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HomeUncategorizedDOJ charges 10 with fraud in global air freight kickback scheme

DOJ charges 10 with fraud in global air freight kickback scheme

10 people have been charged with defrauding Atlas Air Worldwide subsidiary Polar Air Cargo.

Elements of the US criminal justice system, including the United States Attorney for the Southern District of New York, the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS), have cooperated to charge the individuals with fraud.

Polar, a subsidiary of recently acquired Atlas Air Worldwide Holdings, is based in New York.

The charges are based on allegations that the 10 defendants were involved in a decade-long scheme to defraud Polar of tens of millions of dollars in revenue – indeed, in criminal conduct that “led to pervasive corruption of nearly every aspect of [the] company’s operations,” the US Department of Justice (DOJ) said.

Eight of the ten defendants are presenting in federal court. The ninth has been arrested in Thailand and is pending extradition to the US, while the tenth remains at large.

They have all been named by the DOJ.

Some of them were Polar executives, others were vendors with business relationships with Polar.

US Attorney Damian Williams stated: “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.”

The indictment alleges that from at least in or about 2009 through to about July 2021 the fraud perpetrated, which involved a substantial portion of Polar’s senior management and customers and vendors of the airline, “led to pervasive corruption of Polar’s business, touching nearly every aspect of the company’s operations, for over a decade”.

The fraud, it is alleged, saw relations with GSAs, freight forwarders, handling and trucking service providers corrupted.

The defendants who worked for Polar are said to have utilised their positions within the carrier to have secured, among other things, favourable contracts, valuable cargo space and favourable shipping rates, and enrollment in various incentive programmes for the vendors.

In return, the ‘Vendor Defendants’ paid the Polar ‘Executive Defendants’ kickbacks in various forms, including 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.

FBI assistant director Michael Driscoll observed: “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 added: “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.”

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