Indictment brought forward in Polar Air Cargo fraud scheme

Ten former executives and vendors linked to Polar Air Cargo were indicted on fraud charges of $52 million, spurred from a 2021 investigation by the airline, according to a probable cause affidavit unsealed Wednesday from the U.S. Attorney’s Office for the Southern District of New York. Former high-ranking Polar Air Cargo executives and vendors of the carrier are accused of defrauding the airline for more than a decade while pocketing $23 million in the process, officials said. [caption id="attachment_57135485" align="alignright" width="413"] Credit: Polar Air Cargo[/caption] The former executives are charged with accepting money from the vendors in exchange for preferential treatment causing the airline a loss of $52 million. Of those 10, nine were arrested, documents show. The indictment charged Polar Air’s former executive Vice President and Chief Operating Officer Lars WinkelBauer , VP of Marketing Abilash Kurien , VP of Operations Systems Carlton Llewellyn and Senior Director of Customer Service and Capacity Robert Schirmer . The vendors charged include Skye Xu , Benjamin Wei , Alvaro Lopez , Fabiola Cino , Orlando Wong and Patrick Lau . Xu remains at large, according to the indictment. From 2009 to 2021, the former Polar officials received kickbacks for providing favorable business arrangements while maintaining secret ownership interests in the vendors, the documents state. Polar ops Polar Air Cargo is majority-owned by Atlas Air. DHL Express owns a minority share of the $3.2 billion airline, per Flightglobal. It has six Boeing 747s, two Boeing 767s and eight Boeing 777s in its fleet. According to the indictment, Polar Air Cargo operations rely on third-party, general sales agents in the United States to sell available cargo space. General sales agents then sell the space to freight forwarding vendors to coordinate transportation logistics. Documents show that cargo space sales were directed toward companies that Polar Air executives received incentives from. In large part, all parts of the business — ground handlers, trucking services and forwarders — were affected by the scheme. “If these people are convicted, and they find that wrongdoing has affected employees, I would imagine that airlines will be exceedingly cautious and increase oversight of their employees,” Brandon Fried , executive director of the Airforwarders Association , told Air Cargo Next. “ And that’s not just employees, by the way, it’s those agents who the airline retains to represent that period, right, and keep an eye on what their activity is.” Fried said the news is prompting the AfA to conduct internal research. The information in the indictment, if true, is very disappointing, he added. “I’m no lawyer, but in working this through the years, you are responsible not only for the acts of your employees but also those who retain to act on behalf of your company,” Fried said. “So, I would imagine that airlines, you know, are going to be vigilant and very cautious in that oversight.” To deter attention from the scheme, the former Polar Air executives established limited liability companies to hide the kickbacks and incentives, per the indictment. They communicated via personal emails to carry out their dealings, documents show. Multiple charges “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,” U.S. Attorney Damian Williams said in the indictment. “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” Williams added. “Their pervasive fraud ends today, and each defendant now faces substantial prison time for their alleged crimes.” Winkelbauer, Llewellyn, Kurien, Schirmer, Lopez, Wong and Cino were charged with conspiracy to commit wire fraud and services wire fraud, conspiracy to commit money laundering and wire fraud — each carries a sentence of up to 20 years in prison. Winkelbauer, Llewellyn, Kurien and Schirmer were also charged with honest services wire fraud, which carries a sentence of up to 20 years, according to court papers. “We have taken note of the actions of the United States Attorney’s Office for the Southern District of New York,” DHL’s Head, Americas Communications Dan McGrath told Air Cargo Next. “As a minority shareholder of Polar Air Cargo Worldwide, DHL does not comment on third-party litigation.” Atlas Air did not respond to inquiries by Air Cargo Next. Polar Air Cargo was cooperative in the investigation and continues to work with officials as the matter moves forward, the indictment states. The arrests of those involved in the fraud is a step in “righting alleged wrongs and put the company on a path to integrity,” IRS-Criminal Investigation Special Agent in Charge Thomas Fattorusso said in the statement. Said Fried: “I'm sure that people are letting this saturate now. And, you know, hopefully, this is the extent of the malfeasance but it's hard to tell at this point. But I'm sure as it unfolds, we'll see.”

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