Fuel Company Owner Pleads Guilty To Defrauding Ryan International Airlines

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Fuel Company Owner Pleads Guilty To Defrauding Ryan International Airlines

March 12, 2014 - A former owner and operator of a Florida-based airline fuel supply service company pleaded guilty today to participating in a kickback scheme to defraud Illinois-based Ryan International Airlines, a charter airline company located in Rockford, Ill., the Department of Justice announced.

Sean E. Wagner, the former owner and operator of Aviation Fuel International Inc. (AFI), pleaded guilty in the U.S. District Court for the Southern District of Florida in West Palm Beach to one count of conspiracy to commit honest services wire fraud.

On Aug. 13, 2013, a grand jury returned an indictment against Wagner and AFI, charging them for their roles in a conspiracy to defraud Ryan International Airlines. According to the indictment, Wagner and AFI made kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, in exchange for awarding business to AFI.

According to court documents, from at least as early as December 2005 through at least August 2009, Wagner and others at AFI made kickback payments to Kepple totaling more than $200,000 in the form of checks, wire transfers, cash and gift cards. The charges against AFI were dismissed on Feb. 21, 2014.

Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government including the U.S. Department of Defense and the U.S. Department of Homeland Security.

“These types of kickback schemes subvert the competitive process and increase costs to American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously prosecute individuals who defraud American taxpayers and businesses.”

Wagner pleaded guilty to one count of conspiracy to commit honest services wire fraud. The count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine. As a result of the ongoing investigation, four other individuals have pleaded guilty and have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $580,000 in restitution.

In February 2012, Ryan furloughed Pilots, Flight Attendants and support staff. On March 6, 2012, Ryan filed for Chapter 11 bankruptcy, citing "unexpected and dramatic reductions in military flying." On April 1, 2012, Ryan lost its bid to continue flying for the United States Department of Homeland Security (DHS). The loss of the DHS contract resulted in the immediate grounding of four MD-80 aircraft to cut costs. On January 11, 2013, Ryan International Airlines' CEO announced that the airline had gone into liquidation. Its staff were dismissed and it ceased operations.