Pilot Files SEC-Whistleblower Complaint Against American Airlines For Securities Fraud In Violation
Lawrence Meadows, a former U.S. Air Force pilot, and 22 year veteran pilot of American Airlines, has filed a Securities and Exchange Commission (SEC) Whistleblower Compla
Manahattan, NY (PRUnderground) April 15th, 2014
Lawrence Meadows recently filed an SEC-Whistleblower Complaint (SEC Ref. No. TCR1395946377040), against American Airlines for shareholder securities fraud violations under the Dodd-Frank Act, and retaliation lawsuit under the Sarbanes-Oxley Act (Case No. 2013-SOX-16). According to court records, American knowingly failed to pay many of its pilots their otherwise rightful long-term disability benefits, which amounted to well over a 100 million dollars of obligations under its defined benefit pension plans. Meadows further alleges, this resulted in American Airlines understating its pension liabilities, and in turn artificially inflating the earnings reported to its shareholders in its annual financial statements. These material financial misstatements, were subsequently certified in American’s annual SEC 10-K reports, by independent auditors Ernst and Young, LLP.
Meadows complaint specifically alleges that, American’s Medical Department implemented the “Nurse Case Management Pilot Disability Cost Savings” scheme, in an effort to aid with American’s grossly underfunded pension plans. This scheme targeted the most costly pilot claimants, by prematurely terminating their long-term disability benefits. Additionally, he alleges, that American’s Pension Benefits Administration Committee, further facilitated this scheme using a fraudulent, third party disability claims reviewer. According to sworn testimony of former employees, the claims reviewer purportedly paid doctors 120% of the normal exam fee, to deny as many disabled pilot claimants as possible.
During the relevant time-period when the pilot disability cost savings scheme was implemented, American’s 2005 SEC-10K annual report showed substantial pension funding obligations of $3.2B. Further, in that report, American disclosed that due to “substantial pension funding obligations, the Company will need continued need access to additional financing.”, and that, “The inability of the Company to obtain additional funding would have a material adverse impact on the ability of the Company to sustain its operations over the long-term.”
According to his complaint Meadows asserts that, “American’s pension underfunding and securities fraud is on-going,” and further that, “What American Airlines has done to myself and other similarly situated disabled pilots is criminal, and in fact is a violation of the Corporate Fraud and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act.” In response, American Airlines has filed an objection in the U.S. Bankruptcy Court of the Southern District of New York, seeking to extinguish all of Meadow’s statutory claims. That matter is set for hearing on April 17, 2014, before the Honorable Judge Sean Lane.
Meadows is the Founder of the Disabled Airline Pilots Foundation – “Wings of Justice”, whose purpose is enforce absolute individual statutory rights, and protect the pension and disability benefits of himself and other similarly situated disabled airline pilots. For more info go to; http://www.DisabledAirlinePilotsFoundation.com
About Disabled Airline Pilots Foundation