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Thursday, January 1, 2009

Rotorcraft Report: Helicopter Dealer Sentenced in Parts Scheme

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On Dec. 3, Robert A. Schlotzhauer, the 68-year old former owner of Falcon Helicopter Inc and Lee’s Summit Turbine LLC of Lee’s Summit, Mo., was sentenced by a U.S. District Court judge to pay a $500,000 fine, make $63,854 in restitutions, and spend 12 months in home detention for wire fraud and laundering money in a helicopter repair scheme.

The charges stem from a 2001 transaction where Schlotzhauer installed non-serviceable aircraft components from one wrecked McDonnell Douglas 369E helicopter aboard a second 369E that had previously crashed into the ocean and remained submerged for several hours. He then, according to the indictment, created false logbooks and other documents to conceal the true history of the aircraft and its parts, and sold the second aircraft with its illegal parts to Rainbow Air, a tour company that gives rides over Niagara Falls.

Eventually, Rainbow Air became suspicious of the aircraft’s condition and called Schlotzhauer looking for answers. Schlotzhauer emailed Rainbow explaining the parts were from an aircraft that had experienced a hard landing. Rainbow, however demanded a $25,000 refund for the components. Schlotzhauer made the refund via a $31,000 cashier’s check, falsely stating the listed payee was another person in order to conceal the ownership of the unlawful proceeds. When federal investigators descended upon Falcon Helicopter, they discovered false entries and relevant pages missing from documents related to the case.

On March 2008, Schlotzhauer pleaded guilty to wire fraud for lying to Rainbow about the history of the helicopter parts, and to laundering money in an attempt to cover up ownership via the cashier’s check. The court ordered him to pay a $500,000 fine, make $63,854 in restitutions, shut down his business, surrender all repair-related FAA certificates, and refrain from any involvement in the business of maintaining, repairing, or rebuilding aircraft. The sentence did not include prison time, but Schlotzhauer was ordered to spend 12 months under house detention at his own expense.

"Schlotzhauer recklessly jeopardized the lives of pilots and passengers through this fraud scheme," said John F. Wood, U.S. Attorney for the Western District of Missouri. "In order to boost his own profits, he flouted federal requirements for inspecting and repairing the damaged helicopters that he sold. He now faces a stiff fine and the loss of his business, but we are just thankful there were no injuries or fatalities as a result of this scheme."

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