May 03, 2012

GoLocalWorcester on Direct Air

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Good story on the 200,000 bond that Direct Air had to put up.  Let me explain:

  1. Direct Air was suppose to put all monies from tickets sales , not vouchers or club memberships, into escrow.  If the flight ever cancelled, you get your money back.
  2. Just make sure that your monies are safe, Direct Air put up a 200,000 bond
  3. Problem is that there were no checks and balances on the escrow account and the Direct Air Executives stole the money so now there is only $1,000,000 in the account
  4. In the meantime the credict card processor for Direct Air, JetPay, has been processing claims but they are not sure if they will survive since there is only $1,000,000 in escrow.
  5. What happens if JetPay goes out of business to those people who used credit cards to buy tickets?

As a last resort if you do not get your monies back from JetPay, you can go to the bonding company but they have claims far in excess of 200,000 and do not see this being settles until January of 2013.  To top it off there will be no monies or assets left when the Chaprter 7 bankruptcy is wrapped.

The story here is why the hell doesn't the FAA or the airports that had Direct Air flying into them require audited financial statements to ensure that these guys were not stealing monies or better yet require them to increase their bond to $2,000,000 not $200,000.    Sorry, but at some point our Airport Director needs to answer some of these questions?


11 comments:

Jahn said...

Is DA a publicly held co.? If not that"s one possible reason.

Even if not public their banks ( if any) would probably have req'd them.

Then again for an airline they basically had no assets...so maybe there was no bank borrwing. Maybe what equipment they did have was leased which very often a sign of bad credit, finacially weak, etc.

Also an audit(if they had one) only speaks to the fair representation of the financial statements at a particular point in time. ...often as the co's year end.

God dam accoutants are all crooked, too............can u say Enron...can u say Arthur Young CPA's (Constant Pain [in] Ass)

I mean look at City of Worc.....what....maybe close to $3/4T to $1T in unfunded debt and it gets audited every year and comes back "clean"

This is looking more and more like a well planned, well thot out heist. Can u say ..a 2nd sequel......can u say Ocean's 13.

This Has the aura of your typical small local travel agency scam ...book em and then book with the $$$$$...happens all the time in that industry.

this is The Same mindset that knocks on your door and says we're working down the street doing u neighbors driveway and we have some mix left over and u driveway could use a re-surfacing. Here's an FYI..........no one orders too much mix in that business.....the stuff is way too costly and it only last a few hours (less in colder weather) before it's cooled off too much to use..........so right off the bat they're lying to ya....and if bite for the bait......they'll drive to the plant and buy more mix and then the 4" thickness they promised ya will be more 3/8" thickness, b/c that as thin as they can possibly lay it down.

The Venerini Nuns, those scammed by Austy 2 decades ago, they guy just locked up for scamming elders, and others all succumbed to scammers. Problem is DA prob seemed like a big airline to thsoe not familar with DA's operations......not that big is nec. better.

Bill Randell said...

Direct Air was a private company. I am not saying you should audit their books.

You should audit their escrow account to ensure that the public who are buying tickets to fly them out of your airport will not get ripped off.

Bill

Steve Foley said...

"What happens if JetPay goes out of business to those people who used credit cards to buy tickets?"

Simple, I buy their claim against their credit card issuer for $.50 on the dollar. Then I go after their credit card issuer and double my money.

Strange that nobody's taken me up on this offer. I wonder why....

Bill Randell said...

Steve

You and I have gone back and forth on this.. You may be 110% right.. I have been told by a couple different banks that if they do not get their monies back from JetPay they will not refund monies back to their customers.

Again you may be 100% right so you should put an ad on line giving 50 cents on the dollar like you said for anyone who is waiting for credit card reimbursements and you will double your monies.

Bill

Steve Foley said...

Bill,

The credit company is obligated by law to refund the money if the claim is opened within 60 days of receipt of the statement.

I suspect the people you spoke to were talking about claims that were not filed within the timeframe specified in the law, like the person I know who purchased a voucher last June. She's out of luck because she only had until some time last September to file the claim.

I'm talking about the people who were able to file claims within 60 days of receiving their statements. Those are the people protected by the law.

Anyone who did not file a timely claim can hope the credit card company will refund the money as a gesture of good will, but they are not legally entitled to a refund from the card issuer.

jahn said...

Steve, how do you get names of all the people that Jet Pay stiffed? Run a T&G 1/2 page ad? Start a website? Stand in front of city hall with a sandwich board?

I always look with lotsa questions upon things that seem to be EZ money. E.g.

a. I cant be the first one to have thot of this idea?

b. This seems too good to be true?

c. This seems too MLM-esque

d. What am I missing here?

Steve if you thot it was really this EZ, you wouldnt be here telling the world about the little gold mine you have :).

Contrary to what Amelia Amway might tell ya.........those that got solid $$$ making ideas aint tellin' anyone else about their plans and how they want to share the spoils of their venture with others. Capitalism just dont work that way. Just ask Obuma.

I got me a littel gold mine up in the Quabbin reservation and I aint tellin' no one about it.

jahn said...

Steve, how do you get names of all the people that Jet Pay stiffed? Run a T&G 1/2 page ad? Start a website? Stand in front of city hall with a sandwich board?

I always look with lotsa questions upon things that seem to be EZ money. E.g.

a. I cant be the first one to have thot of this idea?

b. This seems too good to be true?

c. This seems too MLM-esque

d. What am I missing here?

Steve if you thot it was really this EZ, you wouldnt be here telling the world about the little gold mine you have :).

Contrary to what Amelia Amway might tell ya.........those that got solid $$$ making ideas aint tellin' anyone else about their plans and how they want to share the spoils of their venture with others. Capitalism just dont work that way. Just ask Obuma.

I got me a littel gold mine up in the Quabbin reservation and I aint tellin' no one about it.

Steve Foley said...

Jahn,

The reason I'm making this offer is because I'm confident that NOBODY will ever take me up on it. It requires that someone submitted a timely claim with their credit card company, and the credit card company refused the claim because Jetpay and/or Direct Air refused the claim.

The credit card company is prohibited by law from refusing the claim, so there's really no chance this has happened.

Bill tells me he has heard of people who's claims were refused, or of banks claiming they would refuse properly submitted claims. I'm pretty confident that there are none.

Jahn said...

Bill, the problem is you can audit their escrow acct as of Dec 31 and the acct could be run bone dry on Jan 1st.

Bill Randell said...

Jahn

yes and no, there should have been an outside company performing monthly audits and signning off on requests for cash which would be tied directly to flights that about to take off


bottom line is that there were no checks and balances on this excrow account and we have what we have today

Jahn said...

OK, maybe something more should have been done. But even if they took all the prepaid cash and had a separate, independent bonded escrow company handle it, DA could still scam even that that 3rd party escrow co.

All they would have to do is tell the escrow co the that cash prepaid for say a Dec flight was was for an Oct flight and basically get their hands on the money 2 months before (Oct) they incurred the bulk of the expenses for the Dec flight.

Not unlike how banks lend money to new car dealers on a per unit ( per car) basis. It's called a floor plan, basically to finance what is on the dealership showroom floor and lot. D'ship is supposed to pay the bank the day that new Escalade is sold, but in fact the trade practice is to fudge it a little bit and hold on to the cash longer by not notifying the bank immediately when the Escalade is sold.

Car dealership gets in hot water and viola they walk off with cash from the Escalade that was sold for which no money was remitted to the bank. Multiply that by a dozen Escalades at $50,000 a pop and an unscrupulous dealer walks away with $600,000 and the underlying collateral left the lot weeks/months ago. Banks do show up and do spot checks, but short of doing daily spot checks, there is no real practical way to control it. This was more prevalent back before the days of car titles, but the same scammer principle applies... i.e. accumulate some elses cash and then not perform...be it a flight or an immediate remittance to the bank......and the thief is off the Carribean.