Tuesday, July 1, 2014

Fraud of the Week: Former Airline Employee & Co-Conspirator Indicted In $22 Million Embezzlment Conspiracy

According to the FBI, 2 men have been charged with defrauding Delta and Northwest Airlines of $22 Million:

Michael Yedor and Paul Anderson have been indicted by a federal grand jury on charges that they participated in a long-running scheme to defraud Delta Airlines of millions of dollars. Yedor was arrested in San Diego, Calif. on Saturday, June 21, 2014.
“The longevity and scope of the scheme to defraud Delta is simply astonishing,” said United States Attorney Sally Quillian Yates. “The indictment is an important first step in finally bringing these defendants to justice after so many years of engaging in fraud.”
 According to United States Attorney Yates, the indictment, and other information presented in court: Anderson had been an employee of Northwest Airlines since 1979. In 2008, Delta Airlines purchased Northwest. The two airlines merged into a single company in December 2009, at which time Anderson became an employee of Delta working in its Minneapolis, Minn., office.
The indictment alleges that, from at least 2004 through 2013, Anderson was involved with Yedor in a scheme to defraud Northwest and, later, Delta, by submitting numerous false invoices on behalf of a company, Airborne Voice and Data, purportedly owned by Yedor. The invoices sought payment from the airlines for goods provided and services supposedly rendered by Airborne Voice and Data, when in fact, both Anderson and Yedor knew that Yedor’s company had not provided any such goods or services.
The indictment also alleges that Yedor sent the invoices to Anderson to be approved. Anderson approved the fraudulent invoices, which caused the airlines to issue payments to Airborne Voice and Data. In exchange for approving each of the invoices, Anderson received a portion of the proceeds of the fraud. The indictment alleges that Yedor and Anderson caused Northwest and Delta to issue approximately $22 million in payments to Airborne on the basis of the false invoices between 2004 and 2013.
Yedor, 62, of Los Angeles, Calif., and Anderson, 57, of Apple Valley, Minn., were indicted on June 10, 2014, and have each been charged with conspiracy to commit mail fraud and ninety-six counts of mail fraud. The indictment was unsealed after Yedor’s arrest on Saturday, June 21, 2014.  ...

Update (1/12/2015):  Yedor has been sentenced to 10 years in prison in what is now believed to be a $36 million embezzlement scheme:

A Los Angeles man has been sentenced to 10 years in prison for defrauding Northwest and Delta Air Lines of more than $36 million over more than a decade, prosecutors said Friday.

Michael Yedor, 62, was sentenced by U.S. District Judge Timothy Batten after pleading guilty Oct. 20 to conspiracy to commit mail fraud. He also forfeited property such as a Beverly Hills mansion and a 71.9-foot yacht that he got from the fraud, prosecutors said.

"The scope and magnitude of this fraudulent scheme is astounding," U.S. Attorney Sally Quillian Yates said.

Yedor had been an employee of Northwest since 1979 and then Delta after the airlines merged in 2009. From at least 1999 through 2013, according to investigators, Yedor submitted invoices from a company, Airborne Voice and Data, that sought payment for goods and services that the company hadn't provided.

J. Britt Johnson, FBI special agent in charge of the Atlanta office, said Yedor's sentencing represents "the end of not only a complex scheme to defraud Northwest Airlines and Delta Airlines but also the resulting extensive federal investigation into those involved."

Yedor's accomplice, Paul Anderson, 57, of Apple Valley, Minn., a manager who had the authority to approve the payments, pleaded guilty to mail fraud on Sept. 15 and is scheduled to be sentenced Jan. 23.

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