Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Thomas Fattorusso, the Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the unsealing of a four-count Indictment charging LARS WINKELBAUER, ABILASH KURIEN, CARLTON LLEWELLYN, ROBERT SCHIRMER, SKYE XU, BENJAMIN WEI, a/k/a/ “Ben Wei,” ALVARO LOPEZ, FABIOLA CINO, ORLANDO WONG, and PATRICK LAU, a/k/a “Pat Lau,” in connection with a massive scheme to defraud Polar Air Cargo Worldwide, Inc. (“Polar”), a leading cargo airline, of tens of millions of dollars in revenue and the honest services of its employees. Nine defendants were arrested today. KURIEN, LLEWELLYN, SCHIRMER, and LAU will be presented in federal court in Manhattan this afternoon. WEI and WONG will be presented later today in federal court in the Central District of California. LOPEZ and CINO will be presented later today in federal court in the Southern District of Florida. WINKELBAUER was arrested today in Thailand and is pending extradition to the United States. SKYE XU remains at large.
U.S. Attorney Damian Williams said: “As alleged, the 10 defendants charged today conducted a widespread scheme that tainted nearly every aspect of Polar Air Cargo Worldwide’s operations and that cost the company an estimated $52 million in losses. The defendants, all of whom were either employed in high-level positions by Polar or were vendors reliant on business arrangements with Polar, allegedly showed a blatant disregard for the integrity of their companies in favor of lining their own pockets. Their pervasive fraud ends today, and each defendant now faces substantial prison time for their alleged crimes.”
FBI Assistant Director Michael J. Driscoll said: “For more than a decade, the defendants allegedly utilized a complex set of schemes at the expense of Polar Air to line their own pockets. The indictments today serve as a reminder to any unscrupulous actors attempting complex frauds – the FBI will hold you accountable in the criminal justice system.”
IRS-CI Special Agent in Charge Thomas Fattorusso said: “Today’s charges are the opening salvo against a decade-long scam by a small group of Polar’s executives and others that allegedly tainted every aspect of its business operations. These arrests and charges today will hopefully begin the process of righting the alleged wrongs of those charged and put the company on a path to integrity, which its hardworking employees and legitimate customers deserve.”
As alleged in the Indictment:
From at least in or about 2009 through in or about July 2021, LARS WINKELBAUER, ABILASH KURIEN, CARLTON LLEWELLYN, ROBERT SCHIRMER, SKYE XU, BENJAMIN WEI, ALVARO LOPEZ, FABIOLA CINO, ORLANDO WONG, and PATRICK LAU participated in a massive scheme to defraud Polar. At all relevant times, WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER (collectively, the “Executive Defendants”) were senior executives of Polar. XU, WEI, LOPEZ, CINO, WONG, and LAU (collectively, the “Vendor Defendants”) owned and operated various Polar vendors and customers. The Executive Defendants agreed to accept millions of dollars in kickbacks from the Vendor Defendants and also reaped substantial financial benefits as a result of their secret ownership interests in certain Polar vendors, in exchange for ensuring that those vendors received favorable business arrangements with Polar. The fraud they perpetrated — which involved a substantial portion of Polar’s senior management and at least 10 customers and vendors of Polar — led to pervasive corruption of Polar’s business, touching nearly every aspect of the company’s operations, for over a decade.
Polar’s business involved numerous outside vendors and customers. Polar relied heavily on third-party, general sales agents (“GSAs”) in the United States to sell cargo space on its planes. In turn, the GSAs hired by Polar often sold available cargo space to freight forwarding vendors, which had been hired by downstream customers to coordinate transportation logistics for large quantities of goods. Polar also contracted with ground handling vendors to load and unload cargo and with trucking vendors to transport cargo from domestic locations to the appropriate airports. In addition, Polar contracted with other partners for a variety of business reasons, including to secure cargo space on airline routes not serviced by Polar flights. The scheme to defraud Polar touched on each aspect of these operations.
Together, the Executive Defendants and the Vendor Defendants defrauded Polar by corrupting Polar’s relationships with GSAs, freight forwarders, and other vendors, including those providing ground handling and trucking services. Unbeknownst to Polar, the Executive Defendants utilized their positions within Polar to secure, among other things, favorable contracts, valuable cargo space, favorable shipping rates, and enrollment in various incentive programs for the Vendor Defendants and their entities. In return, the Vendor Defendants paid the Executive Defendants kickbacks in various forms, including, for example, in payments calculated per kilo of cargo shipped with Polar or as a percentage of the revenue earned as a result of a vendor’s relationship with Polar. In addition, the Executive Defendants, in various combinations, held concealed ownership positions in certain companies which contracted with Polar and that were, in at least one case, associated with the Vendor Defendants. As a result, the Executive Defendants received ownership distributions based, in large part, on revenue derived from contracts with Polar — contracts that had been secured and, often times, renewed due to, in large part, the recommendation of the Executive Defendants with conflicts of interest.
To conceal the kickbacks and conflicted ownership interests from Polar, and thereby to continue the fraud scheme, WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER often directed the kickbacks and ownership distributions be paid to limited liability companies with non-descript names that they, in fact, controlled. Additionally, the Executive Defendants communicated amongst themselves and with the Vendor Defendants about the scheme primarily using personal email accounts, while the Vendor Defendants conducted official Polar business with the Executive Defendants primarily using their professional email accounts.
As a result of the scheme, the Executive Defendants, along with two co-conspirators who also worked as senior executives at Polar, received unlawful payments, either directly or through various limited liability companies they controlled, in excess of approximately $23 million in kickback payments or disbursements received as a result of their ownership of conflicted companies. Additionally, a financial analysis conducted at Polar’s direction estimates that, as a result of the fraudulent scheme, Polar suffered at least approximately $52 million in losses between in or about 2009 and in or about July 2021.
In the Summer of 2021, Polar discovered documentary evidence of the conflicted ownership arrangements and kickback agreements. Shortly thereafter, Polar terminated the employment of WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER, and reported the conduct to law enforcement authorities. Polar has continued to cooperate with law enforcement authorities through the investigation.
* * *
WINKELBAUER, 47, of Bangkok, Thailand, KURIEN, 45, of Wilton, Connecticut, LLEWELLYN, 55, of Highland Mills, New York, SCHIRMER, 58, of Port Jefferson Station, New York, XU, 40, of West Covina, California, WEI, 58, of San Marino, California, LOPEZ, 50, of Aventura, Florida, CINO, 45, of Aventura, Florida, WONG, 60, of Manhattan Beach, California, and LAU, 43, of Flushing, New York, are each charged with one count of conspiracy to commit wire fraud and honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER are also charged with one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding work of the FBI and IRS-CI. Mr. Williams also thanked the United States Attorney’s Offices for the Central District of California and the Southern District of Florida as well as the Justice Department’s Office of International Affairs and Thai authorities for their assistance in the investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Katherine Reilly and Danielle Kudla are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described therein should be treated as an allegation.
Originally published at https://www.fbi.gov/contact-us/field-offices/newyork/news/ten-defendants-charged-with-decade-long-multi-million-dollar-scheme-to-defraud-international-cargo-airline
The post Ten Defendants Charged With Decade-Long, Multi-Million-Dollar Scheme To Defraud International Cargo Airline first appeared on NORLY NEWS.
originally published at Law - NORLY NEWS