Go! exec defends action in lawsuit

Suspicions over CFO Peter Murnane's actions were slow to emerge, he testifies

Jonathan Ornstein, founder of discount interisland airline go!, took the stand in federal court yesterday, saying he did all he could to investigate an executive who has been accused of destroying evidence and lying to the court.

Ornstein was the last witness in a hearing that set the stage for trial in Hawaiian Airlines' lawsuit against Mesa.

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Mesa Air Group Chief Executive Jonathan Ornstein testified under intense questioning yesterday that he did everything he could to investigate his longtime friend and Chief Financial Officer Peter Murnane after a federal bankruptcy judge ruled that Murnane had lied to the court.

But Hawaiian attorney Sidney Levinson questioned the lack of urgency of Ornstein's investigation after Bankruptcy Judge Robert Faris ruled last October that Murnane had given two "false" statements. Levinson said that only recently, when it became apparent that Murnane was in over his head, did Mesa finally take action.

Murnane, accused by Mesa on Tuesday of deleting files to cover up his interest in pornographic material, was to have been Mesa's key witness in defending a lawsuit against the airline.

On Friday, Mesa placed Murnane on paid administrative leave -- four days before the start of the hearing -- so that Mesa could investigate reports of Murnane's alleged misconduct.

Hawaiian, which was seeking to use the deleted material in a lawsuit it has filed against the Phoenix-based airline, is alleging that Mesa used confidential information obtained as a potential investor during the Hawaiian bankruptcy to enter the Hawaii market as interisland carrier go!

With Ornstein being the last witness, the hearing is expected to wrap up this morning, with Bankruptcy Judge Robert Faris to decide whether he wants to grant Hawaiian's motion for a default judgment against Mesa or take the matter under advisement until after the scheduled trial.

In yesterday's hearing, Ornstein said he had no reason to believe that Murnane, a longtime friend of 31 years and a former college classmate, had been less than truthful about his actions.

Discrepancies included using identical wording from a Hawaiian Airlines information memorandum for potential investors for a Mesa information memorandum that Mesa had prepared for potential investors in its go! operation.

"It was so unbelievable to me, I felt it had to be an accident," Ornstein said.

But Ornstein said during questioning and again afterward that he took steps when it became clear that Murnane wasn't being truthful.

"I listened to his explanation, and his explanation was getting more convoluted and I wasn't comfortable with the answers I was getting," said Ornstein, who acknowledged that Murnane told him about needing to delete pornographic material.

Ornstein said he referred the matter to Mesa's legal department, hired outside counsel for Mesa and had meetings with Murnane.

"We did everything we could," he said. "The fact of the matter is I've known this person 31 years. He's been truthful to me. Until that time, I had never reason to doubt him about anything. So when he came me with a reasonable explanation I accepted it. As evidence became less clear and his answers became less responsive, we continued to take more action."

Mark Dunkerley, president and CEO of Hawaiian, said the impressions that Hawaiian had coming into the hearing have been solidified by the testimony.

"It's been revealing," he said.