The United States Department of Justice has announced that Lars Winkelbauer, former executive vice president and chief operating officer at Polar Air Cargo (PO, New York JFK), has been sentenced to four years imprisonment for his part in a decade-long scheme to defraud the airline of more than USD32 million in revenue.

The former executive had pleaded guilty to conspiracy to commit wire fraud and money laundering in the longstanding case at the New York Southern District Court. In passing the 48-month sentence on May 30, US District Judge Jesse M Furman credited Winkelbauer (who had resided in Bangkok) with time he had spent in custody in Thailand while he awaited extradition to stand trial in the United States.

In addition to the prison term, Winkelbauer was sentenced to three years of supervised release. He was ordered to forfeit more than USD6.7 million to the United States and repay more than USD32.9 million to Polar Air Cargo. The judge recommended that he participate in alcohol treatment programmes while serving time at Federal Prison Camp (FPC) Montgomery, a minimum-security federal prison in Alabama. Winkelbauer must surrender by June 27 for imprisonment.

"Winkelbauer abused his high-level position at Polar for over a decade, extracting millions of dollars," commented US Attorney Damian Williams.

According to the charging documents, other filings, and statements made in court Winkelbauer and at least nine other individuals participated in the scheme to defraud Polar Air Cargo from around 2009 until July 2021. In addition to Winkelbauer, the co-accused included three fellow senior executives at the airline and six vendors/customers.

The executives received USD23 million in kickbacks or disbursements during the 12-year period due to their secret ownership of conflicted vendor companies in exchange for favourable business contracts from the airline. The DOJ said the fraud led to "pervasive corruption of Polar Air Cargo's business, touching nearly every aspect of the company's operations for over a decade."

Winkelbauer was the most senior of the executives involved. He received kickbacks connected to 11 separate vendors or customers of Polar Air Cargo, totalling more than USD6 million. He also attempted to conceal the illegal kickbacks through a sophisticated money laundering scheme, including via falsified invoices and the use of shell companies in China.

His co-defendants included former VP of marketing, revenue management, and network planning Abilash Kurien; former VP of operations, systems performance, and quality Carlton Llewellyn; and former senior director of customer service, and capacity (Americas) Robert Schirmer. The vendors were Skye Xu, Benjamin Wei, Alvaro Lopez, Fabiola Cino, Orlando Wong, and Patrick Lau.

In October 2023, Schirmer pleaded guilty to one count of conspiring to commit wire fraud and honest services wire fraud, with a maximum sentence of five years in prison. In January 2024, Llewellyn pleaded guilty to one count of conspiring to commit wire fraud. In February, Kurien also pleaded guilty to wire fraud and money laundering.

According to a letter to the court submitted by Polar Air Cargo president and CEO Michael Steen, the company detected the long-concealed criminal scheme in mid-2021. It immediately overhauled its management team and business strategy to undo the corruption. Among other changes, it stopped using General Sales Agents (GSAs) in the United States.