answered and said, “We cannot reach [this person],” then asked AIN to leave a message and promised to give him AIN’s and telephone number. In response to AIN’s email requesting more information, including what happened to the funds owed to the broker, the following response came from a person with a different name at the company:

Who is the [the broker] and who is the [company named by the broker]?

I think you have some wrong informations.

Our [person] leave in Dubai and he is the representative of Middle East Group since 7 years.

Please check your informations.

We own a [large-cabin jet] who will be in operation on the next two weeks.

I m not able to give you more informations at this time.

I will ask to Mr. [this person] to contact you as soon as possible.

 AIN responded to this email, requesting further information about the large-cabin jet and other company activities, including information on the identities of the management team. We also asked whether the email respondent was the same person that the broker dealt with. As of January 13, AIN had not received further response or a telephone call from anyone at that company.

A search for the company on the Web turned up two other pieces of information. One was an advertisement on an aircraft sales website listing for $5.9 million one-tenth shares of the same large-cabin business jet that the company said it has added to its fleet. The same airplane was listed on another sales website, but priced at $6.2 million for a share of the same size. AIN could find no records of the existence of that particular jet with the registration number shown.
Avoiding Charter Scams
The amount of money involved in jet charters is large enough to attract questionable clients, and charter operators have evolved strategies to prevent illicit transactions.

“We’ve learned a lot over the years,” said Denise Wilson, president and CEO of Desert Jet, a Palm Springs, Calif. charter operator. In the early days of the company, she encountered a situation where a charter broker double-billed his client for the trip, by having the client pay the broker then pay Desert Jet separately.

Desert Jet also experienced a cashier’s check that bounced. The assumption is that cashier’s checks are guaranteed, but that isn’t true. “We had a client pay for a pretty large charter with a cashier’s check,” she recalled. “And it wasn’t till later that we got a notification from the bank that the check was no good. We initially had cashed it then put the money in the bank, then three or four days later the bank took the money back out. So we don’t accept cashier’s checks any longer.”

Now Desert Jet requires color copies of the front and back of the customer’s credit card and photo ID and verifies that the signature on the charter contract matches the signature on the ID and credit card. After vetting its regular clients, Desert Jet will accept ordinary bank checks for payment. “The risk is one-off brokers we’ve never heard of before,” she said.

Wilson works with many brokers and respects those with legitimate businesses and infrastructure, but she is wary of the broker without a merchant bank account and no financial backing. “There are a lot of great brokerage companies out there,” she said. What would help the industry and charter clients would be a broker registry with minimum requirements. “They would have to incorporate and have a checking account, not just a fax and a pretty website. We’re trying to convince the [Department of Transportation] to create a registry. That would go a long way toward protecting consumers.” Desert Jet is also a member of the Air Charter Association of North America (Acana), which sets standards for charter operator and broker members, including longevity, financial stability and references. “Acana is trying to address a lot of these issues with smaller brokerage shops,” Wilson said.

Another option is using an escrow service. European escrow provider Baltic Air Charter Association, which launched service in the U.S. last year, is supported by Shelby Financial and protects money placed on deposit for a charter. The escrow holder does not release the money until all parties involved agree.