Seven Years in Prison for $520,000: Airline Executive Sentenced for Accepting Kickbacks

September 17, 2013

By: Sara Kropf

Ryan International Airlines has had a couple of rough years. The company had once found success flying mail for the U.S. Postal Service and providing military transport for personnel and cargo. But as military spending declined, Ryan found its revenues also dwindling. In March 2012, it filed for Chapter 11 bankruptcy. In early 2013, the holding company for charter-air company Astra-Jet signed a purchase agreement for Ryan’s assets.

It’s hard to know exactly where the Rockford, Illinois-based company will be in a few years. But we know with certainty where its former vice president of ground operations will be—in prison.

Wayne Kepple pleaded guilty in November 2011 to three counts of conspiracy to commit wire fraud and honest services fraud as well as three counts of wire fraud. The guilty plea arose out of Mr. Kepple’s scheme to solicit and accept kickbacks from companies who sought to do business with Ryan. Mr. Kepple was sentenced on September 12, 2013, to 87 months in prison for his role in the scheme. (It’s not clear why it took nearly two years to sentence Mr. Kepple though it’s entirely possible he was busy helping the government build its case against his former co-conspirators.)

According to the plea agreement, Mr. Kepple was in charge of contracting with providers of goods and services to Ryan and also responsible for reviewing and approving the invoices submitted by those providers to the company. This mean that “[t]he defendant had a fiduciary duty to act honestly and faithfully in all business dealings with Ryan.”

From October 2005 to August 2009, Mr. Kepple participated in at least three separate conspiracies to solicit and accept kickbacks in return for awarding Ryan’s contracts to those companies that paid the kickbacks. All in all, he accepted approximately $520,000 in kickbacks.

Three other individuals have already been sentenced for their role in paying Mr. Kepple the kickbacks: David Chiasson was sentenced to 16 months; James Murphy was sentenced to 23 months and Robert Riddell was sentenced to 24 months. The government’s press release notes that Mr. Kepple’s 87-month sentence “reflects his central role in multiple kickback schemes.”

A fifth individual, Sean E. Wagner, and his company, Aviation Fuel International, were indicted for their role in paying Mr. Kepple kickbacks as well. Mr. Wagner supposedly paid Mr. Kepple $200,000 in kickbacks through 40 separate payments, including checks, wire transfers, gift cards and cash.

The driver of Mr. Kepple’s sentence was the loss calculation. He agreed in his plea agreement that the improper benefit conferred was between $2.5 million and $7 million which increased his guideline range by 18 levels. Ultimately, the agreed-upon sentencing range was 87 to 108 months, so Mr. Kepple was lucky to be sentenced at the low end of the range.

Published by Kropf Moseley

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