SEC INVESTIGATION OF ALLEGED UNITED AIRLINES BANKRUPTCY IMPROPRIETIES

January 22, 2010


The Honorable Gordon S. Heddell – Inspector General
U.S. Department of Labor
200 Constitution Avenue NW
Room S-5502
Washington, DC 20210

The Honorable Hilda Solis – Secretary of Labor
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210

Ms. Rebecca Anne Batts – Inspector General
Pension Benefit Guarantee Corporation
1200 K Street
Washington, DC 20005

Mr.Vincent K. Snowbarger – Acting Director
Pension Benefit Guarantee Corporation
Department 77430
PO Box 48277
Detroit, Michigan 48277

SUBJ: SEC INVESTIGATION OF ALLEGED UNITED AIRLINES BANKRUPTCY IMPROPRIETIES

Dear Inspector General Heddell, Inspector General Batts, Labor Secretary Solis, and PBGC Director Snowbarger,

On January 31, 2009, on behalf of the Whistleblowing United Pilots Association, I wrote the attached letter to Department of Labor Inspector General Heddell respectfully requesting his office to investigate issues pertaining to the alleged refusal of then PBGC Acting Inspecting General Deborah Springer to release specific answers to six questions regarding alleged improprieties in the distress-termination of United Airlines defined-benefit pension plans during its post-9/11 Chapter 11 bankruptcy process. To date, we have not received a timely response to this inquiry.

More specifically, responses to the following questions were made to Ms. Springer in early 2008, but not received. FOIA requests for the same information were ignored by the Pension Benefit Guarantee Corporation.

1) Request clarification and legal authority regarding the specific reasons for the ERISA 4047 waiver in light of the weak financial health of the PBGC.

2) Request specific legal clarification and rationale regarding paragraph 13 of the attached legal agreement between United Airlines and the PBGC.

3) Request confirmation that some or all of the original $5.2-billion has been returned to United Airlines with specific dollar figures and financial arrangements made to accommodate said transaction.

4) FOIA requests made indicate that there is no record of an ERISA-mandated pension audit conducted to determine the financial soundness of employee pensions before termination. Kindly provide records of the federally-mandated audit.

5) There is no record of an ERISA-mandated forensic audit being conducted after the pension terminations. Kindly provide records of the federally-mandated audit.

6) Information regarding the data used in the formulation of the Gross Average Mortality (GAM), which is employed to assess the financial soundness of pension programs is unavailable. Kindly provide the data used to formulate the GAM.

On November 3, 2009, SEC Inspector General H. David Kotz sent me the enclosed letter advising me that the Securities and Exchange Commission had wrongfully ignored through administrative improprieties the disposition of my filing an evidence package under the auspices of the Sarbanes-Oxley Act of 2002 in October 2007. He further stated that he had personally met with SEC Enforcement Senior Counsel Michelle Barans on October 29, 2009 regarding this matter and was assured by her that senior enforcement attorneys would “carefully scrutinize your allegations and concern for possible action”. IG Kotz further stated that “Ms. Barans assured me that careful scrutiny would take place”.

A review of the allegations made under Sarbanes-Oxley Section 306 paragraph 2 in the enclosed letter dated October 18, 2007 to then SEC Chairman Christopher Cox, which was part of the evidence package, you will note that it was stated:

“Additionally, during this same time frame, ERISA laws governing the distress-termination of employee pensions may have been violated. Evidence has recently surfaced (redacted fraudulent documents), which indicate that senior United Airlines management may have been less than truthful in disclosing the financial health of United employee pensions to the Pension Benefit Guarantee Corporation (PBGC) in petitioning the board for said distress-termination.”

In support of the promised ‘careful scrutiny’ assured by Ms. Barans, it is respectfully requested that this information be provided both to Security and Exchange Commissioner Mary Schapiro and to our association for inclusion in the investigation and for our association’s legal assessment by attorneys.

President Obama campaigned on a promise of a greater openness of government and enhanced protection for federal whistleblowers. He further stated that his administration would not succumb to untoward pressures exerted by Wall Street banks and K-Street lobbyist.

Section 1107 of the Sarbanes-Oxley Act guarantees retaliation against informants, while affording physical and other protections for honestly reporting alleged white-criminal activity. To date, I have received neither, while being ignored by the Securities and Exchange Commission for over the past two years.

I need look no further over my shoulder than the recent past to reflect on the trials and tribulations of Bernie Madoff whistleblower Harry Markopolis or UBS whistleblower Bradley Birkenfeld to realize the precariousness of my present dilemma as a Sarbanes-Oxley whistleblower. Again, with all due respect to your good offices, I demand that the provisions of this law be upheld, or that I be provided with the reason(s) why I unnecessarily exposed myself, while destroying my family, career, reputation, and finances in attempting to uphold this federal law. Given my personal sacrifices, this isn’t asking too much.

If the Sarbanes-Oxley Act of 2002 is not going to be upheld to the letter of the law, then congress must amend or repeal it, as it appears in my case that it is not worth the paper it is written on. This legislation, along with secretive DOJ ‘deferred prosecution agreements’ are nothing more than a mere traps for federal whistleblowers, which allow ‘exonerated’ white-collar criminals to correct their ‘discrepancies’ and ‘administrative processes’. The honest whistleblower suffers dearly, which sends a chilling signal to other would-be corporate whistleblowers contemplating the reporting of wrong doing in the workplace. It is un-American and it is wrong.

Please be advised that on November 23, 2009, a letter of inquiry was made to Assistant Attorney General Lanny Breuer as to whether a ‘deferred prosecution agreement’ had been negotiated between the Department of Justice and United Airlines management but, to date, a response has not been received from this office.

Your cooperation and prompt response is sincerely appreciated by the many financially disenfranchised employees and retirees of United Airlines who relinquished so much to enable United Airlines successful emergence from Chapter 11 bankruptcy.



Captain Dan Hanley
National Public Spokesperson
Whistleblowing Airline Employees Association



Encl: Letter dated January 31, 2009 to SEC IG H. David Kotz
Letter dated November 3, 2009 from SEC IG H. David Kotz
Letter dated October 18, 2007 to SEC Commissioner Christopher Cox


Cc: Senator Charles Grassley – Ranking Member, Senate Finance Committee
Senator Carl Levin – Chairman, Senate Permanent Subcommittee on Investigations
Senator Daniel Akaka – Chairman, Government Management, the Federal Workforce and DC
Congressman Henry Waxman – Chairman, Government Oversight Committee
Congressman George Miller – Chairman, House Health, Education, Labor, and Pension Committee
The Honorable H. David Kotz – Inspector General, Securities and Exchange Commission
Mary Shapiro – Chairman, Securities and Exchange Commission
Merri Jo Gillette – Regional Director, Chicago Securities and Exchange Commission
The Honorable Eric Holder – Attorney General of the United States
The Honorable Lanny Breuer – Assistant Attorney General, Criminal Division
Robert Mueller – Director, Federal Bureau of Investigation
Patrick Fitzgerald – District Attorney, Northern District of Illinois
Robert Grant – Special Agent-in-Charge, Chicago Federal Bureau of Investigation
The Honorable Calvin L. Scovel – Inspector General, Department of Transportation
The Honorable Ray LaHood – Secretary, Department of Transportation
Randy Babbitt – Administrator, Federal Aviation Administration
The Honorable Richard L. Skinner – Inspector General, Department of Homeland Security
The Honorable Patrick P. O’Carroll – Inspector General, Social Security Administration
Tom Devine – Legal Director, Government Accountability Project
Danielle Brian – Executive Director, Project on Government Oversight
David Colapinto – Attorney, National Whistleblower Center
Jeffrey Grass – Attorney
Member of the Whistleblowing Airline Employees Association