August 2, 2019
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — StartUp Airline Fails to Get off the Ground — Owner Guilty in Fraud & Tax Evasion
In 2014, Michael Morisi, 59, received a $5 million loan from TowneBank guaranteed by the Newport News/Williamsburg-based Peninsula Airport Commission for his startup airline, People Express Airlines.
Within a month, PEX had drawn down nearly the entire loan amount. PEX operated for approximately three months before suspending service. In the aftermath of the suspension of operations, various creditors sought repayment from PEX in 2014 and 2015.
At the same time, Morisi opened new bank accounts to receive insurance proceeds and avoid the seizure of funds. Morisi provided false representations to creditors (including the PAC, which paid over $4 million to satisfy the TowneBank loan) claiming that no funds were available.
He made large purported back salary payments to himself and other executives in lieu of paying creditors. When the first bank account was made subject to a state tax lien, Morisi moved accounts again so that he could receive and divert additional insurance proceeds.
He also filed false tax returns for three years omitting income and failed to file returns for two additional years.
Morisi pleaded guilty to one count of wire fraud and one count of filing a false federal income tax return.
He faces a maximum penalty of 23 years in prison when sentenced on November 15.