Trials & Litigation

Insurers seek $47M from 2 men convicted in airline billing-fraud scheme

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Two men stole tens of millions of dollars from Delta Air Lines and Northwest Airlines over a 20-year period through a relatively simple billing fraud, authorities say.

Now two insurance companies that covered the loss to the airline companies, less a $1 million deductible, are suing the imprisoned pair in an effort to recover $47 million in claimed damages, Courthouse News reports.

Sentenced earlier this year to six years, eight months and 10 years, respectively, after pleading guilty to conspiracy to commit mail fraud, defendants Paul Anderson and Michael Yedor are now behind bars.

They were also ordered by a federal judge in Atlanta to pay $37.1 million in restitution. However, Axis Insurance and Federal Insurance are seeking more in the civil litigation against the two men, alleging that $47 million represents the total amount taken.

The insurers sued Yedor in federal court in Los Angeles and filed a similar complaint against Anderson on Monday in federal court in Minneapolis, Courthouse News reports.

Anderson, a longtime employee of Northwest and then Delta after the two airlines merged in 2008, was in charge of its radio group and oversaw services provided by radio-related vendors. He allegedly approved some $47 million in invoices over a 20-year period, starting in 1992, for goods and services that were not provided by a company operated by Yedor. Once Yedor got paid, he gave kickbacks to Anderson.

The two men were charged and convicted after a former bookkeeper for Yedor blew the whistle to the airline.

Related coverage:

Daily Report (sub. req.): “Hollywood Producer Sentenced for Defrauding Airlines”

Minneapolis Star Tribune: “Prison for man who cheated NWA, Delta out of $36M; Twin Cities accomplice awaits his fate”

WXIA: “Ex-Delta employee sentenced for defrauding airline”

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