Suffolk man pleads guilty to fraud
Published 10:35 pm Thursday, July 25, 2019
A Suffolk man pleaded guilty Thursday to fraud in connection with the failure of People Express Airlines in 2014 and the filing of a false income tax return.
According to court documents, Michael Morisi, 59, was the former president of People Express Airlines Inc., which engaged in failed start-up operations at the Newport News/Williamsburg International Airport, according to a press release from the U.S. Attorney’s Office for the Eastern District of Virginia.
Morisi led the push to get the airline operational, despite a failed track record of obtaining private investments and significant outstanding liabilities, the press release stated.
Email newsletter signup
A switch to a focus on the public commitment of funds led to the airline obtaining a $5 million loan from TowneBank that was guaranteed by the Peninsula Airport Commission. The loan was funded in June 2014.
Within a month, the airline had drawn down nearly the entire loan amount, the press release stated. It operated for approximately three months before suspending service. In the aftermath of the suspension of operations, various creditors sought repayment from the airline in 2014 and 2015.
At the same time, Morisi opened new bank accounts to receive insurance proceeds and avoid the seizure of funds, the press release stated. Morisi provided false representations to creditors — including the airport commission, which paid more than $4 million to satisfy the TowneBank loan — claiming that no funds were available, the press release stated. It also said 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 Nov. 15. Actual sentences for federal crimes are typically less than the maximum penalties.