Charter Airline Says Caesars Swiped Secrets

LAS VEGAS (CN) - Charter airline Aerodynamics wants $12 million from Caesars Entertainment for stealing trade secrets to start its own charter air service, according to a federal complaint.

Michigan-based Aerodynamics and ADI Holdings filed a 65-page complaint against Caesars and other defendants in Federal Court in Nevada this past week, accusing them of misleading the private airline and running a "scheme" to obtain its "most highly guarded trade secrets."

Founded in 1959, ADI describes itself as a leading provider of full-service aviation transportation.

ADI says Steven Markoff, vice president of ESS Travel Management for Caesars, contacted Aerodynamics in October 2014 and asked it to bid on a three- year contract to provide charter services to bring clients to and from Caesars properties across the country.

The companies negotiated a three-year, $85 million contract that would have generated at least $12 million in profit for ADI, the company says in its complaint.

To win the contract, ADI says Caesars required an FAA Part 121 certificate, which helps to ensure an airline can operate safely, and at least three Embraer ERJ-145 or Canadair CRJ-200 jet aircraft.

Despite its many decades of experience, FAA certification and having the required aircraft, Caesars awarded the contract to Via Airlines - which doesn't have the aircraft and is not a certified Part 121 air carrier, ADI says.

Via Airlines only obtained the contract after Caesars and Markoff misappropriated Aerodynamics' trade secrets, including confidential information about how the carrier planned to provide air transportation for Caesars, the complaint says.

However, shortly before awarding the contract to Via Markoff told ADI that Caesars wanted the carrier to begin operating two 50-seaters out of Atlantic City and only needed "'perfunctory'" approval from Caesars' legal department and executive committee, ADI says.

The company shared its information with Markoff and Caesars under a non-disclosure agreement, but says they used that information to harm its business and relationships with customers and vendors, according to the complaint.

Among the "most competitively sensitive items" Aerodynamics shared with Caesars was a spreadsheet detailing projected profits and losses and income from the Caesars routes including costs for labor, maintenance, pilot training, aircraft leases and other information, the carrier says in its complaint.

ADI says Markoff indicated Caesars also was interested in buying the company. Instead, Caesars worked with Via Airlines chairman Amos Vizer to steal Aerodynamics' trade secrets and use that air carrier instead, the complaint says.

Vizer and Via are also named defendants in ADI's suit.

This past February, Markoff and Caesars ended all negotiations with Aerodynamics, and Markoff left Caesars to join Via Air and Via Airlines to run the companies and become an equity investor, ADI says in its complaint.

Markoff also allegedly said in a meeting with the company ADI leases its planes from that he "'never planned to acquire ADI, but I do plan to steal ADI's business and put them out of business,'" the complaint says.

Part of Markoff's plan to put ADI out of business and "among the most damaging acts" was interfering with the contractual relationship between ADI Holdings and PASS Charters, which leased aircraft, crew, maintenance and insurance from ADI, the complaint says.

Markoff told PASS that Via Air and Via Airlines could provide all the flight services PASS needed and for less than ADI was charging because "ADI did not know how to control costs," ADI says in its complaint.

This past March, PASS supposedly said its clients refused to use ADI's aircraft and terminated its contract with the carrier, which Aerodynamics says cost at least $1 million in revenue, according to the complaint.

Via Air and Via Airlines also targeted several other clients of ADI and Aerodynamics and contacted the company that leases aircraft to ADI in an attempt to get it to lease two of the aircraft to the Via companies instead, ADI says.

Aerodynamics and ADI Holdings accuse Markoff and Caesars of misappropriation of trade secrets, bad faith and breach of contract. The charter seeks more than $12 million damages and punitive damages.

Delaware-based International Management Solutions is also named as a defendant in the suit.

Anthony W. Austin of the Fennemore Craig law firm represents Aerodynamics and ADI Holdings and was not available for comment.

Officials for Caesars Entertainment were not available for comment.

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