$600K Scam Uncovered: Korean Air Executive Exploits Lax Oversight for Years
Korean Air underpaid the Guam Airport over $600,000 in passenger facilities charges, because they underreported the number of passengers on their flights for years. As soon as the airport caught it in an audit, the airline paid up – and started asking questions.
Their former station manager will now serve 41 months in federal prison, plus five years of supervised release, for bank fraud and money laundering and will have to pay restitution to the airline.
Between September 2015 and December 2018 he structured a scheme so that Korean Air paid him, and he paid the airport, for rent and passenger fees – and he’d underreport the number of passengers on Korean flights and pocket the difference.
- He was one of two signers for Korean Air in Guam
- He changed the address on his checking account to match the local Korean Air office
When the airport finally started an audit of the airline’s passengers and payments, the manager fled to Texas. He was indicted last year, and took a plea in the fall. Korean Air notes that when caught, the manager did not even apologize. His attorneys argued in his defense that,
- This fraud was so super obvious, it should have been caught a long time ago, and that’s on the airline. Korean Air was sending payment to the guy’s personal checking account, and he was writing personal checks to the airport.
“The defendant had put the money in his own personal account; it should have been easily found,” Mantanona said. “You don’t want to blame the victims, but if the victims had done any of their own due diligence, and checked … and had GIAA looked to see who was writing the checks that paid their bills, they would have discovered this. It wasn’t, in the defense’s opinion, a sophisticated means. It was very simple.”
- Nobody should’ve trusted the guy anyway, or more specifically that he wasn’t in a ‘position of trust’ that was abused.
There are two things here that strike me as particularly astonishing.
That’s both chutzpah and stupidity.