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28th Jun 2001, 05:17
Justice Department joins suit against Bergt airline
FALSE CLAIMS ACT: Feds accuse ACE of bilking Postal Service, seek triple damages.
By Richard Mauer
Anchorage Daily News
(Published June 27, 2001)
The U.S. government has joined the whistle-blower lawsuit of a former employee of Anchorage entrepreneur Neil Bergt, accusing the air cargo line operated by Bergt and his family of bilking the U.S. Postal Service out of $365,000.
The Justice Department is seeking triple damages -- more than $1 million -- for alleged violations of the federal False Claims Act by Alaska Central Express of Anchorage.
In a lawsuit filed Monday, the government says that during a span of nearly three years ending Feb. 26, 1999, Alaska Central Express routinely accepted payments for mail it carried between major airports as if it were delivered to the Bush. Because of the difference in rates, the Postal Service made 21 overpayments to Alaska Central Express ranging from $62.50 on Aug. 2, 1996, to $87,389 on Dec. 27, 1996.
The airline knowingly accepted the overpayments despite its legal obligations to refund the money and used false records to "conceal, avoid or decrease its obligation," the government said.
Anchorage attorney Tim Petumenos, representing Alaska Central Express, said Tuesday afternoon that he had just received the government's complaint and wouldn't comment except to say that the airline "has defenses." He has 20 days to file a formal response.
In its lawsuit, the government says that Bergt, his son Mike, and Neil Bergt's wife, Anne Butler, run the airline, though it only named the airline and its San Diego-based holding company, Western States Investment Group, as defendants. According to the complaint, the holding company owns 51 percent of the airline stock and Butler owns the rest.
Neither Neil Bergt nor Mike Bergt returned messages left at their work telephone numbers.
The case stems from a federal lawsuit brought last year and filed under seal by Albert Wilt, who held positions of comptroller, general manager and chief financial officer of several Bergt companies, including Alaska Central Express, Alaska Refining, Alaska Diversified Properties and Bergt's passenger airline, MarkAir, which collapsed under overwhelming debt in 1995.
Last month, Wilt began serving a 21-month sentence at the minimum-security federal penitentiary in Sheridan, Ore., for embezzling $368,800 from Alaska Central Express -- nearly the same amount asserted to have been overcharged.
Wilt thought he was justified in embezzling the money, some of which he believed he was owed from the MarkAir debacle, and some of which he donated to organizations that help AIDS victims, said his attorney, Phillip Benson.
"Ultimately he realized that what he did was inexcusable and he stood up and took his medicine," Benson said. Wilt pleaded guilty to wire fraud, forgery and tax code violations and must pay the money back.
Wilt's lawsuit was brought under the federal False Claims Act, which stems back to the profiteering scandals that beset the Union Army in the Civil War. The law allows individuals to bring suit on behalf of the United States when the government has been cheated and to receive up to 30 percent of the money collected as a bounty. If the government decides to join a case, as it has done in Wilt's, it adds its considerable investigatory might.
Benson said investigators from the U.S. Postal Service inspector general's office independently corroborated the overpayments alleged by Wilt.
According to Wilt's original lawsuit, which was unsealed when the government joined the case, Mike Bergt was in charge of postal operations for the cargo line. In September 1996, Wilt, as accounting director, noticed a $100,000 Postal Service overpayment. He called postal officials and arranged for repayment.
When Mike Bergt told his father about Wilt's actions, Neil Bergt "berated Wilt in the presence of other ACE employees, telling Wilt he was 'stupid,' that he had just given away more than $100,000, that he would never be a smart businessman and that he was destined for failure," the lawsuit charged.
Employees continued to tell the Bergts of additional overpayments over the next two years, but the Bergts' "warnings and threats" intimidated them from alerting the Postal Service and the money was never returned, the suit said.
For those same two years, according to the government's indictment of Wilt, he plotted how he would steal the money from Alaska Central Express, and he finally acted on June 12, 1998, by moving money from one company to another through a series of wire transfers and checks before it landed in his own account three days later.
When the loss was discovered and cargo line officials went to Anchorage police, Wilt went to federal authorities, Benson said in an interview.
But he didn't immediately start his False Claims Act lawsuit. In an interview, Wilt's criminal defense attorney, Robin Koutchak, said that arose out of an argument she was having with the federal prosecutor, whom she thought was going all out against her client but who seemed uninterested in prosecuting Wilt's allegations of contract violations.
"I told him he was a chicken," Koutchak said in an interview. Later, discussing her anger with another lawyer, she was referred to Benson, a former Alaskan who lives in Minnesota and specializes in False Claims Act cases, she said
Reporter Richard Mauer can be reached at [email protected].
FALSE CLAIMS ACT: Feds accuse ACE of bilking Postal Service, seek triple damages.
By Richard Mauer
Anchorage Daily News
(Published June 27, 2001)
The U.S. government has joined the whistle-blower lawsuit of a former employee of Anchorage entrepreneur Neil Bergt, accusing the air cargo line operated by Bergt and his family of bilking the U.S. Postal Service out of $365,000.
The Justice Department is seeking triple damages -- more than $1 million -- for alleged violations of the federal False Claims Act by Alaska Central Express of Anchorage.
In a lawsuit filed Monday, the government says that during a span of nearly three years ending Feb. 26, 1999, Alaska Central Express routinely accepted payments for mail it carried between major airports as if it were delivered to the Bush. Because of the difference in rates, the Postal Service made 21 overpayments to Alaska Central Express ranging from $62.50 on Aug. 2, 1996, to $87,389 on Dec. 27, 1996.
The airline knowingly accepted the overpayments despite its legal obligations to refund the money and used false records to "conceal, avoid or decrease its obligation," the government said.
Anchorage attorney Tim Petumenos, representing Alaska Central Express, said Tuesday afternoon that he had just received the government's complaint and wouldn't comment except to say that the airline "has defenses." He has 20 days to file a formal response.
In its lawsuit, the government says that Bergt, his son Mike, and Neil Bergt's wife, Anne Butler, run the airline, though it only named the airline and its San Diego-based holding company, Western States Investment Group, as defendants. According to the complaint, the holding company owns 51 percent of the airline stock and Butler owns the rest.
Neither Neil Bergt nor Mike Bergt returned messages left at their work telephone numbers.
The case stems from a federal lawsuit brought last year and filed under seal by Albert Wilt, who held positions of comptroller, general manager and chief financial officer of several Bergt companies, including Alaska Central Express, Alaska Refining, Alaska Diversified Properties and Bergt's passenger airline, MarkAir, which collapsed under overwhelming debt in 1995.
Last month, Wilt began serving a 21-month sentence at the minimum-security federal penitentiary in Sheridan, Ore., for embezzling $368,800 from Alaska Central Express -- nearly the same amount asserted to have been overcharged.
Wilt thought he was justified in embezzling the money, some of which he believed he was owed from the MarkAir debacle, and some of which he donated to organizations that help AIDS victims, said his attorney, Phillip Benson.
"Ultimately he realized that what he did was inexcusable and he stood up and took his medicine," Benson said. Wilt pleaded guilty to wire fraud, forgery and tax code violations and must pay the money back.
Wilt's lawsuit was brought under the federal False Claims Act, which stems back to the profiteering scandals that beset the Union Army in the Civil War. The law allows individuals to bring suit on behalf of the United States when the government has been cheated and to receive up to 30 percent of the money collected as a bounty. If the government decides to join a case, as it has done in Wilt's, it adds its considerable investigatory might.
Benson said investigators from the U.S. Postal Service inspector general's office independently corroborated the overpayments alleged by Wilt.
According to Wilt's original lawsuit, which was unsealed when the government joined the case, Mike Bergt was in charge of postal operations for the cargo line. In September 1996, Wilt, as accounting director, noticed a $100,000 Postal Service overpayment. He called postal officials and arranged for repayment.
When Mike Bergt told his father about Wilt's actions, Neil Bergt "berated Wilt in the presence of other ACE employees, telling Wilt he was 'stupid,' that he had just given away more than $100,000, that he would never be a smart businessman and that he was destined for failure," the lawsuit charged.
Employees continued to tell the Bergts of additional overpayments over the next two years, but the Bergts' "warnings and threats" intimidated them from alerting the Postal Service and the money was never returned, the suit said.
For those same two years, according to the government's indictment of Wilt, he plotted how he would steal the money from Alaska Central Express, and he finally acted on June 12, 1998, by moving money from one company to another through a series of wire transfers and checks before it landed in his own account three days later.
When the loss was discovered and cargo line officials went to Anchorage police, Wilt went to federal authorities, Benson said in an interview.
But he didn't immediately start his False Claims Act lawsuit. In an interview, Wilt's criminal defense attorney, Robin Koutchak, said that arose out of an argument she was having with the federal prosecutor, whom she thought was going all out against her client but who seemed uninterested in prosecuting Wilt's allegations of contract violations.
"I told him he was a chicken," Koutchak said in an interview. Later, discussing her anger with another lawyer, she was referred to Benson, a former Alaskan who lives in Minnesota and specializes in False Claims Act cases, she said
Reporter Richard Mauer can be reached at [email protected].