Ex-Manager Sentenced for Role in Defrauding Delta of Millions Over 10+ Years
Jeff Edwards February 25, 2015
A former managerial employee of Delta’s will spend a large chunk of his retirement in federal prison after being sentenced for defrauding the airline out of more than $36 million.
Former Delta Air Lines employee Paul Anderson, 57, has been sentenced to six years and eight months in prison, and ordered to pay more than $36 million in restitution and forfeit his retirement accounts as punishment for defrauding the legacy carrier. His lengthy stay in federal prison will be followed by several years of supervised release.
In September 2014, Anderson pled guilty to submitting false invoices to his employer in a scam that spanned more than a decade and netted more than $36 million in ill-gotten gains. According to a report by Atlanta NBC affiliate WXIA, Anderson was hired by Northwest Airlines in 1979. He began defrauding his employer as early as 1999, and he continued the scheme after Northwest merged with Delta in 2008.
Anderson’s co-conspirator, Michael Yedor, 62, submitted invoices to the airline from a phony company named Airborne Voice and Data for work that was never performed. Anderson, then a manager at the airline, approved the fake invoices and shared in the proceeds.
Yedor was sentenced last month to 10 years in federal prison followed by three years of supervised release. He was also ordered to pay more than $72 million in restitution for his role in the scheme.
U.S. Attorney Sally Quillian Yates found the pair’s crimes went beyond common embezzlement, telling WXIA in June of last year: “The longevity and scope of the scheme to defraud Delta is simply astonishing.”
[Photo: iStock]
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So he enjoyed his wealth longer than the sentence he received!
It would be extremely unlikely for an external audit firm to be able to catch a fraud like this. Despite the fraud totalling millions of dollars over years an external audit firm will only select a sample of invoices to test and those tests are designed to determine systematic concerns, not individual instances of fraud. And in a case like this where you have collusion, even if the audit firm had identified one of the invoices in question, it would have held up to their testing as the supporting documentation would have agreed to the amount paid. This seems to have been a internal control issue where there were not appropriate levels of review or segregation of duties, or if they were in place by design, they weren't operational. Makes you wonder how many others like this are going on in other companies that just haven't been identified.
I am actually curious as to how much they actually took (maybe 50-100mil?) and then on top of that why in the hell did you not stop after about 25-50 mil and retire then? LOL
The restitution? Easy. Any criminal restitution can be discharged in a Chapter 13 bankrupcy. All the person has to do is serve their time in jail, then file bankruptcy when they get out. Under Chapter 13, they, make small monthly payments (based on their income) for 60 months, then after the 60 months are up, the rest of the restitution is discharged (forgiven). So yes, Delta is out 99& of the money.
RELANGFORD above is absolutely right. And there are a lot of other people at Delta who need to explain why they did not have appropriate controls in place.