CNMI’s Saipan Air Sues Arizona Partner Company For Fraud

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CNMI’s Saipan Air Sues Arizona Partner Company For Fraud Swift Air LLC charged with defrauding CNMI airline start-up

By Andrew O. De Guzman

SAIPAN, CNMI (Marianas Variety, July 13, 2012) – Saipan Air is suing in federal court top officials of Arizona-based Swift Air LLC for its failure to provide aircraft to the Commonwealth of the Northern Mariana Islands company.

Named defendants were Donald A. Stukes, Jeffrey Conry, Hank Tobert, Boris Van Lier, and 10 John Does.

Saipan Air, which is represented by attorney Steven Pixley, is asking $50 million in punitive damages, special damages to be proven at trial, disgorgement of ill-gotten gains, restitution, attorney fees, costs, and for other relief. The complaint is asking for a jury trial.

The complaint said Stukes, Conry, and Tobert are managers of Swift Air, while Van Lier is the vice president and chief operating officer.

The complaint’s claims are for fraud, Racketeer Influenced and Corrupt Organization Act, or RICO, and civil conspiracy.

Since gaining a U.S. carrier license is a lengthy process, the complaint said Saipan Air planned to go into service using a wet lease of aircraft, crew, maintenance, and insurance agreement with an existing certified part-121 carrier.

This arrangement is common practice for start-up airlines. While such leases are expensive, they permit airlines to quickly start and establish themselves while going through the steps to become part-121 carriers themselves, the complaint added.

Saipan Air targeted to have its inaugural flight last July 1.

Before it could deliver its promise of two Boeing 757 aircraft for Saipan Air’s flight, Swift Air, LLC filed a petition Chapter 11 protection on June 27.

On or about Dec. 20, 2011, the complaint said the defendants obtained an ownership interest in Swift Air which was established on or about March 16, 2005.

The defendants "did not pay any financial consideration for this transfer of ownership interest in Swift Air. Moreover, the defendants did not infuse any capital into Swift Air," the complaint said.

The "defendants used Swift Air as a mere sham and shell to defraud Saipan Air and otherwise operated its entity as their alter ego," the complaint added.

Saipan Air wired $1.2 million to Swift Air as part of their agreement.

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