LOS ANGELES (CN) – It took two men 20 years to embezzle $47.4 million from Northwest and Delta Air Lines, insurers claim in court, and they want the money back.
Axis Insurance and Federal Insurance sued Michael A. Yedor in Federal Court on Friday, as subrogees of Delta Air Lines.
Axis and Federal filed a similar lawsuit against Paul Anderson on Monday in Minneapolis Federal Court. Citations in this article are taken from the Los Angeles complaint.
The companies claim that Yedor conspired with Northwest employee Paul Anderson to submit false invoices to Northwest, then to Delta after it merged with Northwest, from 1992 to 2013.
Anderson “was the supervisor of Northwest’s and then Delta’s Radio Group, which installed, maintained and upgraded radio communications, and he was responsible for managing vendors who provided radio-related services to the airlines,” the Los Angeles complaint states.
Yedor used the company name Airborne Voice & Data Communication Services on “false and fraudulent invoices as the vendor which purportedly provided the goods and services, and an address in Los Angeles from which he carried out the activities,” the insurers say.
Yedor approved payments to Airborne for $47.4 million, despite knowing that Airborne had not provided the airlines with goods or services, and kicked back some of the embezzled money to Anderson, the complaint states.
A former bookkeeper for Yedor contacted Delta to report the embezzlement in November 2013, the insurers say. Delta fired Anderson, and Anderson and Yedor were indicted and pleaded guilty in Atlanta Federal Court.
Yedor is now an inmate in the Federal Correctional Institution on Terminal Island, Calif., serving a 10-year sentence for conspiracy to commit mail fraud. Anderson was sentenced to 6 years and 8 months for his role in the crime.
“The scope and magnitude of this fraudulent scheme is astounding,” said U.S. Attorney Sally Quillian Yates. “The millions of dollars the defendants stole hurt the honest operations of an important company and its many customers, as well as other honest vendors who play by the rules.”
As part of his plea agreement, Yedor “admitted the manner in which he perpetrated the embezzlement scheme,” the complaint states.
Axis and Federal say they paid Delta $46.4 million for its claim, which had a $1 million deductible.
Yedor was ordered, with Anderson, to make restitution of $37.1 million, including $21.4 million to Axis and $15.7 million to Federal, as part of his criminal case. He has not repaid the companies, the lawsuit states.
The insurers are represented by Carleton Burch with Anderson, McPharlin & Conners.
In Minneapolis, they are represented by Joel Wiegert, with Meagher Geer.
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