2 sentenced to prison over failed airline plan
The men had been working on a financial plan for Hawaiian Air
Two financial backers of an ill-fated Hawaiian Airlines reorganization plan have been sentenced to prison in U.S. District Court in Manhattan, N.Y., for conspiracy to commit bankruptcy fraud.
William Spencer, who was charged with lying about the ability of his firm's trust to infuse $300 million to bring the airline out of bankruptcy, last week received 51 months in prison and a $12,500 fine from District Judge Loretta Preska. He has appealed the sentence to the 2nd Circuit Court in Manhattan.
Paul Boghosian, who also was indicted for commercial bribery, received 24 months for agreeing to pay $500,000 to an FBI agent posing as a hedge fund manager in exchange for a $2.5 million loan. Preska gave him less prison time than Spencer because of a family situation.
Boghosian is expected to appeal, said Megan Gaffney, a spokeswoman for the U.S. Attorney's Office in the Southern District of New York.
Each count had carried a maximum prison term of five years.
Veteran Hawaiian Airlines pilot Robert Konop, who teamed with Spencer and Boghosian on the failed reorganization plan but was not indicted, earlier this month was held in contempt by federal Bankruptcy Judge Robert Faris in Honolulu. Konop was ordered to pay sanctions of $379,340, minus the $125,000 contempt settlement already paid by attorney Randal Yoshida and any amount that is awarded and actually paid by attorney Timothy Philipp.
Yoshida was the local attorney for Konop, Spencer and Boghosian while Philipp was the group's mainland-based attorney.
Konop is appealing Faris' order and Philipp's case is still pending. The payments would go to Hawaiian Airlines' parent company, Hawaiian Holdings Inc., and investor RC Aviation LLC, which financed a succesfull reorganization plan for the carrier and is Hawaiian Holdings' controlling shareholder.
The sentencing of Spencer and Boghosian last Wednesday concluded another unusual twist in the tale of Hawaiian Airlines' bankruptcy saga, which began when its Chairman and Chief Executive John Adams was ousted in May 2003 by Faris for an ill-timed $25 million tender offer that Faris said placed the interests of the shareholders ahead of those of the creditors.
Konop was fired by the airline a year ago for his role in the failed reorganization plan.