Pension scam cost them their jobs
As the recession continues its flight into that deep horizon, more individuals are left wanting. Wanting money, wanting security… wanting answers. It’s no wonder people want low cost loans or a money loan now and again. The immediacy of delivery can be a saving grace during tough times.
Pilots at Continental Airlines need that saving grace, too. That’s why we see that Continental sues nine pilots for allegedly faking divorces in what they allege is a pension scam. The seven men and two women exploited a loophole in the system because they were afraid that their pensions were going to disappear because of financial difficulties in the airline industry. Now all but one are unemployed. All of them are facing legal action.
Get that money now
Shannon Buggs reports for the Houston Chronicle that Continental Airlines is suing both the nine pilots and their spouses for faking marriage dissolutions in order to execute an end around to circumvent federal laws on collecting pension benefits before retirement. Eight of the nine senior pilots have been fired or tendered their resignations after being caught.
“The one exception… recanted his fraud and signed an agreement to make restitution to the plan and consequently was reinstated to active employment,” said Continental in its lawsuit in Houston’s federal district court. However, this pilot has yet to repay the money or accumulated interest as ordered by a federal judge.
Protecting pension assets
“The law requires that Continental and other fiduciaries of the pension plan take appropriate steps to protect pension assets,” said airline spokeswoman Julie King.
Continental has alleged that the group of pilots and their spouses got divorces yet continued to live together. During the process, they kept the truth of their marital status change from their children and friends. Once the divorces where approved by Texas, the pilots signed documents giving their ex-spouses all rights to their pilot pension plans. Those pensions were worth as much as $900,000 per pilot, which the spouses requested from Continental in lump-sum payments.
But that isn’t the violation. This is…
So far, everything is kosher. But what Continental alleges is that after the spouses received their payments, the couples remarried. Thus, the divorces were “subterfuges or sham transactions,” as Continental’s legal staff puts it.
Clearly, the pilots and their spouses undertook this plot because they feared for their financial futures. Delta Air Lines, United Airlines and US Airways had all filed for bankruptcy and reneged on their pension promises. The government had to step in to pay some of the pension obligations, but the former employees are still in the lurch.
In light of this, I could not convict the Continental pilots. I believe that the applicable pension law needs to be changed. But the current playbook doesn’t have that kind of wiggle room.
“If you look at it from the pilots’ perspective, it’s understandable why they might have pursued this plan to keep that original benefit, but it absolutely is not permitted,” Jesse Gelsomini, a labor lawyer.
This isn’t the first time
Attorneys of United Airlines’ parent company consulted with the U.S. Department of Labor in 1999 as to whether they should accept divorce documents it felt were “questionable or sham in nature.” The case involved maintenance workers in Indianapolis who were “following steps laid out in a pamphlet called the Retirement Liberation Handbook, which gave instructions on how to use divorce to acquire benefits prior to retirement,” writes Buggs.
The Labor Department responded by saying that it was “not free to ignore information that calls into question the validity of court documents that divide up marital property.” They were advised to contact state authorities and share their suspicions over the assumed fraud.
So what have we learned here? Low cost loans or a money loan can legally help your budget when the chips are down, but don’t commit fraud against big brother. Even when you’re right. Unless perhaps you’re prepared for a legal battle…
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