Update: SEC IG looks into United Airlines bankruptcy

Update: SEC IG looks into United Airlines bankruptcy


By: Barbara Hollingsworth
Examiner Columnist
11/25/09 4:51 PM EST


David Kotz, inspector general of the Securities and Exchange Commission, acknowledged that the agency did not respond appropriately to allegations made in November 2007 by former pilot Dan Hanley that United Airlines violated the Sarbanes-Oxley Act during its post-9/11 Chapter 11 bankruptcy proceedings. The law was passed after financial shenanigans by Enron management cratered the energy company.

In a Nov. 3 letter, Kotz told Hanley, now head of the Whistleblowing Airline Employees Association (http://www.airline-whistleblowers.org) that after reviewing his complaint, “we did not believe that sufficient action was taken by the Office of Investor Education and Advocacy.” Kotz said he was referring the matter directly to SEC Enforcement Division senior counsel Michelle Barrans for possible criminal action.

One of Hanley’s allegations was that the Department of Justice worked out a deferred prosecution agreement with United management, essentially giving them a pass on criminal charges and allowing them to collect millions of dollars in exit bonuses while United vendors, shareholders and employees – who lost their pensions – were hung out to dry.

Hanley, a veteran pilot who was forced out of his job after complaining about lax safety at the airline, also alleges that the Chicago judge who presided over the United Airline bankruptcy proceedings maintained a $40 million bribery fund, part of which was held in a land trust in Arizona under his initials.

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----- Original Message -----

From: Dan Hanley

To: Lanny Breuer

Cc: Barbara Hollingsworth ; Eric Lichtblau ; CBS Pia Malbran ; Bloomberg Holly Rosenkrantz ; Michael Lynch ; David Cay Johnston ; Attorney Jeffrey C. Grass ; Dave Colapinto ; POGO Danielle Brian ; Shanna Devine ; Government Accountability Project Tom Devine ; Mary Schapiro ; David Kotz ; FBI Chicago Robert Grant ; US Attorney Patrick Fitzgerald ; Robert Mueller ; Attorney General Eric Holder ; Glenn A. Fine

Sent: Monday, November 23, 2009 9:46 AM

SUBJ: DEFERRED PROSECUTION AGREEMENT IN UNITED AIRLINES BANKRUPTCY

November 23, 2009

Mr. Lanny A. Breuer

Assistant Attorney General – Criminal Division

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530-0001

SUBJ: DEFERRED PROSECUTION AGREEMENT IN UNITED AIRLINES BANKRUPTCY

Dear Mr. Breuer,

I had previously written Attorney General Holder in February of this year concerning issues of alleged corruption surrounding the United Airlines post-9/11 bankruptcy that was referred to Federal Bureau of Investigation Assistant Director, Criminal Investigative Division, Kenneth W. Kaiser, who in turn provided me with what I considered an inadequate letter response in May of this year.

Because I had already been turned away at the office of the Chicago FBI in February 2009 where I had originally filed a federal complaint on February 14, 2008 (complaint #2008-9580) with advisement that FBI Chicago had no intention of investigating my allegations, it made no sense to me to contact the nearest FBI office in Atlanta with this same information. It was at this point in time that I realized that I had been marginalized by the Department of Justice/Federal Bureau of Investigation, as this determination not to investigate my claims was reached without having even reviewed the tiniest shred of evidence, or interrogated available witnesses.

In January 2009, I had also written Securities and Exchange Commissioner Inspector General H. David Kotz the enclosed letter regarding the lack of SEC response to a letter/affidavit previously submitted by me to the SEC in November 2007. Recently, I was advised in a letter from Mr. Kotz that the alleged criminality issues addressed in the affidavit were currently under SEC Compliance Section investigation under the direction of SEC Senior Counsel Michelle Barrans.

In Mr. Kotz’s letter response to me regarding a specific inquiry concerning DOJ ‘deferred prosecution agreements’ in my January 2009 letter to him, he advised that Ms. Barrans suggested that I contact the Department of Justice Criminal Division for this information. It appears that I have gone full circle on this issue yet another time.

Request is herein made to your good office to please advise me as to whether or not the FBI intends to coordinate their investigative activities with the SEC in this matter, or if a ‘deferred prosecution agreement’ has already been reached between the Department of Justice and the management of United Airlines concerning alleged criminality associated with the United Airlines post-9/11 Chapter 11 bankruptcy.

President Obama campaigned on a promise of a greater openness of government with guaranteed enhancement of federal whistle blower protections. In this regard, I would greatly appreciate your attention to this matter and will patiently await your response.

Very respectfully,

Dan Hanley

Encl: Letter dated October 18, 2007 to Christopher Cox, SEC Chairman

My sworn affidavit dated October 25, 2007 submitted to SEC Chairman Cox

Letter dated January 28, 2009 to H. David Kotz, SEC Inspector General

Letter dated February 2, 2009 to Chicago FBI Special Agent-in-Charge Robert Grant

Letter dated February 6, 2009 to Attorney General Eric Holder

Letter dated May 8, 2009 from DOJ Kenneth Kaiser

Letter dated May 20, 2009 to DOJ Kenneth Kaiser

Letter dated November 3, 2009 from H. David Kotz, SEC Inspector General



Cc: President Barack Obama

Glenn Fine - Inspector General, Department of Justice

Eric Holder, Attorney General of the United States

Robert Mueller – Director, Federal Bureau of Investigation

Patrick Fitzgerald – District Attorney, Northern District of Illinois

Robert Grant – Special Agent-in-Charge, FBI Chicago

H. David Kotz – Inspector General, Securities and Exchange Commission

Mary Schapiro – Chairman, Securities and Exchange Commission

Tom Devine – Legal Director, Government Accountability Project

Danielle Brian – Executive Director, Project on Government Oversight

David Colapinto – General Counsel, National Whistleblower Center

Jeffrey Grass – Attorney

Pia Malbran - CBS News

Katie Couric - ABC News

Holly Rosenkrantz - Bloomberg News

Barbara Hollingsworth - Washington Examiner

Eric Lichtblau - New York Times

David Cay Johnson – Author/Investigative Journalist

Print media outlets

Michael Lynch